One India, lit up

Problems and possibilities of the national power grid

Natural systems have a simple property: surpluses in one place flow to areas where there are deficits. Economics managed to "theoremise", as it were, this rule in the famous Stolper-Samuelson theorem that said if there were no barriers, the prices of capital and labour would tend to equalise across countries. But India is a country that specialises in barriers - social, political, technological, administrative and economic. Not that it doesn't also sometimes remove them. It does - as its latest success shows, whereby at long last the southern power grid has been connected to the national grid. The government is rubbing its hands in satisfaction that this has been done a few months in advance. It forgets that the three or four months saved in 2014 do not make up for the years and years lost till January 1 when a 765-kilovolt transmission line between Raichur and Solapur was lit up.

Still, better late than never - and some sort of congratulations are in order because the southern grid ranks third among the five regional grids in terms of power consumption. Until now it has been chronically short. At the minimum it used to be short of around six per cent and at the most around 15 per cent. Ideally, these shortfalls should have been made up by local power stations. But that did not happen, in part because Kerala refuses to have any "dirty" industries and, indeed, has had the cheek to tell Odisha, Karnataka and Tamil Nadu that it will help put up its power stations in those states. India will now have the entire 230 gigawatts of installed capacity available for use by everyone. Essentially, the crucial development was the commissioning last week of a link between Solapur in Maharashtra and Raichur in Karnataka - the former is on the western grid and the latter is on the southern grid. The concern is that in response to the chronic shortfall of power in the prosperous southern states, the Power Grid Corporation of India Limited, or PGCIL, will not properly complete the process of integration. This newspaper has reported that, over the coming summer, commercial operations on the newly commissioned line will be restricted for fear that the southern region will trip the national grid. It remains to be seen if this attitude is based on a rational calculation of the risks or gives too much weight to tail-end possibilities. It is worth noting that the tripping of the northern grid that plunged several states into darkness in 2012 was not directly caused by excess withdrawals.

A single efficient market for power will soon be a reality. And states that don't mind a bit of soot and grime can actually set up more stations than they themselves need so that they can sell power - at a premium, of course - to others that are more concerned about pollution. Overall, average power trading prices will tend to go up as more availability results in higher demand. The trade-off is, thus, between higher power costs and much higher economic benefits.