Meenakshi Vashist Founder & CEO TekUncorked

21 Nov 2023

The roots of the Indian power sector can be traced back to the late 19th century. The Calcutta Electric Supply Corporation, established in 1899, was the first power-generating utility in India. It provided electricity for street lighting and soon expanded its services to commercial and residential areas. Around the same time, Jamsetji Tata founded the Tata Hydroelectric Power Supply Company in 1910, which constructed the Khopoli hydroelectric power plant, marking India’s first hydroelectric power project. When India became an independent sovereign nation in 1947, electricity and power were generated by coal and hydro. These two sources generated roughly 1,362 MW of power and were produced and supplied chiefly by private entities. The Electricity Supply Act of 1948 created the groundwork for individual states to put into effect power development programs via State Electricity Boards (SEBs). It was also the tool that created The Central Electricity Authority (CEA) which acts as a statutory body to advise the government on power generation, transmission, and distribution. Under this Act, a few selected major cities were allowed to run their own power systems.

The India Power Gap

The demand for power grew at a rate that outstripped supply. In the mid-1970s, the Government of India began to set up huge coal and hydroelectric power generating and distribution systems to satisfy the demand. Thus, the National Thermal Power Corporation (NTPC) and the National Hydroelectric Power Corporation (NHPC) were born. In 1989, the National Power Transmission Corporation (NPTC) was set up to integrate, operate, maintain, and provide overall coherence to the numerous production and distribution systems. This institution was later named Power Grid.

Addressing India’s Power Sector Challenges

India’s rapid economic growth heavily relies on a consistent power supply, vital for industries, manufacturing, and overall productivity. Over the next 20 years, India is set to experience the largest increase in energy demand of any country worldwide. However, while India boasts over 350 GW of installed capacity, there’s a considerable gap between capacity, generation, and actual supply to consumers. Rural areas still struggle with unreliable power access, and over 300 million people remain without reliable electricity. The Plant Load Factor for industries has declined from 77.5 percent in 2010 to 58.87 percent in 2022, underscoring the need to address this issue for India’s energy security. 

The Challenges in India’s Power Sector

The power sector faces several challenges, including transmission losses, last-mile delivery issues, power theft, and flawed pricing. Aging transmission infrastructure and inefficient systems contribute to high transmission and distribution losses, which stand at 21.09%, double the global average. Over the next 20 years, India is set to experience the largest increase in energy demand of any country worldwide. However, these positive growth signs notwithstanding, the supply side of India’s energy sector is underperforming. Despite the 350 GW Meenakshi Vashist Founder & CEO TekUncorked TEKUNCORKED The India Power Gap www.electricalmirror.net || November 2023 || ELECTRICAL MIR ORR 93 gross installed capacity, data shows that demand was not met. While significant progress has been made in expanding electricity access, some rural and remote areas still lack reliable power supply.

The Magnitude of These Power Issues India generates nearly 1.5 trillion units of electricity annually, with 300 billion units failing to reach consumers. Across India, the aggregate commercial and technical losses are 15-40 percent. Urban areas face regular power cuts, while rural India experiences erratic supply. These challenges hinder economic growth and the overall quality of life.

A Bird’s Eye View of India’s Power Sector Challenges

While India has become power generation sufficient, the power sector faces numerous problems. They range from generation and transmission losses to last-mile delivery to theft to flawed and inaccurate pricing. According to the Central Electricity Authority (CEA), India is facing an energy shortage of 0.7% and a peak power shortage of 0.8% which is a significant shortfall given India’s population of over 1.3 billion people. Most of the existing transmission grid, in India, is over 25 years old. However, this is not unusual as power infrastructure generally remains fully functional for over 50-60 years, with timely maintenance and upkeep. For a vast and populous country like India, the distribution grid network has at least one power infrastructure equipment every 2 square km. Real-time maintenance and upkeep of such power networks distributing electricity to an area of over 3 million square km is a real challenge. The rapidly growing demand for electricity by all sectors of the economy continues to increase the stress on the existing infrastructure. This, of course, requires serious long-term investments and clear policies to cut down losses in the grid, increase protection and safety, and improve demand, load management, and reliability of electricity distribution. Transformers account for nearly half of the transmission losses. Inefficient transmission and distribution systems contribute to technical and commercial losses during power transmission. Losses usually occur because of the resistance or impedance of wires, conductors, and other equipment as electricity passes through them. Power generation stations are often far from high-usage urban and industrial locations. At this time the country has set up some 4.6 lakh circuit km of transmission lines. These lines stretch over inhospitable terrain and vast distances. The consequence is high losses in distribution. To further compound the problem the distribution is marked by random, scattered, and disorganized sub-transmission systems creating further transmission losses. A sensitive topic, if unavoidable, is that much of the losses that distribution companies face is power theft. In the period 2021-2022, there was an estimated loss of around INR 157 crores due to theft! Less than half of that was recovered. Consumers tamper with meters in a number of ways including bypassing them altogether. Another typical method is to bribe meter readers. Unmetered supply, and free and even heavily subsidised tariffs to farmers are other reasons. Defective meters and faulty billing are also causes contributing to revenue and transmission losses.

Positive Government Initiatives

The Government of India has initiated efforts to enhance the power sector’s sustainability, including improving plant load factors, SEB liquidity, and fuel supply coordination. Inter-regional grids and load management through regional electricity boards aim to optimize power exchange. Strengthening state electricity boards’ financial viability and operational performance is essential for the power sector’s sustainability.

Moving Forward

As India’s economy grows, addressing power sector challenges becomes paramount for energy security. Embracing innovative solutions empowers consumers and utilities to make informed decisions, reduce wastage, and ensure a reliable power sector. Bridging India’s power gap is crucial for the nation’s brighter future, and innovations to overcome these pressing issues need to be pushed forward.