Indian Power Shortage A Management Matter

Around 56% rural households and 12% urban households still do not have access to electricity. The power ministry has a plan to provide power to all by 2012. Has it something to do with the lack of generation capacity created over the years? Most of the people in India think that as the main reason of the shortages. And even a consultant such Boston Consulting thinks, ‘nowhere is India’s weak infrastructure more obvious than in power’.

Surprisingly, the peak power shortage hovers around 12.5% since 2001. According to India’s ministry of power, in the previous financial year up to March 31, peak demand exceeded supply by about 10,500 megawatts, or 11.6%. In China, electricity demand in the first six months of the current year exceeded supply by 700 million kilowatt hours, according to the China Electricity Council. And to overcome this unreliable supply, many Indian enterprises invest in their own power generation plants. About three-fifths of Indian manufacturing is supplied by such power, compared to less than a fourth in China.

But let us look at where does India’s generated electricity go?

For every 100 units of power generation, consumers pay for only 60 units. According to the planning Commission, power theft in 2005 was 20% of the total power generated in India. And in money value, it was over Rs 22,500 crore.

Technical loss is also 20% because of transmission at low voltage over long distances instead of at high voltage. The central Electricity Authority estimates that T&D losses should be 10%. And for every one percent reduction in T&D loss, International energy agency estimates that India can save an additional capacity of 800MW. That will be sufficient to fulfill the total requirement of a state like Himachal Pradesh.

Every one percent increase of PLF can result in additional capacity addition of around 1300MW. As per an estimate, about 30,000 MW of thermal capacity needs renovation, which can generate 5,000 MW of additional capacity. Power Load Factor- the measure of the performance of power station-in 1997 PLF was around 60% that should have been around 80%. Some central and private plants have improved to around 72% but the state-owned plants have dipped further below 50%.

So basically, India can leave behind its power shortage jus by three actions:

1.The authority concerned must be ruthless and cut down the theft.

2.Power ministry must heavily invest in high voltage power transmission on priority to reduce T&D loss.

3.All the existing plants must follow strict maintenance and refurbishing plans to keep PLF high.

However, additional generation capacity is necessary. Every Indian household must get electrified and must get the demanded power. An average Indian consumes 520 kgoe (kg of oil equivalent) of energy against a world average of 1688 kgoe. The Chinese consumes double 1090 khoe and the American over 15 times 7835kgoe.

India must go for a GDP growth much higher than 9% that it is attaining today. And it will be manufacturing and services sectors only that can make that happen. The planners must see that no enterprise and entrepreneur get constrained because of the shortage of power.

According to the International Energy Agency (IEA), for every 1 percent rise in GDP growth rate, India’s power sector needs to register a growth of 1.5%. India needs to multiply its energy supply by 5 to 7 times today’s consumption to attain even a growth rate of 8% over the next two decades. For the higher target, the energy supply must increase many more times.

Potentials are abundant.
Hydro:                Present 32,326 MW; Potential 1,50,000 MW
Wind: Present 5,300MW;                Potential 45,000MW
Biomass:     Present 381 MW;                Potential 19,000MW
Solar PV: Present 110 MW;                Potential 20MW/sq. km
Geothermal: Present 20kw-1MW; Potential 2000 -10,000MW
Ethanol:                Present 1 mtoe/year; Potential 10 mtoe/year

According to the power ministry, the 11th plan will have the capacity addition of 68,870 mw. Besides, inter regional transmission capacity would be increased to 37,000 mw by 2011-12 from 16,500 mw (end of 10th Plan).

Government plan of power to all by 2012 will require an investment of $100 billion (Rs 4,50,000 crore).

But the past history of the implementation of the power projects has been discouraging. Capacity addition as percentage of 5 year Plan target has been dismal at 54, 47, and 42 for VII, IX, and X plans respectively.

We can only hope it will improve in XI plan. And the way out for this will be the cutting down of the administrative delays and political interferences; and using dynamic project managers with total autonomy and accountability. Can the Indian Power Industry Repeat the Performance of Telecom Firms?

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