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Power-starved India: Gensets add up to Under Half of Installed Power Capacity
Aug 21, 2014

With India power-starved, the millions of diesel generator (DG) sets working to meet the shortage in industrial and commercial units now add up to a cumulative capacity of 90,000 MW. That figure is nearly equal to what was India’s total installed power generation capacity just over a decade ago (March 2002) and about 36 per cent of the current installed generation capacity.

As per more figures compiled by the country’s power regulator, the DG capacity is growing at a rate of 5,000 MW to 8,000 MW every year. That is higher than the cumulative nuclear and solar capacities being added year-on-year in the country. Besides, the estimate, presented by the Central Electricity Regulatory Commission (CERC) in its Central Advisory Commission meeting, is largely restricted to just the big DG sets of over 100 kvA (kilo volt ampere) used by industrial and commercial units as a back-up to the unreliable and insufficient power supply to non-domestic consumers across nearly all states.

Taking into account domestic load running on gensets would take this figure to beyond 90,000 MW.

Apart from the fact that they spew tonnes of carbon-dioxide, the gensets run on subsidised diesel. The cost of generation from a mid-sized DG set is over Rs. 14-15 per unit.

Currently, thermal generation capacity of over 48,000 MW is stranded in the country in the absence of coal linkages and non-closure of power purchase agreements (pacts with buyers of electricity), or due to the lack of flexibility in diversion of coal. Aggravating matters is the fact that despite a cumulative installed generation capacity (as on August, 2014) of 2,50,257 MW, demand up to only 1,40,000 MW is met, primarily due to transmission infrastructure failing to keep pace with generation capacity.

As per the Central Electricity Authority’s latest estimate, the country’s diesel-fuelled power capacity is just 1,199 MW. This means that the massive capacity of 90,000 MW from DG sets is completely outside the realm of policy making and official statistics. The data available was largely collated from manufacturers of DG sets.

At the consumer level, the spread of DG sets is increasing with every passing year, considering that practically all commercial establishments, mid-to-large sized factories and apartment complexes are equipped with back-up power that runs on diesel.

The specific suggestion put up before the CERC was that State Electricity Regulators (SERCs, which are the equivalent of CERC) be asked to impose restrictions on use of diesel gensets in order to mitigate the risk of energy security and for the protection of environment.

By and large, industries do not run DG sets out of choice, but as a matter of compulsion. In the absence of reliable and quality power supply from distribution utilities, most of which are state-owned electricity boards, industry is forced to rely on back supply, despite the prohibitive costs. This also involves bribing fuel pump owners to ensure a regular supply of diesel.

The report prepared by research and consulting firm GlobalData, focusing on energy and healthcare industries, also notes that while the US, China and India are currently the top markets for diesel gensets, their market share will improve only in China and India by the end of the forecast period of 2020. China and India each face a considerable gap between their power supply and demand, creating attractive markets for diesel genset manufacturers. High power deficits, coupled with significant economic growth potential, are expected to be the strongest drivers behind these markets’ expansion.

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