NEW DELHI: It may be hard to believe in a country where blackouts are still the norm in large parts. Enough power is available in the system but there are no takers for a substantial portion of it.
Power minister Piyush Goyal on April 30 told Parliament that most parts of the country have surplus power. “The sad part is that states are not acquiring or buying power to be able to give their residents uninterrupted power supply,” he told the Lok Sabha.
A day before on April 29, he found there was so much surplus power at 3.30 pm that the national grid monitoring station indicated power was available at “zero rupee per unit”.
Last Thursday, there were no takers for 100 million units of electricity, equivalent to 1,500 MW of coal-fired and 2,500 MW gas-based capacity, from state-run generation utility NTPC that accounts for nearly a fifth of the installed capacity in the country.
Similarly, a look at the data from Indian Energy Exchange shows there were more bids for selling power than for buying in April. In the complicated power trading business, this may not be seen as an empirical proof. But, it certainly is a strong indicator of the trend. While the poor financial health of the state discoms is largely to blame, there are other factors such as fuel prices, difficulty in bill collection, etc that prevent utilities from procuring power. This has led to a fall in demand in the face of rising capacity.
“Usually, it is costly power that goes abegging. Usually utilities with weak bill collection system prefer to shed load than buy. They find it more viable to pay the ‘fixed charge’ in the tariff than to suffer loss due to inability to recover the cost of additional power,” one NTPC executive said.
Simultaneously, generation capacity has been growing steadily and power generation topped the trillion unit-mark in 2014-2015 at 1,048.4 billion. This marks 8.4% growth over previous year. Most utilities buy power through long-term contracts. The fixed, or capacity, charge makes up 30% or less of the contracted tariff. The aversion can be understood better in case of gas-fired plants. These plants are idling because supply of cheap domestic gas has been snapped due to shortage.
Since utilities booked the capacity of these plants on domestic gas-based tariff, they are unwilling to consider running them with imported fuel as the cost would double.
Coal-fired plants too face somewhat similar situation. Many of them have to import to make up for shortfall in domestic supplies. This raises fuel and transport costs.
Many utilities are also turning to power exchange to take advantage of falling rates as inter-region connectivity and transmission network’s carrying capacity improves. Then there are heavily deficit states such as Tamil Nadu and Kerala that pay Rs 8.5 per unit to buy power from the exchange. “If there was better connectivity with the south, our unbought 100 million units would have been lapped up by these states,” the NTPC executive said.
Analysts have a different take. “Actually, losses of the discoms are rising at a slower pace after the restructuring that took place a few years ago. The slowdown in the economy has to do with a bit of the fall in demand,” said Sudip Sural, senior director at ratings and research firm Crisil.
Central Electricity Authority data shows that power plants were spinning at an average 63% of their capacity, down from 78% three years ago. The idling gas-fired plants may have much to do with this, since generation capacity has been going up steadily during this period.
