- Energy use in India has doubled since 2000
- Half of the total installed generation capacity
is generated by the private sector
- In the last decade, India provided electricity to
nearly 50 million new users every year, equal to the entire population of
Spain
- The availability of power in rural areas was
about 12:30 hours in a day in 2015, which improved to 21:09 hours, and
23.41 hours in urban areas
- Coal import dependency of the power sector is
expected to increase moderately in the near term
Mumbai, June 03, 2022: India faces the twin dilemma of co‐existence of shortage and abundance
in several parts of its energy system. While the provision of electricity has
increased significantly over the years, weak institutions and utility
governance hamper the power sector’s financial performance with issues of
accountability, operational efficiency, customer service, and transmission to
state-level transmission institutions. The sector takes a huge and
grossly unacceptable hit due to extensive losses, leakages and pilferages, and
the cost recovery from tariffs.
These are some major
findings of a report titled Power Sector in India: New Emerging
Opportunities and Challenges released by Infomerics Valuation and Rating
Pvt Ltd., the well-known SEBI-registered and RBI-accredited financial
services credit rating company.
The report explores the
opportunities and challenges ahead for India as it seeks to ensure reliable,
affordable and sustainable energy for a growing population.
During FY20 and FY19, the
growth of electricity generation was lower than in the previous financial years
because of the impact of COVID-19. The report quotes the International Energy
Agency (IEA) stating that during FY21 recovery in electricity demand from the
COVID-19 pandemic was faster and stronger in India than in EU countries.
India is the
third-largest producer and the third-largest consumer of electricity in the
world. With the increasing population, electricity demand is rising at a fast
clip and India has improved its power generation capacity over the years. India
has added more than 500 billion units until FY22 from FY10. The power
generation capacity rose from 808.498 billion units (BU) in 2009-10 to
1,381.827 BU in 2019-20.
The power sector in India
has 395 GW (Giga Watt) installed generation capacity, 203 GW peak power
requirement, 11 per cent installed capacity CAGR (2011-2020) and 67 per cent
required hydropower capacity. The private sector with 48.50 per cent has the
largest installed generation capacity followed by the Central sector (24.90 per
cent) and the State sector (26.70 per cent). Fossil fuel has still higher
installation, generating 2,35,929 Mega Watt (MW) of electricity, constituting
nearly 60 per cent of the total installed generation capacity.
The report takes note of
the current power crisis caused by the paucity of coal. It states that the
continued heatwave has led to a rapid rise in the energy demand in states such
as Punjab, Uttar Pradesh, Maharashtra, Haryana, and Andhra Pradesh. The
northern states are witnessing power cuts amid low coal stocks. Over 150
thermal power plants have a coal shortage problem and the coal stock position
of 173 powers plant stood at the sub-optimal level of 21.93 million tonnes
(MT), which is less than the regulatory requirement of 66.32 MT as of April 21,
2022. But the power demand rose rapidly from 106.6 BU in 2019 to 124.2 BU in
2021 and further to 132 BU in 2022.
The electricity demand
far outstripping the supply despite Coal India recording coal production of 622
million tonnes in FY 22 vis-à-vis 607 million tonnes in FY 21. India’s
current daily power deficit rose sharply from the average of 0.3 per cent to 1
per cent with the dreaded possibility of rising even further. Given the
paucity of options, most States, including Punjab, Tamil Nadu, Andhra Pradesh,
Telangana, Odisha and Bihar, were forced to resort to power cuts, ranging from
two hours to eight hours to meet the widening demand-supply chasm.
The gravity of the
situation, the Infomerics study says, is starkly reflected in the Central
Electricity Authority’s (CEA’s) report on coal stock on May 5, 2022. This
Report underscored that out of 173 thermal power plants, 107 plants had a
critically low stock of coal. Should this scenario of severe coal-stock
shortages persist, the possibility of stagflation in India in the
not-too-distant future cannot be ruled out.
The Infomerics report
states that India is the third‐largest global emitter of CO2, despite low
per capita CO2 emissions. The carbon intensity of its power sector
exceeds the global average. Further, particulate matter emissions are a
major contributor to air pollution, which has emerged as one of India’s most
sensitive social and environmental issues. This is going to be a big challenge
for the policymakers making it necessary to shift their focus to the most
efficient and sustainable energy sources. Strategic measures include improving
the efficiency of supply and consumption of energy, expanding the proportion of
natural gas, and hydropower in the fuel mix, and reducing energy intensity in
the transport sector.
Natural gas and modern
renewable sources of energy have become increasingly important and were least
affected by the effects of the Covid‐19 pandemic in 2020. The rise of solar PV
has been spectacular; the resource potential is huge, and policy support and
technology cost reductions have quickly made it the cheapest option for new
power generation.
India is purposefully
moving towards the achievement of the goal set by the Intergovernmental Panel
on Climate Change (IPCC). The report states that India’s non-fossil fuel-based
capacity met the 40 per cent target under its nationally determined
contribution (NDC) at COP 21. Solar energy capacity is up from 2.63 GW to 49 GW
in the last 7 years.
The report states that India needs a much higher storage capacity for
Discoms. But there has to be undivided attention on the pursuit of
large-scale grid storage to achieve the avowed objective of creating 500 GW
of non-fossil fuel capacity, including 450 GW of renewable energy sources. This
is not easy, but certainly doable, it states.
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