Surplus power: An opportunity beckons

Representational image (Photo: Getty Images)

India is witnessing a strange paradox. Providing electricity to ensure one light and a fan to the poor is in itself a big deal, and amidst tall government claims, many villages in the country are still not electrified or despite installation of electricity poles, remain powerless. Under these circumstances, the Central Electricity Authority, under the Ministry of Power, has come out with a report, according to which there will be 1.1 per cent surplus power in 2016-17.

Surplus or deficit power is seen in terms of power supply and demand throughout the year. If demand for power is greater than its supply, it would be considered deficit of power; where supply of power is more than its demand, it would be called a power surplus situation. In fact, this is the first time that we have surplus power, according to government statistics. The situation does give satisfaction, but it poses a problem as well. Due to surplus power, power plants are under stress because of lower demand and lower prices in view of competition. The important question is whether this challenge can be converted into an opportunity.

While analysing the reasons for surplus power, experts opine that demand for power is estimated from the people connected to the grid. However, a large number of people are still not connected to the grid. If we add the prospective demand from those deprived of electricity so far, then this surplus will vanish. As per international comparisons, India’s per capita consumption of electricity is among the lowest in the world. India’s per capita electricity demand is 1070 kilowatt hours, while the global average is 3026 kilowatt hours. Among BRICS nations, India is at the bottom in terms of per capita electricity consumption. Due to lower incomes, people have lower purchasing power and therefore they consume less electricity. However, electricity demand is on the rise year after year. In 2014-15, electricity demand increased by 6.6 per cent and in 2015-16 by 4.2 per cent. The government is making efforts to increase the capacity to generate more power, to facilitate availability of power for an increasing population. By August 2016, the total capacity was 306 Giga watts. Today total production of electricity is 1108 billion units from utilities and 166 billion units from captive power plants.

It is satisfactory that we have surplus power and there are few possibilities of power cuts. However, we still have 3.2 per cent power deficit during peak hours. The current government pats itself on the back for the surplus power. However, CEA has estimated that though we have surplus power in the southern and western parts of the country, there is still power deficit in the eastern and northern parts of the country.

Power deficit was a major problem in India till some time back. However, the situation of electricity surplus is no less challenging as electricity producing units will have to sell electricity at un-remunerative prices and therefore may incur huge losses. As a result, future capacity generation may get adversely affected if electricity generation becomes a loss-making business. The last three years have seen 77636 megawatts (MW) of installed capacity in power generation.  Due to the efforts of the present government, especially the Prime Minister, significant strides have been made in solar power and there is a great future for it in the country. Therefore, it is essential that we are able to maintain a balance between demand and supply of electricity in the country.

Even when faced with power surplus, we are still using a large amount of petroleum products for transportation and cooking. A huge amount of LPG is being imported for cooking. If we are able to produce enough electricity, would it not be appropriate to promote use of electric stoves. All over the world due to environmental hazards, people are turning towards electric vehicles. While going fast on solar power generation, the Prime Minister has set a target for reducing petroleum imports by at least 10 per cent. If we are able to achieve this target, the country will be saving at least US $10 billion to 12 billion. Today, India is the fourth largest oil importing country of the world. So, a reduction in imports may also cause further reduction in the prices of petroleum products globally. We may not only be moving towards energy security, the commitments made in the Paris Deal may also be achieved faster.

Due to power surplus and fast increasing electricity generating capacity, India has also started exporting electricity, though in small quantities. We are exporting electricity to Bangladesh, Nepal and Myanmar. Electricity exports to Sri Lanka are under process by laying a cable under sea. Therefore, we can say that in times to come, India may not only be self-sufficient in electricity, it may even be exporting electricity to neighbouring countries.

Riding on electricity surplus, by increasing the use of electricity in cooking and transport, we may not only be protecting our environment, even costs may come down. On the one hand we may be able to reduce our oil import bill, and on the other, earn valuable foreign exchange. However, for converting the challenge of surplus power into an opportunity, we will have to keep a close eye on the scenario, so that the targets of electricity generation are not hit due to lower prices of electricity.