Turning India’s power surplus into a boon
Investment in the power sector could be made more profitable by a slew of measures that increase the consumption of electricity
Low consumption of power in the country, which has resulted in low plant load factor and surplus of coal at the pithead and at the power plants, has been a matter of concern for the last few months. A good monsoon has lowered agricultural consumption of electricity and cheaper hydropower has replaced thermal power in the grid as bountiful rains ensured ample waters in the reservoirs. As a result, some analysts and experts have been questioning the additional capacity that we are adding to the grid. We are adding capacity not only in the traditional thermal and hydro but also in the renewable sector, in which we have a target of 175 GW of capacity by 2022.
India’s per capita consumption remains among the lowest in the developing world. This is a pointer to the fact that power consumption is going to grow in the future and the current situation is only reflective of the low purchasing power of the consumers at present, apart from issues of connectivity and reliability that are, however, being addressed at a fast pace. The woes of distribution companies (discoms), which are not buying power because of their debts and inability to recover costs from consumers, are being overcome through the Ujwal Discom Assurance Yojana (UDAY).
A low plant load factor threatens the viability of power plants and we have to look for creative solutions to deal with the current situation. This situation is not peculiar to India. Countries have overcome this situation by having competing facilities in two-three fuels, with the grid switching over from one fuel to another depending on the price of the fuel and the market demand. Coal competes with fuels such as natural gas and nuclear and the consumer is offered different options. In a country like India, where capital has other competing demands, investment in the power sector could be made more profitable with the adoption of a slew of measures that increase the consumption of electricity. Electricity offers elasticity of use and could be utilized to replace fuels in other sectors.
Ecuador, which has invested in hydropower in the last few years, has also become power surplus. Ecuador is overcoming this situation by embarking on a programme of replacing gas stoves with electric stoves for cooking in households, thus bringing down the consumption of natural gas, which it imports. We can learn from this and encourage the use of electricity for cooking during the surplus season—for this, a special tariff may be offered, which could be lower than the comparative LPG price. This is an easy solution, as apart from the electric stove in the household, no other infrastructure will be required to implement it. Electricity could also replace imported kerosene. This will also have an impact on our overall LPG and kerosene imports, free LPG for consumption in rural areas and help faster implementation of the Pradhan Mantri Ujjwala Yojana.
The other measure we should take is a fast switchover to electric vehicles. In the city of Guilin, China, which I visited in 2012, the majority of two-wheelers being used are electric vehicles. China restricts the use of traditional two-wheelers in several cities in order to reduce pollution. As a result, China is the global leader in the electric two-wheelers market, with an estimated stock of 200 million units. We have a target of having six million electric vehicles by 2020. This should be upped and power companies could be guided to take a special interest in their promotion. Cities like Ahmedabad, Vadodara and Pune, which are known for their liking for two-wheelers, could become the hubs for the adoption of electric vehicles. Electric charging facilities for vehicles can be provided in major cities and on highways. Lower tariff could be offered for ‘off-peak’ recharge of vehicles. The use of electric buses in public transport should also be encouraged. China is again a global leader in this area, with a fleet of more than 170,000 electric buses. Smart cities and cities planned under the proposed industrial corridors should incorporate infrastructure for electric vehicles in their plans. Indian Railways could fast-track its electrification programme so that it lowers its diesel consumption.
If these measures are undertaken, they would have many beneficial effects. Adoption of electricity for cooking instead of LPG, LNG or kerosene would lower our imports of these fuels. Similarly, a jump in the use of electric vehicles will lower the rise in demand of petroleum imports. Faster electrification may even lower consumption of refined petroleum products, thereby contributing to the target of lowering imports of these products by 10% set by Prime Minister Narendra Modi. Lower demand by India, the fourth largest importer of crude oil, will have a salutary effect on the market price of crude oil and will contribute to enhancing the energy security of the country. Adoption of electric vehicles will lower the pollution level in cities, apart from helping to meet our commitments in the 2015 Paris climate change agreement.
And like Ecuador, increasing export of power will be another way to overcome the temporary excess in our grid. Last year, when Colombia faced a power shortage because of lower generation by its hydropower plants (due to El Niño), Ecuador sold power to it. We have already made good progress in this area. In 2013, we started exporting 500 MW of power to Bangladesh, which has been augmented further by commencing export of another 100 MW from Palatana, Tripura, this year. Power exports to Nepal are set to increase following the completion of the construction of the Muzaffarpur-Dhalkebar transmission line, once the transmission infrastructure on the Nepalese side is strengthened. Nepal may need more power, in the short run, which could be supplied by India. In the long run, Nepal will become a supplier of hydro-based power to India. In the case of Sri Lanka, an undersea cable will allow us to export power to them. We have made a good beginning by commencing export of 3 MW to the border towns of Myanmar, which could be scaled up by constructing a better transmission infrastructure. A pan-Asia-Pacific grid in the long run will help balance the surplus and shortages in the region.
Thus the power surplus situation can be converted into a boon. It could lower the demand for imported petroleum products and increase the consumption of domestically produced coal—a 175 GW renewable energy target by 2022 will be a welcome addition to our energy mix and help replace fossil fuel further.
Prabhat Kumar is India’s ambassador to Colombia and Ecuador. Previously, he has served as joint secretary in charge of the energy security division of MEA. These are his personal views.
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