Power Demand Set to Grow in Post-Pandemic Phase; is Power Industry ready to deliver?

Posted on 15 Apr 2021

It was over a year ago that Prime Minister Narendra Modi announced a nationwide lockdown and businesses, except the essential services, stopped functioning. Yes, it was the first such kind of experience for Indian businesses and its public in recent memories.

Though the pandemic-induced lockdown was lifted in stages and industries began functioning in a calibrated manner, the demand for power was low. As a cascading effect of the outbreak of coronavirus and the lockdowns that followed it, power demand was less as compared to pre-Covid days. This is however changing with industries back in business and another nationwide lockdown a remote possibility. But is the power industry ready to brace up to the demands?

The pandemic hasn’t disappeared from the scene completely but it looks the country is more confident than it was a year ago when the lockdown was announced. Things aren’t as gloomy as they were a year ago when people didn’t have any safety shields to protect themselves from the pandemic. India has initiated one of the biggest vaccination drives in the world starting with health workers and 60+ and currently 45+ being administered vaccination shots.

Very soon those below 45 will also be administered the vaccines, either Covishield or Covaxin or any other vaccines that may come up. Interestingly the country is also a major supplier of the vaccines produced by Serum Institute and Bharat Biotech to a number of countries across the globe.

As per data reviewed by Reuters, India’s power demand fell in 35 years by 1 per cent during the financial year which ended in March 2021. Power demand has since then picked up with generation growing by around 23 per cent as per the data from Power System Operation Corporation (POSOCO), a Government of India owned entity. This was the seventh consecutive monthly increase since August 2020 when most parts of India emerged out of the lockdown and also the fastest since March 2010.

The demand steadily grew with most of the industries beginning to function in full swing and with temperatures soaring in various parts of India and with the onset of summer months ahead, the demand for power will keep increasing. The recently published India Energy Outlook 2021 says that India is the world’s third largest energy-consuming country on account of rising incomes and improved standards of living. India’s population is expected to increase further in the coming years and to meet the electricity demand in the next 20 years the country needs to add a power system of the size of the European Union to what it has now.

India is embarking on its smart cities mission to drive economic growth and improve the quality of life by harnessing technologies that would lead to smart outcomes. The infrastructure development that needs to happen as these smart cities are built will bring forth demand for power and the power industry has to brace itself to it.

According to the Ministry of Power, Government of India, India’s power consumption grew by 47 per cent in the first week of April to 28.34 billion units as against a year ago when almost 90 per cent of business activities were shut. Power demand in the first week of April touched its highest level of 181 GW on April 7, 2021, reflecting a robust recovery in industrial and commercial demand for electricity.

Traditionally, in India, the demand for power is met by coal and Coal India Limited (CIL) is ever ready to meet any surge in demand from the power industry. Following the Paris accord and the calls for raising the standard of living by providing cleaner and more reliable electricity, the country is transitioning to meeting power demands through renewable energy sources, achieve sustainable growth and reduce collateral damage to the environment, albeit gradually.

The government of India has set an ambitious target of around 450 gigawatts (GW) of renewable energy capacity by 2030. The country is already working on the target of 175 GW of renewable energy by 2022 which includes 100 GW of solar and 60 GW of wind energy.

The outbreak of pandemic and economic slowdown may slow down things but nevertheless, the government’s ambition is clear. It was in furtherance of this that the government announced a provision of Rs.1,000 crores to the Solar Energy Corporation of India (SECI). Additionally, it also announced a capital infusion of Rs.1,500 crores to the Indian Renewable Energy Development Agency (IREDA). With the government’s unwavering commitment, there will be increased uses of cleaner sources of energy to meet electricity demand in India.

Power industry stakeholders now need to ramp up power production which calls for immediate intervention from the think tanks of the industry. For this, they need to ensure the smoother functioning of transmission and distribution systems. Overhauling the tariff structure with lower commercial and industrial tariffs will also help. India needs to emulate countries such as Germany, Japan, the United Kingdom, and the United States of America where tariffs are lower.

The industry must efficiently address flaws in distribution and ensure a reliable supply of power for consumers. Power consumption with India’s exploding population and increase in per capita usage is estimated to reach 1,894.7 TWh by 2022, as per Ministry of Commerce and Industry estimates.

Often consumers buy new connections when they have access to uninterrupted power and this becomes one of the key factors in increasing per capita power consumption. Furthermore, the power sector needs to augment and modernize its power grids to control outages and tripping problems. It also needs to address large-scale power theft, faulty billing, and inordinate delays in new connection procurement, besides ensuring the sector’s economic stability. These have been perennial problems that have beleaguered the power sector and it will need a more holistic approach to fix these glitches.

The Government of India should take a lead in bringing forth path-breaking reforms with full support from the various state governments. The government’s decision to privatize discoms in union territories is being seen as a step in the right direction and industry analysts say that reforms of such kind will bode well for the power sector. Increased participation in the distribution of power is expected to enhance quality services, provide healthy completion, and reduce financial stress.

The power sector has grown amicably in the previous decade and continued to do well during the Covid crisis. It now needs to reap the benefits of the prevailing positive sentiment through aggressive distribution reforms, indigenous R&D and technology development and creating an ecosystem for growth. The sector needs to tune itself to the expected rise in demand from industrial sectors with an efficient supply and delivery network.

Once the domestic needs are fulfilled then the sector can explore possibilities of exports. Already plans are afoot to link the electricity grid with Middle East countries as well as South Asian nations to share non-conventional sources of energy with them. Many solar projects are also underway in states like Rajasthan and Gujarat and the government believes that the energy produced from these sources can be sold domestically as well as overseas.

The government’s National Solar Mission aims to enhance solar capacity to 100 GW by 2022 and make India a leader in solar energy. As these developments take place smoothly the country’s rising power demands can be met and for this, the government, as well as the power industry, should be ready for good investments in renewable forms of energy and not look at coal alone for getting power. Alternatives sources need to be explored fully which will bode well for the country’s energy demands in the coming years.

The author is a Delhi based journalist and can be contacted at prasad.n@indoen.com