Powering a shortfall

Old fault lines need to be addressed

Surging demand for power owing to an extended and unusually hot summer and rising economic activities has raised the spectre of prolonged power cuts again. Key northern states, some of them critical manufacturing bases, have been facing widening gaps between demand and supply. States such as Haryana and Rajasthan have seen their energy deficits rise to roughly 13 million units (MUs) till September 2 from 4.32 MUs and 5.34 MUs, respectively, in 2022. More striking are Gujarat and Madhya Pradesh, where the energy deficits have surged 15.94 MUs and 16.6 MUs, respectively, from zero last year. Overall, India’s peak power deficit touched 10 Gw on September 1 as national demand almost hit a historic high of 240 Gw. The key point about this power deficit is that it has occurred in the absence of the usual suspects — a shortage of coal, which accounts for 70 per cent of electricity generation, or the underperformance of hydropower, the second-largest energy supplier. Indeed, the power ministry moved early in April to ensure that various subsidiaries of state-owned Coal India, the country’s principal coal producer, had a sufficient number of railway rakes at their disposal to transport coal to thermal power plants. At the same time, Coal India’s production has grown at a rapid clip — with record output in the first quarter of FY24 and double-digit growth in August. An unexpectedly dry month has meant that thermal plants were spared raw material disruptions.
 

So what explains this deficit? Principally, it appears, the old structural fault lines that have afflicted the sector for decades. The proclivity of states to supply power below cost to sections of people considered electorally significant (such as farmers) has meant that state-owned distribution companies have little money to spare for adequate investment in infrastructure such as transmission networks. According to the power ministry data, 27 states and Union Territories out of a total of 36 — and these include industrialised Gujarat — provide subsidies to sections of power consumers. To be sure, transmission & distribution (T&D) losses, the bane of the power sector, have fallen sharply from a high of 25.5 per cent in FY13 to 13.5 per cent in FY23, mostly on the back of central incentive schemes. This suggests that states have managed to control unauthorised connections and thefts from their networks. Beyond that, however, the discoms’ ability to purchase surplus electricity through the national grid is limited. The power ministry’s plan to integrate private and quasi-private power trading platforms to improve price discovery and supply across the national grid will be fully tested here.
 

Plans to add 14,700 Mw of thermal power capacity this year, by the Centre and states, should go some way towards bridging the shortfall. But such mammoth additions raise questions about the role that renewable power (solar, wind) must play in addressing India’s emission targets. Renewable power currently accounts for just 11 per cent of energy supply and the government’s targets of a renewable-energy capacity of 500 Gw by 2030 (from 172 Gw today) is a tough ask. The inherent variability of their supply creates grid operational challenges, which are yet to be fully addressed. The limited role of renewable energy as a result of technical challenges could prove a crucial weakness as the government seeks to balance the competing challenges of higher power demand and zero-emission targets.