India - A Blackout Nation

Posted in Finance Articles, Total Reads: 1077 , Published on 29 August 2012

The recent power outages in the North of India have brought the focus back on the ailing power sector. I still remember the sultry summer days a decade back when as a child growing up in Delhi; I used to spend most of my summer breaks in the dark. This was before the Delhi Government privatized the electric distribution industry somewhere in the early 2000’s.

The collapse of the northern and eastern power grid bought not so fond memories back. The major reason of the grid failure was the overdrawing by certain state electricity boards of Uttar Pradesh, Haryana, Punjab and some other states. This resulted in the operating frequency to fall below 48 MHz.

The Northern grid supplies power to the states of Delhi, Punjab, Jammu & Kashmir, Himachal Pradesh, Haryana, Uttar Pradesh, Rajasthan and Uttarakhand. The Eastern grid supplies power to the states of West Bengal, Odisha, Jharkhand and Bihar.

Let us take a look at the power demand and supply scenario in our country based on latest data.



Date reported

Total installed capacity (GW)


April 2012

Available base load supply (MU)


May 2011

Available peak load supply (GW)


May 2011

Demand base load (MU)


May 2011

Demand peak load (GW)


May 2011

It is clear from the widening difference that urgent efforts are essential to plug this gap and see India become one of the world powers(literally and otherwise also).

Electricity in India is still used as a vote garnering tool with promises of free electricity resulting in a gaping hole in the balance sheets among power distribution companies by virtue of supplying electricity at subsidized rates.

The grid collapse was a sort of a world record wherein 600 million people were powerless.

Reasons for the collapse

1) Monsoon or rather the lack of it played a major role. Farmers rely on electric pumps to draw bore well water. This leads to a greater demand for electricity.

2) Power generation is still predominantly coal driven in India, with 66% of generation through coal based plants.

3) Import of coal is becoming dearer due to the rupee depreciation. As per the Planning Commission statistics, the gap between the demand and supply of coal was 35 million tonnes at the end of 2007 and it is expected to be around 83 million tonnes at the end of this year.

4) India’s dependence on countries like Iran for oil imports which has reduced its supply of oil in recent times has deepened India’s power crises.

5) Minimal penalty imposed on the states drawing beyond their capacity is hardly a disincentive. In fact states like UP have continued to exploit this loophole.

6) Power thefts continue to plague our distribution and transmission sectors.

7) Poor transmission infrastructure which result in power wastages on the supply side.

Solution to the problems

1) Smart grid is a major initiative that could revolutionize the power supply by using the strength of the Information technology to prevent overdrawing by states by cutting the supply when threshold is reached.

2) Curbing power thefts and leakages.

3) World over the peak power demand is met through renewable sources like wind and solar power. Other sources like utilizing biomass energy should also be given a thrust.

4) Installation of micro grids within a state would reduce the kind of long distance dependencies witnessed recently. This would make the power cycle i.e. generation, distribution and transmission more efficient. Such an experiment has already been in operation in Gujarat.

These grids cover a radius of around 40 km.

5) Using solar panels on households could be another solution. A number of such panels could power the grid and bring in self sufficiency in the corresponding region.

6) Abolishing the subsidy policy and setting market determined rates for fuel and electricity would lead to reliable energy and electricity sectors, which would help in the long run.

Ultimately India needs to ramp up its power infrastructure, look at various other sources of energy and penalize the people who indulge in power thefts harshly.

Fernán Caballero once said "There is a force more powerful than steam and electricity: the will", it is this will that our country needs today; the will to be self sufficient and honest.

Let there be light.

This article has been authored by Angad Lamba from NMIMS.



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