I wrote about incredibly low power consumption in India two years back (Power), and the situation hasn’t changed significantly. Per capita consumption growth has been low, however some of the reasons for it are refreshingly surprising. From a recent CRISIL report -

” … demand for power is estimated to remain tepid at ~6% over FY18-22 owing to reducing electricity intensity in GDP, rising efficiency and reducing technical losses.” PDF Link

The same report is also cited in a significantly different light by an article in The Wire - “As Coal Shortage Hits Indian Power Plants, …”

India’s power sector has always faced severe investment issues. The sector’s policy is shrouded in mystery and without much long term stability. This often leads to a multiple misconceptions, as amply demonstrated by another article by same reporter “As Investor Sentiment in India’s Power Sector Lags, Modi Likely to Opt for Change in Narrative”. The byline seems to be able to predict the future, and this gem is buried towards the end of the article -

“With states refusing to bite the bullet on power tariff reform, wholesale privatisation of discoms is the only option left before the Centre to insulate power distribution from political interference and restore its viability, feel power sector experts.”

I am not sure which experts the article is citing, however such a sweeping generalization is one of the core misconceptions about the sector. The article doesn’t mention performance of privatized distribution markets. This is because such companies don’t allow transparent audit of their systems, as demonstrated in Delhi (Link). I can assure you that proper audit of privatized power markets will reveal a much starker reality. The terms and conditions under which these were privatized are laughable and a clear case of privatization of profits, while pushing losses for the public to bear.

The result of years of neglect is that power sector doesn’t contribute significantly towards growth. Premium customers are forced to install their own power backup solutions, which creates an illusion of stable supply and fails to address fundamental challenges.

It is true that new private investment in power sector is under stress, however government is not responsible to guarantee profits for private sector. Private sector has to figure it out on their own. If they need to drag government into courts for failing to honor contracts, so be it.

While absolute per-capita consumption is an important number, more important number is energy intensity and efficiency. I believe its essential for everyone to cross the “Wash Line”, and a vibrant, sustainable and robust energy sector is fundamental for the same.

Best, Umang