India could soon have more electricity than it needs – but power cuts are not going away

If all goes according to the government plan, India will have more electricity than it needs by next year. Yet that doesn't mean power cuts are a thing of the past.

A report released last week by the Central Electricity Authority which advises the government on electrical lines and transmission said that India will have a power surplus as soon as next year. But experts and the country's track record suggest that the country will continue to face serious challenges in transmitting that electricity to every household. But load shedding isn't going anywhere.

The government set itself a target of producing 1,178 billion units this fiscal year in order to meet demand and achieve an overall power surplus of 1.1%. According to the Central Electricity Authority report, India will have a 2.6% power surplus even during peak demand after factoring in the incoming power from projects in Bhutan and sources of renewable energy. The report's numbers are calculated by using past demand as the base and extrapolating monthly demand for each state from there.

While Delhi, Maharashtra and Gujarat are set to see a power surplus if the reported data holds true for the upcoming year, eastern states like Bihar, Odisha and Jharkhand will be among the ones facing a severe power shortage.

However, power cuts in most parts of this country are caused not due to lack of power but due to buying capacity of the distribution companies or transmission issues, among other things.

For instance, Delhi had almost as much power as it needed last year and faced a shortage of minuscule 0.1% of its energy requirement, but the capital recorded more than 1,000 long-duration power cuts in a single month of June.

Similarly, Karnataka’s power shortage was less than 5% last year but the capital city of Bangalore along with its outskirts has recorded more than 300 power cuts this year already.

Doesn't add up

While having enough capacity is one thing, the ability to reach interiors of this country is another and it doesn’t help that the power distribution companies are so starved of funds that they can’t afford to buy all this available power.

In places like Delhi, losses through power theft and transmission inefficiencies cost about Rs 1,200 crore each year to the power distribution companies. Recent reports have claimed that these losses often bring down power reliability which results in more outages – largely irrespective of demand and supply.

Meanwhile, experts suggest that it is not quite accurate to think the country will produce enough electricity to meet its demand.

Ashwini Chitnis, a senior research associate with Prayas, a non-governmental organisation working in the energy sector, says that the demand projections are highly understated due to multiple reasons.

“There is a lot of latent demand in the rural areas where the electricity hasn’t even reached yet. They haven’t taken that into account,” Chitnis said. “Further, the government uses GDP growth rate to estimate future demand which has been shown to have a weak connection with the actual electricity demand.”

Who is going to pay for it?

Chitnis added that there’s ample doubt about the demand figures themselves but it doesn’t help that the Central Electricity Authority only considers state level forecasts as a singular unit and extrapolates from there, while conditions might differ for each specific power distribution company and in some cities, where there are more than one operators.

“Some states will have a surplus but the question is if their discoms [distribution companies] will be able to provide power all day with the kind of losses that they have,” Chitnis said. “Most discoms don’t provide full day power to agricultural units because they know that the power is subsidised so they won’t make as much revenue and same goes for consumer households.”

This implies that special focus and push is needed from the government’s side to distribution companies placed in states where there aren’t many industrial buyers of power who pay a lot more than consumers do.

“The government needs to think of ways of cross-subsidising power in order to make it accessible to people. What use is a power surplus when a substantial portion of this country is in the dark because they can’t afford it?” Chitnis concluded.

Piyush Goyal, the Minister of State with Independent Charge for Power, Coal, New and Renewable Energy, recently noted the same during an address at a university in Noida where he said that his ministry was doing its best to provide power but the Uttar Pradesh government wasn’t buying it, giving people no respite from power cuts.

“My achievement in the past two years is that there has been no power deficit in our country and we have surplus power to supply to all states,” he said. “We are selling power for Rs 3.70 per unit to Uttar Pradesh. In Odisha we are selling power for Rs 2.52. Earlier, the Centre used to sell it for Rs 10 per unit. But what can I do if UP does not buy power?”