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India power plants stranded as discoms scramble to connect 50 million homes

LiveMint logoLiveMint 10-06-2017 Anindya Upadhyay

New Delhi: India is scaling back expectations for power demand growth as it struggles to electrify millions of homes despite a glut in generation capacity.

The world’s second-most populous nation is building more power plants than it can utilize as state-level distributors struggle to connect 50 million households, according to Ravindra Kumar Verma, head of the Central Electricity Authority (CEA), the power ministry’s planning arm. As a result, about 25 gigawatts (GW) of coal-fired power-generating capacity is “stranded” and unused, he said. That’s equivalent to the entire installed capacity of neighbouring Pakistan.

Demand growth for power is slowing as state distribution companies, known as discoms, struggle to purchase enough electricity for the populations they serve. Most discoms lose money selling below cost to poor and agricultural customers and through power theft. The CEA defines demand as the amount of electricity that distributors buy, not necessarily how much would be needed for the whole country, helping explain why millions still lack power and several cities face regular blackouts despite the under-utilized capacity.

“We were thinking that the entire demand will come on the system, but it has not happened that way,” Verma said in an interview in New Delhi on Tuesday. “When discoms turn around is the point when we will get close to 24/7 power. That’s where all the constraint lies.”

Electricity use is estimated to grow 6.2% a year over the six years ending March 2022. Consumption over the previous six years expanded 5.3%, missing a 7.6% forecast, the CEA said in its latest power survey report published this year. The lower-than-expected growth rate led the agency to temper its outlook, Verma said.

“Projections are estimated growth rates worked out on the basis of certain assumptions. If the assumptions slip, then projections are hit,” he said.

India is on track to add 102 GW of conventional power projects in the five years ended March 2017, compared with a target of 88.5 GW, according to country’s Draft Electricity Plan published in December. At the same time, the country’s gas-fired plants, which can generate nearly 25 GW of power, are running at less than a quarter of their capacity, according to the plan. The country’s capacity totaled 329 GW, with more than half of that coming from coal-fired plants, according to CEA data. Bloomberg

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