If we go by the popular media narrative, the country is facing acute power crisis. Many states are witnessing scheduled power cuts of 1 to 3 hours. The headlines screaming about worsening coal shortages are scaring the users, as the already hotter summer weather is entering its peak phase in May and June. Some industrial units in the states like UP, Haryana, Delhi, Punjab, Rajasthan, Tamil Nadu and Andhra Pradesh etc., are reportedly considering production cuts, in case power situation worsens further, considering the high cost of diesel based power backup.
The government on its part has outrightly denied any power or coal crisis in the country. The concerned ministry and related officers have also assured availability of adequate coal stock.
Not surprising, the power sector has been one of the most favorite sectors with investors in the past few months. The stock prices of the power sector companies, encompassing the companies in the business of power generation, power transmission, power distribution, coal production & import, and power trading, have done materially better. In particular, stocks of the companies focusing on renewable and clean energy have performed remarkably.
Surprisingly though, the stocks of power backup companies, including generators, inverters and batteries, have done very badly in recent months despite frequent power cuts.
My understanding of the situation is as follows:
· Presently the total installed capacity of power in India is 399.5GW. Out of this 59% (236.11GW) capacity is thermal (coal and gas based); 13% (57.5GW) is hydro; 26% (105GW) is renewable (Solar – 54GW, Wind – 40GW and Biomass – 11GW) and rest is nuclear (6.8GW).
· In the past one decade, most of the new power generation capacities have been installed in the private sector. The addition to the nuclear capacity has been dismal despite the civil nuclear deal having been executed in 2009. The new addition to thermal power has considerably slowed in the past 4years as more and more investment is getting committed to clean sources of energy. The hydro generation capacity is also stagnant, perhaps due to environmental concerns.
· The current daily demand for electricity is about 191.8GW, less than half of the installed capacity. The current supply is 186.6GW, resulting in about 5.2GW of shortages. Obviously it is not the paucity generation capacity which is responsible for power shortages. It is obviously the availability of fuel (coal & gas for thermal and water for hydro) that is hindering the power supply.
· Failure in implementing reforms in the coal sector; failure in securing adequate gas supply for gas based plants; failure in securing adequate supplies for nuclear energy; are some of the primary reasons for the frequent power crisis.
· We have committed to very ambitious clean energy targets. This definitely requires meticulous planning and execution of the transition from the legacy power generation structure. There appears to be a huge lag in managing the transition. The focus appears to have completely shifted to the 2030-2040 clean energy goals. Not enough planning seems to have been done for the transition period (2022-2030) requirements. The consumers are obviously suffering.
(All charts and Data sourced from the National Power Portal)
