Surplus power in Tamil Nadu and the Power Cuts - Is it for real?

It has been 'ages' (read six months) since we had an announced power cut in Tamil Nadu!

The government boasts of correcting the long standing problem of power in the state. Every consumer in the state would like to know whether this surplus is real and whether he should plan for the dry days now. Or can he lay back and enjoy the situation?

Every seller of power is also in a quandary. Power surplus, they think, is not real. And that it is only a question of time before the surplus will yield place to the old condition of power cuts and Restrictive measures.

Let us get a fair ringside view of what has happened in the last six months that has resulted in the surplus state that we are in today. And then see whether we have reached a steady state condition or are we heading for more volatility in the power sector?

Major problems we faced in the last two years were:
1. Power generation was less than the power requirement. We wanted 14000 MW of power approximately, but generated anywhere between 11000 and 12000 MW.
2. Evacuation of even generated power could not be carried out because uptime of transmission network and the capacity were both insufficient.
3. Delivery capability at the distribution end was also suffering since the last mile capacity was in a quandary. So if one applies for power, the person did not get it at least for three to six months.

Only if all of these problems have been cleared then we can safely assume that the power surplus situation has been reached and you would get power when you want and not when they supply!

Let us take one by one and analyse where we are in each one of them.

1. The gap between supply and demand was very real for the last three years. This year, two major events brought in categorical market changes. One, major slackening of all industries. Two, commissioning of over 2500 MW of power supply within Tamil Nadu from various private sources. The slow down in the industries, ensured on one side the demand fell down by over 3000 MW resulting in a need that hovered between 11000 and 12000 MW. On the other side, additional capacity increased the possible supply. Luckily, at the same time there was a fall in generation due to various reasons. But still, the utility ended up with a surplus position of nearly 1000 MW!

2. Though the work on the green corridor for Wind evacuation from southern districts has been speeded up considerably, as per the government's claim. However, a few substations came online to improve the overall evacuation situation. But nothing much for the suffering Wind investors to rejoice. We still ended up the season this year at more than 40% evacuation cut in the wind evacuation. At the same time, the corridors connecting the north and the west to the South have been completed ushering in an era of power surplus in the state.

3. Marginal improvement in the last mile capacity and a reduced off take by the industries due to the slow down in the growth has added to the surplus.

Falling prices are for real. Unless the industries see an upturn. Unless, the steel, the textile and other metal industries start looking up, there will not be any increased demand. Well, steel depends on real estate. Overall, the economy has to look up to create more demand. Only then will we be able to assess whether there is a real surplus or not. However, with todays slow growth on the cards and the government not very keen in pushing up the inflation, the steps taken to rectify the industrial growth problems will be slow in coming.

Please plan to live with low prices on power. The end of this tunnel for the power industry is not to be seen!


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