India’s Power Sector is seeing massive investments with innumerable business groups setting up thermal power plants in the country spurred by the electricity deficit of more than 15% and the GDP growth of more than 8% expected in the next decade.India’s private power companies are competing with each other in setting up massive ultra mega thermal power plants of 4 GW capacity.However India’s pathetic state of electricity distribution may lead to huge losses for the investors in the power sector.The reason is that the electricity distribution is controlled by the state utilities which have cumulative losses of $13 billion which is expected to double to $26 billion in another 5 years.These “discoms’ don’t have money to pay the private producers of power even with an electricity deficit.With India’s electricity market a tangle of red tape,losses and government control the situation looks bleak for all the business groups deciding to enter the power sector.
Already private utilities like Adani Power and Monnet Ispat are having trouble in selling the power to discoms as these utilities don’t have cash.Monnet Ispat has been forced to sell power for as low as 1c/KwH as demand has plummeted.This has happened despite Indian customers facing power blackouts even after paying more than 10c/KwH for power.The distorted nature of the electricity market with government entities in the middle is responsible for this situation.Even India’s largest utility NTPC has seen its profit growth dip as state discom are not buying power despite electricity shortage.These discoms buy power at inflated rate during elections and once they are over stop buying power.India’s pathetic transmission and distribution infrastructure is a major hurdle in installing more renewable energy in India as was seen in the case where solar power plants are not being debt financed by banks due to bankrupt discoms.India’s Solar Program JNNSM launched with much fanfare is already facing problems on multiple fronts,this will only add to them.
Cash-strapped state power utilities have cut offtake from thermal power generators, hitting their output and driving down tariffs in the short-term market. State power utilities, which buy the entire output of thermal power generators such as NTPC, Adani Power and Monnet Ispat, have cut off take because of a cash crunch and are resorting to load shedding, industry experts said. The accumulated losses of these utilities are expected to touch 1,50,000 crore by 2014 -15, against 70,000 crore now, according to the Planning Commission.NTPC, the country’s top power generator, lowered output last fiscal after state electricity boards did not draw power. I am living in an extreme dichotomy. On the one hand, we talk about acute energy shortage, and on the other I do not have buyers for my electricity. The question is should we scale down our targets or scale up domestic coal production or keep importing coal,” NTPC chairman and managing director Arup Roy Choudhury said.
A top executive at Monnet Power said the company was forced to sell electricity at 0.50 per KWH in January, as there was no demand from states. Adani Power chief executive officer Ravi Sharma said state load dispatch centres that ensure integrated operation of the power system, ask distribution companies to back out. The power sector regulator, Central Electricity Regulatory Commission, is unable to address the issue. According to Pramod Deo, the commission’s chairperson, distribution companies are owned by states and their regulatory commissions are responsible for taking action.
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Yes. There are 2 ways to do it.1. Off the grid. You buy it, you make it, you store it, you use it. Pro: you’ll still have lights in a blocakut.Con: If you don’t make enough you sit in the dark. 2. On the grid. You have the equipment to generate power that is then sold to the power co. for storage and sale. They in turn sell you power. You have 2 meters, what you generate turns backward and what you use turns forward, you hope they net to 0 at the end of the month.Pro: you don’t need to have the storage on site (batteries) and the power co. will usually give you a partial subsidy for the equipment.Con: dependent on the grid.