Time To Expel Socialism From Electricity Economics?

Time To Expel Socialism From Electricity Economics?

The selling price of solar electricity in the US is 3 cents/Kwh in 2016. Solar electricity pricing, it is clear, will dominate, like OPEC once did, going forward.

This is far cheaper than Indian coal-based power generation. Thermal generation accounts for 54.5% of the total (2013). Installed capacity is 267, 637 MW, generating 1106 billion Kwh.

Additionally, there are captive power stations, 47,082 MW worth, generating 166,426 Kwh (2014-15) and 75,000 MW of diesel generating sets.

Fortunately, India under Modi has understood where the world is headed, and is adding solar capacity furiously- hopefully, 100,000 MW by 2020.

Similarly, hydro, accounting for just 5% generation in 2013, is due to be boosted considerably, as is wind energy, contributing 8.5% already.

So, in the medium term, along with nuclear energy, 5 reactors under construction, another 18  targeted for 2025, electricity will be plentiful, greener, and much cheaper.

India now has an Electricity Act 2003, and a National Electricity Policy 2005, both of which piously seek to emphasise rural electrification, particularly of poor Dalit households.

However, even at present levels of generation, there is, ironically, a complaint of inadequate demand, mainly because the backbone doesn’t reach everywhere necessary - and because electricity is a perishable commodity that can’t be stored!

We currently buy in Bhutan’s surplus electricity, probably as a balance of payments mechanism, and sell our surplus to Bangladesh and Myanmar, in return for their natural gas, for which a new pipeline and road/rail links are in the works.

This, even as we seek to grow and modernise our generation, transmission grids, our distribution - to cater to present/future demand and connectivity.

But, like everything else, when it comes to consumption, it is the upper end of the pyramid that tends to do most of it. The problem is, we have not taken a benign policy stance to this favourable reality.

Better off people, including productive business  and industry, can afford to consume more of everything, electricity included, and should be rewarded for it. And yet, even though this is what makes all enterprise both viable and profitable, there is little or no policy acknowledgement as yet.

In America, where lavish amounts of domestic electricity for heating/airconditioning, myriad appliances/gadgets, is largely provided by neighbouring private utility companies; large consumers are rewarded with discounted tariffs. Here, in India, they are penalised, with rapacious rates, and lectured on conservation.

The government policy makers still persist on aiming electricity at the one third that is poverty stricken. But, laudable as this is, it is financially unworkable, if the big consumers are not encouraged to consume even more to compensate.

Very poor people cannot buy much electricity, even at rock-bottom tariffs, calculated presently on fossil-fuel generated electricity.  

Nevertheless, additional domestic rates are being proposed now, higher than even the preposterous Rs. 8 per Kwh for the big users.

For running two or more airconditioners, the Delhi public is being told to expect another Rs. 10,000/- or more, to their monthly electricity bill. Other states too, follow similar policies. Commercial/industrial rates, are anyway, even higher!

That this is a clear invitation to meter-fiddling corruption, rampant already, is another, if related, matter.   

India is third in energy consumption today, after China and the US, but it still accounts for just 5.3% of the global share (2015).

And this, on poor per capita consumption of just 1,010 Kwh, which means the poor don’t even consume this meagre amount, but are counted in the averaging for merely being numerous.  

We are expected to become the second largest by 2035, accounting for 18% of world electricity consumption. But what use is this, if it is just a sum based on even more people?

Albeit our askew dependence on fossil fuel to generate electricity- 29.45% from crude oil, 7.7% from natural gas, and 54.5% from coal, (we have the world’s 4^th largest deposits of coal) is a big part of the problem today.

The Modi government expects to have universal electricity connectivity within its current term of office; 2018 is often mentioned. 

The Government of India also expects to be electricity surplus by 2017!  

What joy then if graded electricity tariffs start at a meagre 200 units a month, barely enough to run a couple of LED bulbs?

If a consumer uses more than 200 units, the tariff is stepped up, and at  a couple of thousand units a month, running airconditioners, microwaves, heaters, and the like, tariffs are whizzing the meter, at multiples of the base rate!

For: ABP Live

(747 words)

August 26^th, 2016

Gautam Mukherjee