Horizons- March 2013

Posted on April 1, 2013 by


Power deficitPower Sector: Lessons from Industry

In an economy chronically starved for energy, a 10% shortage in power and electricity supply is not breaking news. It is well accepted that the power sector has a significant multiplier effect on the economy.  In our attempts to bridge this persistent gap, can we in the power sector learn from the corporate experience?

The Illusion of Averages

The use of averages is useful at a conceptual level e.g. estimating electricity demand or wind energy potential. When it comes to planning and policy making, however, generalization can be harmful. Macro statistics conceal significant changes in patterns followed by various states. For example, on an average, electricity shortage has declined from 10% to 8% in the last seven years. Tamil Nadu was an industrial powerhouse a decade ago, with availability of power being an important consideration for businesses scouting for locations. Today, Gujarat looks set to take over.

Similarly, the popular solution to power shortages seems to be adding more coal based power plants. But the ideal energy mix consists of base load supply like coal as well as intermediate and peaking supplies like hydro and gas based power. Yet the low contribution of gas and hydro power to the energy mix is often lost within plans for coal based thermal power capacity addition.

As the country develops further, solutions to market demand need to become less generic and more targeted to address sub-segments within the larger market.

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