‘India needs to build robust energy delivery ecosystem aiming last-mile user for more power consumption’

By Mohua Mukherjee

In the past two decades, India achieved commendable progress in the electricity sector. Progressive policy initiatives, increased focus on alternative sources of energy, and government interventions both at the Central and State level changed the face of the electricity industry in India. The government’s flagship programs such as Saubhagya and Deen Dayal Upadhyay Gram Jyoti Yojana ensured electricity access to more than 750 million people in the past two decades. As a result, India achieved 100 percent universal electrification in 2018.

Reliable Power: An enabler for India’s Economic Aspirations

The Economic Survey 2018-19, however, pointed out that India still lags behind significantly in energy usage as compared to the global average. India needs to increase its per capita energy consumption by at least 2.5 times to accelerate its real per capita GDP to $5000. This will further aid India’s journey to an upper-middle-income country as energy consumption is closely linked to economic growth. As India seeks to embrace a new phase of growth in the electricity sector, access to reliable power holds the key to its economic and social development.

Reliable electricity motivates people to invest more in electrical appliances which then increases household electricity consumption. But unreliable power supply and the long duration of power cuts in India not only impacts the overall electricity consumption but also discourages prospective customers from taking new grid-connections. Besides the inconvenience, unreliable electricity supply forces a customer to bear additional expenses on power back-ups.

Currently, while electricity is available to all, the supply is highly erratic, which negatively affects the performance of several industries and manufacturing units as well. This further slows down the pace of development in the country. Smart Power India’s study on Electricity Access in India & Benchmarking Distribution Utilities conducted in partnership with NITI Aayog and Rockefeller Foundation found that on average, the customers of grid electricity in India currently receive only 17 hours of electricity supply daily. The supply is further interrupted by at least one power cut per day, and multiple voltage fluctuations. Hence the next milestone that the power sector should strive to achieve is to provide reliable and quality electricity to all.

Ushering in an era of quality and reliable electricity supply

Grid connectivity has now been reported for all willing households and a majority of grid-customers have the availability of electricity infrastructure within 50 meters of their premise. However, SPI’s joint study observes an interesting difference in the electricity availability rate and the hook-up rate. Even for customers that have easy availability of electricity, the hook-up rate is only 86%. Even where electricity access is high, the supply is plagued with unscheduled power cuts, low capacity of distribution utilities, infrequent billing, and a long time taken to resolve complaints.

For universal electrification to be truly successful, customers of grid-connected electricity should have access to electricity at times when they need it the most between 6 pm – 10 pm when they are at home. In the absence of a better quality of supply, governments and electricity suppliers can help customers by providing reliable load shedding schedules. This would enable them to plan their activities around outages. In order to provide load shedding schedules, it may be necessary to focus on reducing technical faults in existing transmission and distribution infrastructure as a short-term priority over the long-term necessity to increase generation capacity.

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The state of electricity in the country can be analyzed further by looking at the reasons for not connecting to the grid, which includes poor quality of service, the distance of the nearest electric pole from the customer’s premises, inability to pay for electricity costs, and user charges, unaffordability, and in some cases of institutional customers – refusal of a connection. The inefficiency in providing electricity has led to a significant number of people opting for non-grid sources of electricity. SPI’s joint study notes that customers reported damage to their electrical appliances due to erratic power supply, which has also led to dissatisfaction among customers with regards to the electricity supply.

Measures need to be taken to improve the viability of distribution companies, including tariff rationalization and timely release of subsidies along with improved governance, which will strengthen the electricity delivery network. Other factors such as connection capacity and consumer centricity also pose a challenge.

Future policy decisions by the government and implementation by the power sector should orient itself to enhance the efficiency of the performance of the power industry. The best solutions for increased reliance on grid electricity are to increase generation capacity and/or reduce transmission and distribution losses. Levels of investment in self-generation, which is generally more expensive than grid electricity, indicate a high willingness to pay for reliable power. This may provide an opportunity for government and private power companies to charge higher prices to firms in order to fund investments that will make power supply more reliable.

Strengthening India’s resolve to build a robust energy delivery ecosystem

Providing reliable electricity to customers is of the utmost importance to utilities as India still has one of the lowest per capita electricity consumption across the world. Reliable electricity would ensure public trust that will lead to investment in more electrical appliances. This will in turn, increase the electricity consumption in each region. But for this to happen, India needs to first of all build a robust energy delivery ecosystem with a focus on the last-mile customer.

For all to be connected to the grid to reap the benefits of a fool-proof energy ecosystem, it is also essential for the connection process to be seamless. SPI’s joint study further found that a significant proportion of non-users of grid electricity cited complicated connection processes and paperwork as the reason for not accessing the grid. This has further led to lower satisfaction with power quality and complaint resolution process.

Therefore, to deliver undisrupted electricity connectivity to all, we need to leverage the universal electrification that India has achieved. The power industry should work on providing reliable electricity and improve its overall performance with changes in policies, infrastructure, governance, as well as capacity building. The utilities’ capacity can be strengthened by redesigning organizational structures to reflect evolving market requirements. Implementing data-driven planning for all investments in distribution infrastructure, with a focus on improving reliability and quality of supply should also be the key point of focus for the industry.

The government should lend financial and policy support to the sector to achieve the noble vision of reliable and affordable electricity for all. Some immediate steps in the direction would be to fast-track the Direct Benefit Transfer implementation of electricity subsidies to consumers, accelerate the performance of operational as well as infrastructural capacities of the utilities to ensure grid customers receive reliable electricity throughout the day. Coordinated action by the power sector along with the government will definitely lead to a robust energy sector in India that will power the dreams of a billion people.

Mohua Mukherjee is an independent energy observer and ex-World Bank Head of India Solar Program. Views expressed are the author’s own.