Surprise! India now has too much electricity – and it’s not good news

With the successful push for tapping the renewable energy, India, which once faced electricity shortage, now has too much of it. India’s gross electricity capacity is much higher than the demand. “For a change, shortfalls have fallen dramatically and there is talk of “surplus” power,” a report by Brookings India said.

However, as every electricity grid operates in a balance between supply and demand, usually with a slight surplus of capacity to meet eventualities and uncertainty—too much surplus becomes expensive, the report warned. One the biggest problems could be having a surplus average energy but not having surplus capacity all the time.

“Renewable Energy (RE) creates particularly acute issues for the grid since it is both variables as well as likely available only at specific times,” the report said, adding that the target of 175GW renewable energy production by 2022 is “top-down”, set by the central government, and doesn’t incorporate much (if any) feedback by DisComs on how much power of what type is needed by that year.

“…load-shedding is often an economic issue where state utilities (the distribution companies, or DisComs) are not buying sufficient power because they are cash-strapped and bleeding money,” the report added. Moreover, another challenge is that the coal-based capacity has grown at over 12% annually, double the growth rate of power demand. This creates a lot of overhang that impacts grid economics.

The challenge is also the targeted 175 GW of RE is disproportionately concentrated in a handful of states. Karnataka today already has almost 5 GW of solar and more of wind, far ahead of its targets. “The entire systems planning has to shift from one of managing scarcity to managing surplus, at least for parts of the day or year,” the report said.

The problem of higher supply of power as compared to demand was also highlighted by NITI Aayog CEO Amitabh Kant, who said that unless the demand for power is created, the woes of power companies would not end. Discoms in India, so far, have suffered losses due to corruption, electricity theft and non-repayment of bills. To pull discoms from the abyss, the government launched the ‘UDAY’ bailout scheme. However, the electricity surplus seems to have been posing another risk to these discoms.

Source- Financial Express