New plants, rains boot up electricity sector showing

Gleaming new power plants and good rains have perked up the power sector's performance. Deficit levels, which were at a decade-high level just three months ago, are sharply down in June.

The improvement started in April-May itself, as shown by the index of industrial production (IIP). While the cumulative growth in electricity production during April-May 2007 was 9 per cent, it was a paltry 5.3 per cent in the same period last year.

On an absolute level too, the demand-supply gap is reducing somewhat. In May, for example, against the overall demand of 61,249 million units (MU) of electricity, about 56,564 MU was generated -- leaving a gap of 4,685 MU. Last year, the gap was much larger at 5,117 MU -- 51,791 MU was available against a requirement of 56,908 MU.

As a result, the power supply deficit or the energy deficit in the country for May 2007 is at 7.6 per cent, sharply down from 10 per cent in the peak summer month of April.

According to the Central Electricity Authority "" which collects data for the power sector "" the month of June has also shown a remarkable improvement with peak shortage dipping to 8 per cent, whereas the deficit in overall power supply went down to 6 per cent.

Explaining the improvements, a senior CEA official said that about 9,000 Mw of power generation capacity came on stream last year, which is showing up in improved generation this year. Also, "good weather has suppressed demand. A good rainfall also ensures sufficient hydel-power generation. The plant load factor (PLF) of power plants has also improved," he said.

Region-wise, the southern and eastern parts of the country have shown considerable improvement in power supply and deficit in May is down to 3 per cent. In April, south India had a deficit of 4.8 per cent while the gap in east India was 3.7 per cent.

The worst hit during this period are the north-eastern and western regions. The energy deficit in the western region for May was 15 per cent, while the peak deficit was a high 24.5 per cent. The north-eastern region also fared badly in May with the energy deficit at 14.6 per cent and the peak deficit at 26 per cent. This region has vast hydro potential, which has not been yet tapped, say experts.

"Month-wise, the picture may look bright, but the situation may get inverted if you take the cumulative annual figures," says Shekar Reddy, a power expert who was also involved with the Indian Institute of Planning (IIPA) study on restructuring of state utilities.

Although a good monsoon will definitely ease the power shortage situation to some extent, experts say that the present peak demand deficit of around 13-14 per cent is here to stay.

For the next three months, different states will see an increase in demand as they get into the sowing season for seasonal crops. For instance, Punjab has high electricity demand due to the paddy crop.

During the rainy season, plants also undergo repair and maintenance, which could impact power supply.

Around 4,000-5,000 Mw of plant capacity would be closed temporarily, says the CEA official. All plants are run in the peak months to meet demand.

According to CEA's 17th Electric Power Survey (EPS), growth in electrical energy requirement for the current year (2007-08) would be 8 per cent, while the growth in peak electric load would be 10 per cent.