Power crisis grips country despite cheap electricity spot rates, record capacity

NEW DELHI: The power situation has deteriorated sharply this summer despite the addition of a record 20,000 mw of new capacity last year, but spot prices of electricity have crashed to the lowest ever.

The situation is worst in the southern states, where industries are struggling without power for days as the peninsula is unable to draw power from surplus regions as it is not connected to the national grid.

Large plants fired by coal or gas are idling because of the acute fuel scarcity while state electricity boards are refusing to buy power because they are unable to recover costs because of low tariffs and distribution losses.

Power cuts last as long as 12 hours in villages in the south. Industries in Andhra Pradesh and Tamil Nadu are forced to buy electricity from local captive generators for as high as 8 per unit to run their units.
Tamil Nadu has asked its industries to meet 30% of their power requirement from alternate sources while Andhra Pradesh has declared three days a week power-holiday schedule for big consumers. There is no respite in sight for consumers in south India as the Central Electricity Authority expects power shortage to widen to 26% in the current fiscal from 18.5% in 2012-13.

Power consumers in urban areas of states like Uttar Pradesh, Haryana, Punjab, Uttarakhand and Jammu and Kashmir are facing 6-8 hours of outages. Demand for power in the country rose 6.5% to 123 gigawatts (gw) from 115 gw over the last two months.

The demand being met rose to 117 gw from 107 gw. Power Secretary P Uma Shankar said the crisis is due to a combination of factors like transmission bottlenecks in southern states, state power distribution companies' inability to purchase power, and shortage of coal and gas that has left a large number of power plants idle. "The situation is expected to improve after a national grid is put in place and distribution companies start reviving," Shankar said. Ironically, the country's power generation capacity increased by 20.6 gw in 2012-13 - the largest in any year. Data available with the Central Electricity Authority shows that about 25% of India's power generation capacity is unutilised due to reasons like fuel scarcity and maintenance shutdown.

Average prices on the country's largest power trading platform, India Energy Exchange, dropped to 2.027 per unit in June from 4 in the same period last year. Average prices during peak hours during April-June have fallen to 2.8 per unit against 3.5 in the corresponding period last year and about 8 in April 2010. India Energy Exchange director (business development) Rajesh K Mediratta said, "The power system data still shows shortages of about 2,000 mw in the northern region - Uttar Pradesh (1,900 mw) and Jammu and Kashmir (100 mw). Eastern states like Bihar and Odisha are short by 250 mw and 150 mw, respectively. These states should at least purchase more power from the exchange."