India sees lowest plant load factor in 15 years; power capacities operating at 65%

[anant_s]

NEW DELHI: The Modi government has claimed several records in the power sector in its first year in office, including the highest annual capacity addition ever and the best generation growth in two decades with output touching the trillion unit mark. What it hasn't pointed out is that 2014-15 also recorded the lowest plant load factor in over 15 years with the country's power capacities operating at a mere 65%.

That the power sector, which till recently was only worried about fuel supplies, is sitting on a fresh time bomb has been brought to Prime Minister Narendra Modi's attention by top government officials in a recent meeting to assess infrastructure sectors. "Now we are staring at a new power crisis that requires an expeditious intervention.

There are no takers for all the generation capacity that is in place. There is demand but they don't have the money to pay for the power due to the health of the discoms (state distribution companies)," a senior government official told ET, adding that discoms across all states had incurred accumulated losses of Rs 2.51 lakh crore in 2012-13.
In 2014-15, 22,566 MW of capacity was commissioned, which officials and experts said were stuck in the pipeline for years till they were put on the fasttrack by the UPA in its fag end through the Cabinet Committee on Investments.
India now has an installed power capacity of 158,000 MW with 30,000 MW more in the pipeline. Another 1,00,000 MW would be added from solar power over the next five years, as per the government's plans. "Who will buy all this power if discoms are unhealthy?" said another official aware of the presentation made to the Prime Minister by the NITI Aayog on May 2 where the issue was red-flagged.
"The PM was informed that if this situation continues, it will become a very big problem and must be looked into now," he said. "The average gap between power generation costs and tariffs charged by state discoms is now 82 paise and makes generation unviable," the official said, adding that power firms already owe Coal India around Rs 8,000 crore as they haven't been paid by discoms.
A bigger worry, said experts, is that no new power generation project has been announced in the past two years and the low PLFs as well as lack of clarity on bidding parameters for new ultra mega power projects has made investments unattractive for now.

"We are back to the 1990s for the power sector with plant load factors in the low sixties. My worry is even if we tide over this crisis, there will be a bigger supply crisis four year from now when demand would rise further but no new plants are slated to come up," said Kameswara Rao, leader energy, utilities and mining at consulting firm PwC.
At current utilisation levels, electricity producers may still be able to service their debt, but their profit margins would take a serious hit, Rao said, stressing that this is a key reason for prospective investors to put off any greenfield project plans.

Officials said that the plant load factor would remain under stress till tariff reforms are pursued with states. And unless state distribution utilities are made viable and tariff reforms are pushed again, the government's 24X7 power promise would face a serious challenge.

"Just six state discoms are not in the red - Karnataka, Gujarat, Punjab, West Bengal, Delhi and Sikkim and transmission and distribution sectors require an investment of Rs 3 lakh crore," said an official referring to the NITI Aayog presentation to the PM. Top cabinet ministers, including Finance Minister Arun Jaitley, power and coal minister Piyush Goyal, oil and gas minister Dharmendra Pradhan and transport minister Nitin Gadkari, were present at the meeting.
Rao said discom accounts are significantly delayed and often don't reflect that they haven't been paid receivables from their own state governments, so the their accumulated losses may be far worse by now than the Rs 2.51 lakh crore figure for 2012-13.

With power secretary PK Sinha retiring this month, his successor to be picked soon by the Prime Minister-led Appointments Committee of the Cabinet would have his plate full, said an official, referring to the new challenges that have arisen in the sector that the government is gearing up to counter. "The focus is now more on transmission and distribution sector," said a power ministry statement, recapping its 'record achievements' in the government's first year on Wednesday.
India sees lowest plant load factor in 15 years; power capacities operating at 65% - The Economic Times

 

[anant_s]

Paradox
After coal block auction, record production of coal has taken place and this is showing reflection on increase in generation of thermal power plants. unfortunately we still see several areas in India (especially Domestic consumers and small businesses) running without power. This situation can directly be attributed to following factors:
1. Relatively poor inter grid connections.
In a country of our size Thermal power generation is quite attractive in eastern states having large coal reserves along with large hydel power generation potential.

As we have it most industrialized regions are either in south or West, requiring power transmission over large distances. Here comes the efficiency and capacity of inter-grid lines.

Presently Power grid is slowly upgrading its network to seamlessly transfer power from one region to other by use of High Voltage DC transmission lines (HVDC) rated at 765 kV and above. However slow start in this sector and funding has been issues that has led to poor inter-grid connectivity that has often led to regional grids collapsing.

2. Distribution companies in several states and cities running in losses.

In 2012 the cumulative loss for all power distribution companies was around 2,00, 000 Crores (yes 2 Lakh Crores).
The basic reason behind this figure is the way power business is conducted in India. Most times distribution companies which are a final interface between generation sector and customers aren't allowed to work freely. People in a lot of parts are reluctant to pay for their bills which leads to losses and in turn this leads to a cascading effect with money not reaching the generation utility.
Coupled to this is the Transmission and Distribution losses which unfortunately are among the highest in India.

Each percentage of T&D loss reduced amounts to adding to generation not to mention reducing environmental impact.
Unless these companies work in a free and transparent environment (much like fuel sector companies do), little will change for an average consumer and industry.

3. Populist policies & Political interference
Probably the single biggest reason behind the mess. Power and electricity is a sensitive issue considering how its scarcity exists in certain parts of country and its direct impact on agriculture and business. Political parties realize this well and use the sector to further their political agendas. this leads to supply of power at dirt cheap rates to consumers which invariably default payment and that leads to burden on utilities first and later on states financial position.
a lot of parties promise free power which essentially is paid by tax payers money and in the end leads to a skewed revenue model where utility doesn't know when and how it is going to get its money.
The effect of this business model leads to a situation where new capacity addition cannot be done for want of funds and distorted revenue model, which further cripples industry and users. Ultimately the situation gets to a vicious cycle of negative feedback loop.

Successive governments have attempted to correct the situation but lack of clarity and will to drive hard reforms in the sector (especially distribution policy matters) have led to a situation where India in spite of one the biggest electricity generators, still is a long distance from achieving the goal of 24 hr in-interupted power supply to all.

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@thesolar65 @Chanakya's_Chant @Rain Man @SpArK @scorpionx @levina @Manindra @Echo_419 @Abingdonboy @hinduguy @Hindustani78 @Bang Galore @Skull and Bones @Capt.Popeye @ other members especially those who work in Indian power sector

 

[Echo_419]

Paradox
After coal block auction, record production of coal has taken place and this is showing reflection on increase in generation of thermal power plants. unfortunately we still see several areas in India (especially Domestic consumers and small businesses) running without power. This situation can directly be attributed to following factors:
1. Relatively poor inter grid connections.
In a country of our size Thermal power generation is quite attractive in eastern states having large coal reserves along with large hydel power generation potential.
View attachment 225714 View attachment 225715
As we have it most industrialized regions are either in south or West, requiring power transmission over large distances. Here comes the efficiency and capacity of inter-grid lines.

Presently Power grid is slowly upgrading its network to seamlessly transfer power from one region to other by use of High Voltage DC transmission lines (HVDC) rated at 765 kV and above. However slow start in this sector and funding has been issues that has led to poor inter-grid connectivity that has often led to regional grids collapsing.

2. Distribution companies in several states and cities running in losses.
View attachment 225727
In 2012 the cumulative loss for all power distribution companies was around 2,00, 000 Crores (yes 2 Lakh Crores).
The basic reason behind this figure is the way power business is conducted in India. Most times distribution companies which are a final interface between generation sector and customers aren't allowed to work freely. People in a lot of parts are reluctant to pay for their bills which leads to losses and in turn this leads to a cascading effect with money not reaching the generation utility.
Coupled to this is the Transmission and Distribution losses which unfortunately are among the highest in India.
View attachment 225726
Each percentage of T&D loss reduced amounts to adding to generation not to mention reducing environmental impact.
Unless these companies work in a free and transparent environment (much like fuel sector companies do), little will change for an average consumer and industry.

3. Populist policies & Political interference
Probably the single biggest reason behind the mess. Power and electricity is a sensitive issue considering how its scarcity exists in certain parts of country and its direct impact on agriculture and business. Political parties realize this well and use the sector to further their political agendas. this leads to supply of power at dirt cheap rates to consumers which invariably default payment and that leads to burden on utilities first and later on states financial position.
a lot of parties promise free power which essentially is paid by tax payers money and in the end leads to a skewed revenue model where utility doesn't know when and how it is going to get its money.
The effect of this business model leads to a situation where new capacity addition cannot be done for want of funds and distorted revenue model, which further cripples industry and users. Ultimately the situation gets to a vicious cycle of negative feedback loop.

Successive governments have attempted to correct the situation but lack of clarity and will to drive hard reforms in the sector (especially distribution policy matters) have led to a situation where India in spite of one the biggest electricity generators, still is a long distance from achieving the goal of 24 hr in-interupted power supply to all.

------------------------------------------------------------------------------------------------------------------------------------------------------

@thesolar65 @Chanakya's_Chant @Rain Man @SpArK @scorpionx @levina @Manindra @Echo_419 @Abingdonboy @hinduguy @Hindustani78 @Bang Galore @Skull and Bones @Capt.Popeye @ other members especially those who work in Indian power sector

Damm we need to solve this problem ASAP
On topic
Populist policies of some parties are the main coluprits

 

[Bang Galore]

This is something I have been aware of for some time. Most state DISCOMS deliberately prefer load shedding, rather than buy power for which they will be unable to pay and state governments are not willing to do the right ting & pass on the costs or provide budgetary support to cover any subsidy.. People who ask why populism like that done in Delhi by the AAP government should not be encouraged should read such articles.

 

[SrNair]

Damm we need to solve this problem ASAP
On topic
Populist policies of some parties are the main coluprits

Subsidy is the real problem.Subsidising tariff isthe real populist policy.
Just an example.The NTPC kayamkulam generates power for rs 18/ unit.But our KSEB cant sell at that rate to our citizen.So they have to subsidise it around 2 or 3 rs / unit.Still the electricity of a middle class will touch 1000+.
So what would be the consequence if they use Rs 20/ unit.?
Of course same thing happens in other states.Reason is simple Indians dont have that much of buying power or income.
We need to optimise entire power structure.Should implement strong mesures for power thrft and I2R losses.We should also upgrade our grid structure.

 

[Nicky G]

Infrastructure can and will get better. Unfortunately populism and political interference and public behavior of not paying for their consumption are very hard to correct, if possible at all that is.

All direct subsidy should end, all support must be through direct cash transfer. Only way to minimize distortion of any sector.

GoI took quick action to ensure coal blocks, lets see what steps they take here.

 

[Manindra]

Currently we are power surplus nation, but who will buy electricity if states didn't . States like UP, Bihar still have crippling loadshedding.

 

[anant_s]

This is something I have been aware of for some time. Most state DISCOMS deliberately prefer load shedding, rather than buy power for which they will be unable to pay and state governments are not willing to do the right ting & pass on the costs or provide budgetary support to cover any subsidy.. People who ask why populism like that done in Delhi by the AAP government should not be encouraged should read such articles.

Electricity like any other commodity must be treated in same manner of applying market rules.The problem is that government still tries to control the usage pattern of electricity. In a healthy business environment, a company should be able to sell electricity to its paying customers and correspondingly customers be happy to pay for it. With money flowing smoothly, companies should be able to invest in expanding their capabilities (in line with growing demand) and improve quality of services.
Unfortunately this basic paradigm is all but absent in electricity sector. I mean one visit to state power distribution office and you'll know they are providing power more as formality of doing job than actually thinking about ways of improving business. They know well that only a part of billing they do is actually going to come back. Results poor infra-structure, long power cuts, people resorting to theft of electricity and it goes on.

Subsidy is the real problem.Subsidising tariff isthe real populist policy.

Absolutely sir.
and it is ridiculous as to why electricity should be subsidized and not charged as per its actual cost. More so when we know that the subsidy is actually funded by the tax payers money.
De-regulating the market is the only way forward. i recall last PM Dr Singh's remark when Diesel subsidy was gradually being reduced, he said that in an open economy let markets find their own level of pricing, government cannot intervene beyond a level.
Electricity isn't that simple an issue, but creating a mess in the sector in name of caring for poor or subsidies must stop. & we musn't forget tariff rationalization.

 

[SrNair]

Not that easy until we get a profitable power generation method .
Our citizens are not there yet to take that weight in to their shoulders .

Another solution is the billing of rich and upper middle class like that of private companies ,by adding profits etc .
Common man cant bear an expense of 10+ rs / unit at the current scenario.

So we need subsidy for a certain extent.

Electricity like any other commodity must be treated in same manner of applying market rules.The problem is that government still tries to control the usage pattern of electricity. In a healthy business environment, a company should be able to sell electricity to its paying customers and correspondingly customers be happy to pay for it. With money flowing smoothly, companies should be able to invest in expanding their capabilities (in line with growing demand) and improve quality of services.
Unfortunately this basic paradigm is all but absent in electricity sector. I mean one visit to state power distribution office and you'll know they are providing power more as formality of doing job than actually thinking about ways of improving business. They know well that only a part of billing they do is actually going to come back. Results poor infra-structure, long power cuts, people resorting to theft of electricity and it goes on.

Absolutely sir.
and it is ridiculous as to why electricity should be subsidized and not charged as per its actual cost. More so when we know that the subsidy is actually funded by the tax payers money.
De-regulating the market is the only way forward. i recall last PM Dr Singh's remark when Diesel subsidy was gradually being reduced, he said that in an open economy let markets find their own level of pricing, government cannot intervene beyond a level.
Electricity isn't that simple an issue, but creating a mess in the sector in name of caring for poor or subsidies must stop. & we musn't forget tariff rationalization.

 

[Echo_419]

Subsidy is the real problem.Subsidising tariff isthe real populist policy.
Just an example.The NTPC kayamkulam generates power for rs 18/ unit.But our KSEB cant sell at that rate to our citizen.So they have to subsidise it around 2 or 3 rs / unit.Still the electricity of a middle class will touch 1000+.
So what would be the consequence if they use Rs 20/ unit.?
Of course same thing happens in other states.Reason is simple Indians dont have that much of buying power or income.
We need to optimise entire power structure.Should implement strong mesures for power thrft and I2R losses.We should also upgrade our grid structure.

A common man cannot bear that amount what we need is a cheaper way to gebrate power

 

[gslv]

NTPC kayamkulam generates power for rs 18/ unit.

18₹ holy shit. Even nuclear power comes below that I guess.

 

[Chinese-Dragon]

Well, Modi is doing the right thing by installing more power generation capacity, since that is usually a bottleneck for growth in developing countries.

But with super-socialists like AAP ruling in Delhi (free water, free electricity!) what can be done?

 

[nair]

Reduce the distribution losses, Make Led lamps affordable......probably the simple solutions....... You can not do anything about hydro power generation........ Those activist wont allow you to develop.....

 

[Chanakya's_Chant]

India sees lowest plant load factor in 15 years; power capacities operating at 65% - The Economic Times

This is something I have been aware of for some time. Most state DISCOMS deliberately prefer load shedding, rather than buy power for which they will be unable to pay and state governments are not willing to do the right ting & pass on the costs or provide budgetary support to cover any subsidy.. People who ask why populism like that done in Delhi by the AAP government should not be encouraged should read such articles.

An interesting insight into why discoms create power-cuts-

Watch: Truth vs Hype - The Myth of Power Crisis - NDTV

(Minute 14:00...)

Does India have a severe shortage of power?

Gireesh Pradhan, chairman of the Central Electricity Regulatory Commission: "we have approximately 250.000 megawatt of capacity...
...our demand is around 135.000 megawatts. That's because if the intensive supply side push that was given over the past few years...which is almost the 5th largest in the world...on paper yes of course, we have enough power available.
After that they explain why the power will not be forwarded or why the distributors create powercuts. All in all a very interesting report.

Via @sancho !

We recently upgraded our major transmission lines linking India’s five regional grids from 400 kilovolts to 765 kilovolts. We have around 26% power loses but the problem is not actually the transmission line but theft - 80 percent of power loss is theft!

India will spend 253 billion rupees ($4.1 billion) to tackle rampant theft of electricity by rolling out metering in cities and upgrading old distribution networks.

India to invest $4 billion to tackle power theft | Reuters

Meanwhile interestingly factories and businesses across India are switching to their own solar electricity grids and are even exporting/selling the balance to others.

Power-hungry businesses build their own solar plants| Reuters

 

[magudi]

Power deficit is at a record low of 3.6%: Power Minister Piyush Goyal | Latest News & Updates at Daily News & Analysis

Piyush Goyal