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Power demand healthy, excess supply a worry: Sambitosh Mohaptra, PwC

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Source: The Economic Times
Saturday, July 08, 2017

 NEW DELHI: The government has brushed aside arguments that electricity demand — one of the indicators of economic growth — in India is low and said the problem is of oversupply as companies had invested heavily for profits. 


The power ministry said electricity generation is India is growing at a robust rate. Power consumption numbers are low as they do not include electricity purchased in the open markets and exports, the ministry said. Low power plant utilisation and lack of PPAs is due to the problem of plenty, officials in the ministry said. 

“The latest electricity generation figures released by CEA, reflect a healthy percentage increase over last year of 8.66% for May 2017 and 7.06% for Apr-May 2017. Since, electricity cannot be stored, power generation is the most robust estimate for power demand. The data shows that there is healthy power demand in the country,” said the statement. 

The generation data comprises the gross generation from power plants, other than captive power plants. The consumption data is calculated by the states adding inter-state imports and subtracting inter-state exports, officials said. 

The growth rate in electricity generation in 2016-17 vis-a- vis 2015-16 is 5.83%, the growth rate in consumption during the same period is 4.08%. The difference in growth rates between actual generation and actual consumption is due to sale by private plants to industrial consumers and bilateral trades that go unaccounted for. 

Sambitosh Mohaptra, Partner — Energy & Utilities of PwC, said: “The demand growth is healthy given the flattening of load curves through feeder segregation and energy efficiency measures and it improves PLFs. Prices in short-term market are still keeping the longterm procurement processes in abeyance from states.” 
Industry yardstick is that each percentage growth in GDP has to be accompanied by 0.9% of rise in power consumption. The power ministry official said the country added 42% of the installed generation capacity in 2014 in the last three years. The problem of oversupply is just a mismatch and should be resolved in the next 2-3 years once the market matures, he said. 

Association of Power Producers director general Ashok Khurana said because of capacity explosion in 11th and 12th Five-Year Plan periods, we are suffering from huge excess capacity. It would take another 3-4 years for this capacity to get absorbed. 


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