CARE Ratings has retained 6-7% growth outlook for India’s electricity generation in FY19. Successful implementation of electrification led by “Power for all” is expected to drive demand for electricity.
Nevertheless, bringing down aggregate technical and commercial (AT&C) losses would be key to stabilising the power sector in India. Achieving 15% AT&C on all-India basis, as stipulated under UDAY scheme (Ujjwal DISCOM Assurance Yojana), would require improvement in revenue collection— especially from domestic power consumers who have been electrified under the government’s SAUBHAGYA electrification scheme.
Additionally, measures like smart-metering should be expedited and implemented in a time-bound manner.
Renewables’ share in overall generation
India generated 1156.8 billion units (BU) of electricity during 11-month period of April-Jan 19, reporting growth of 5.7% as against 5.3% in the previous year. Renewable energy sources contributed 107.2 BU, and recorded a 25.2% growth over production in the corresponding period of FY18—according to CARE Ratings.
Installed capacity stood at 350.1 GW as of February 2019, recording a net capacity addition of 6.1 GW during the year. Solar and wind power accounted for 95% of capacity addition and remaining were hydro power projects.
Total 7.8 GW of renewable energy capacity was added during the 11-month period of FY19 as per latest data from Ministry of New and Renewable Energy (MNRE) and Central Electricity Authority. Solar power witnessed the highest capacity addition (5.4 GW), followed by wind power (1.3 GW) and small hydro (32 MW).
100% electrification achieved, but AT&C losses a concern
India is 100% electrified and as per government data, all willing households have been connected to grid-based electricity.
AT&C losses at 19.8% versus a targeted 15% as envisaged under the UDAY scheme for March 2019 are a concern. Major SAUBHAGYA beneficiary states, including J&K, Uttar Pradesh, Madhya Pradesh, Bihar and Rajasthan, continue to have AT&C losses over 25% and their discoms would have to expedite corrective measures.
With major improvement in electrification, the demand may spike during peak summer seasons and having enough transmission capacity would be vital to cater to that demand and containing power deficit. Investments in grid strengthening will have to be increased considerably as more renewable energy capacity is added, suggest CARE Ratings analysts.
2 GW monthly to meet 100 GW target
Solar Energy Corporation of India (SECI) issued fresh tenders totalling 6 GW in March 2019, in order to improve the overall pace of implementation of solar projects over the next 36 months. An average 2 GW of solar capacity has to be completed every month over the next 3 years in order to achieve a 100 GW solar power capacity, according to CARE Ratings.