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Power cuts in offing, but cheap coal, gas-pooling to cushion drought effect

A deficient monsoon, coupled with peak summer demand, typically means power outages. And if past experiences are anything to go by, this year should be no different.

Analysts, however, said the availability of cheap imported coal and the fact that the government has decided to pool the price of gas for the power sector, could provide some cushion, and the country may not see the kind of power outages it did in 2012. That year, on July 30 and 31, most of north and east India was plunged into darkness after the northern grid failed over two consecutive days.

The following year, too, saw peak power deficit of 13.5% during May-July. The figure  was around 9% in 2014.

Hydro power constitutes about 12% of the total output, while total installed hydropower capacity is around 14%.

Though reservoirs running dry may pose a bit of a challenge this time, the overall picture looks a lot better than previous years, analysts said.

"This year, coal prices are at an all time low, and Coal India has said that it will be able to meet domestic demand," said Dipesh Dipu, an energy analyst with Jenissi Management Consultants. "Moreover gas availability is also better. So, peak power deficit should not be more than 9%," he added.

Sambitosh Mohapatra, partner at PricewaterhouseCoopers India, too, thinks that peak power deficit should not be more than 6-7% this summer.

"At present we are at 3.6%. Now, hydel power contributes 10-12% to the country's total power output, so a monsoon deficit should not impact the overall figure by more than 3%" Mohapatra said. "I frankly do not think that monsoons are really deciding our supply-demand situation," he added.

The government's recent decision to pool gas prices for power plants will also help by making cheaper gas available for fuel-starved plants. A uniform gas price could help revive 31 power plants that have been on the verge of closing down, and is expected to add 75 billion units of power to the country's network.

Mohapatra also said that more than the shortfall in rains, losses being faced by power distribution companies are a bigger threat. The subsidy dependence of state-owned power distribution companies in 2014-15 was to the tune of Rs 72,000 crore.

source: http://www.hindustantimes.com