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Good luck with power

Electricity sector needs more work, not complacency

Business Standard Editorial Comment  |  New Delhi 

A combination of factors has halved the power deficit in most of 2013-14, and this is likely to spill over into a more bearable summer this year because of better storage in reservoirs. While this is good news, fortuitous circumstances explain much of the improvement. First, the lower deficit is partly owing to subdued demand resulting from the industrial slowdown that has hit the economy in the last few years. If economic and industrial growth recovers from the current year onwards, as is the forecast, the power deficit is likely to go up again quickly. Second, the current improved scenario and prospects are also the result of a good monsoon in 2013. There is a chance that this may not be repeated in the current year as a result of the partial reappearance of the El Nino climatic factor. The combination of the two - higher industrial activity and a poorer monsoon on present reckoning - is likely to lead to a far worse scenario this time next year, unless policy continues to reform transmission and distribution and keeps adding to capacity.

One concrete action initiated is the build-up of better coal stocks at important power plants. This has been partially enabled by a small rise in the output of Coal India on the back of speeded-up clearance of power projects that were earlier stalled for lack of coal sources. The process has to continue so that inefficiency and inaction in the environment ministry are addressed to reduce the number of stalled projects to only those that are beset by genuine environmental issues. But, simultaneously, a negative trend of cutting power tariffs in a pre-election scenario, initiated by the short-lived Aam Aadmi Party rule in Delhi, looms overhead. It is imperative that the process of moving to viable tariffs continues, even as regulators must diligently verify claims of power distributors for a hike in tariffs before agreeing to an upward revision. There is also an urgent need to improve the efficiency of Coal India, which faces regulatory action for imposing one-sided supply agreements with power plants that let it pass off poor-quality coal to its customers without any penalty.

It is also necessary to improve the power transmission infrastructure. The country has become a single grid only on paper. It is vital to make this work so that the power-deficit southern and western regions get to use some of the surplus in the east. Further, it is important to keep working on improving the renewal energy scenario, in which India has done well till now but should not lose momentum. In particular, solar power, whose cost keeps falling, still has huge untapped potential. Odisha has received a $1-billion (about Rs 6,000 crore) proposal from a Canadian consortium for a 500-megawatt plant and solar panel manufacturing facility. If domestic gas prices go up and output rises, there will be greater scope for local gas-based power plants near demand clusters. This will reduce both pollution (vis-à-vis coal-based power) and the pressure on transmission. Above all, it is vital for India to do better in improving energy efficiency. A good area to focus is the automobile sector by being strict on tightening emission norms and doing more for public transport.

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First Published: Tue, March 11 2014. 21:38 IST
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