New Delhi: A power crisis is looming large on India and the country needs to immediately start planning coal-based power plants and transmission corridors to avert it, experts have cautioned. This is in stark contrast to statistics
of the country’s electricity authority that showed planned capacity is enough to meet peak hour demand till 2026-27.
Adding only renewable generation capacity will add to the woes in tackling the unprecedented rise in demand due to higher industrial activity, new domestic connections and states’ resolve to improve power availability, industry experts have said.
“Not factoring incremental peak demand from revival in industrial activity, our existing capacity and pipeline can at best meet projected peak demand till FY23, post which we will start running peak deficit,” a recent report by ICICI Securities said.
According to experts, the country is already late in planning thermal capacity that have very long construction periods. Also, possibilities of the sector getting fresh investments in the near term look bleak with about 50 GW stressed capacity and coal-based plants operating at just about 60% capacity.
Close to 30 GW power assets are likely to move to bankruptcy court as banks have not been able to arrive at resolution. While renewable projects are getting financed, thermal assets are not likely to get lenders because of banks’ over exposure, sectoral stress and fuel crunch, experts said.
According to the ICICI Securities report, the country reported peak power demand of 177 GW in September, an increase of 13 GW over FY18 peak demand — the highest year-onyear growth since 1993-94.
“Record peak demand increase in FY19, driven by increased domestic demand, new connections under Saubhagya and reduction in load shedding, appears structural,” the report said.
“Against this, adjusting installed capacity and pipeline with historical availability factor, foretells the end of current ‘peak surplus’ scenario by FY23.
To prepare for life beyond FY23, we need to ramp up capacity addition planning, or prepare to face another high price/supply deficit scenario,” it said. India’s installed capacity is 346 GW with ability to meet about 190 GW peak demand, to which 5-10 GW is likely to get added through plants under construction.
Renewable plants contribute little towards meeting peak demand as their variable nature renders them unreliable, the report said. Also, more non-renewable inter-regional transmission capacity addition is needed and capex planning for remaining 80 GW renewable power evacuation has to be done, it said.
“We have come to the conclusion that Saubhagya’s impact has been and is expected to be much sharper on peak demand than base demand… Pickup in industrial demand will positively impact both base and peak demand, which will require generation and transmission capacity additions, something we do not believe is being currently built-in,”
the report said.
The Central Electricity Authority’s National Electricity Plan early this year had said India would need addition of only 6,440-mw thermal power during 2017-22.
Association of Power Producers director general Ashok Khurana, however, said the demand-supply position may change drastically in the next three-to-four years “with slowdown in new capacity addition coupled with retirement of 40 GW of old capacity”.
“To avoid power shortages at the beginning of 14th plan, we need to initiate well thought of strategy of increasing coal and power production,” Khurana said. “For meeting power requirements now and in future, coal sector has to be commercialised. Coal India NSE 0.59 % cannot deliver the required quantum.” A senior executive with a power firm said there is a clear trend that peak demand is growing much faster than the base demand.
“If the current fuel shortage is not resolved or coal reforms do not take place, we are staring at huge power deficit country by 2022,” the person told ET. “At the same time, planning for new capacities also needs to start at the right earnest, looking at the healthy energy demand due to Pradhan Mantri Housing Scheme and Saubhagya scheme,” he
The ICICI Securities report said that with improvement in financials after debt transfer or re-pricing under UDAY and the central government’s push for ‘24×7 Power for All’, there had been 32% reduction in declared load shedding in 2017-18 over FY17 to 7.7 hours per month from 11.3 hours per month.