India is aggressively revamping its power sector program to improve transmission and tackle inefficiencies in distribution but there is an urgent need to reach out to consumers, particularly agrarian in a more strategic way.
“India is already beginning to do a lot, revamping its program by using more renewable sources of energy and improving efficiency,” said Mohinder Gulati, chief operating officer of Vienna-based Sustainable Energy For All.
But more importantly, the country needs to improve its distribution system that includes transmission lines and transformers and eliminate losses of electricity, particularly through leakages and theft, which is very high.
“The power sector has to improve the consumer end of the business,” Gulati said. He pointed out that while overall the performance of the power sector has been improving, the weak spot is consumer end of supplies.
One such sector of consumption is agriculture. Gulati stressed on India’s need to deliver electricity efficiently and effectively to the farming sector, which still sees umpteen “uneconomic practices”.
“The pressing issue is not whether you need to give free power but instead the mode of efficient and effective delivery,” he said. Farmers need to be given incentives or motivated to efficiently use electricity and water. The mantras are ‘more crop per drop’ and ‘more crop per mega-watt’. They need to grow crops which are appropriate for their respective agro-climatic zones. If a geographical region is not suitable for growing a particular crop, it should not be opted for simply because growers have access to free power and water.
Among a number of ways to tackle inefficiencies in the power sector, Gulati suggested allocation of power on the basis of megawatt/hour. Such an allocation will compel the farmers to use power efficiently.
An efficient use of electricity and water in the agricultural sector will alter the market outlook as savings from the wastage would increase supply and step up earnings from tariffs.
Once the inefficiency is removed, the cost of power will come down and tariffs can be raised. This will lead to higher ratings on creditworthiness for generating companies, thereby attracting better financing, according to Gulati. He is author of a book, “Direct delivery of power subsidies to agriculture in India”, which was published in June 2015.
It will become easier to arrange financing for those companies which have higher credit ratings. This in turn will help India balance its supply and demand of electricity.
If power generating industry is financially healthy, it can then subsidize power supply to the farmers in a big way, thereby revolutionizing the sector which remains uneconomic due to inefficiencies in work practices.
In a system like that of India, cross-subsidies are inherited but their affordability needs to be taken into account. It is possible to deliver power subsidies to the farmers, even providing electricity to them free of cost, if it is done in a way that the farmers will actually save it, Gulati said.
“The farmers will save electricity and water provided they see a benefit out of it, even though they are getting them for free,” he noted.
There is a need to step up investment and improve the operational and financial efficiency of delivering subsidies.
Gulati applauded India’s achievements in the power sector including the 40,000 megawatt solar program to reach out to some 300 million people who are currently without electricity. This can be achieved in around five to six years. He believes that India’s solar power program is on track to become an international benchmark and model for providing electricity access to around one billion people.
Such a program will not only help India and have global impact but also make global leaders to sit up and take notice.
In the energy sector, on some fronts, India is doing very well. Power generation capacity has been eased. Controversies surrounding allocation of licenses for coal mining have been resolved. Several mines have been auctioned.
Thanks to the open and transparent auctioning of coal mines for power generation, the supply in the domestic sector will be improved. The 30,000-40,000 MW capacity which has been lying idle will now come into the system. This includes coal and new power generation from other sources including renewables. As a result, there will be more opportunities to people for access to electricity and this is a signal for good governance. fii-news.com
