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January 18, 2013

From power-surplus to power-starved

The problems with power generation in Tamil Nadu and the application of mediocre remedies.

A power-surplus state just a decade back, Tamil Nadu has steadily slipped to an ignominious position where 14-16 hour power cuts have been imposed on consumers in most districts. Consumption of diesel for operating gensets has doubled in the last two years, increasing the power bill for the user and the subsidy burden on the government. Industries have been shut down, workers have been laid off and students have been forced to read in candlelight.

It will be instructive to reflect on how this precipitous decline came about as it holds important lessons for other states as well.

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Tamil Nadu is not a state that is blessed with energy resources. Barring a lignite mine at Neyveli, there is no other significant source to feed a baseload power plant (that is capable of all-year, 24 hour generation). Large thermal plants that are located around Chennai, Mettur, Tuticorin need to source coal from distant coalfields. Due to a choked railway corridor between Chennai and Vijayawada, they have to transport it by ships from Paradeep port to Chennai. This is a major logistical exercise and seriously constrains the supplies of coal.

From 2002, when the state GDP was growing at a rate of 8 percent, the economy needed to be fuelled by a corresponding increase in power generation. This warranted an addition of 600-800 MW of base-load power every year till 2008 and 800-1000 MW every year from 2009 onwards. With the average gestation period for a thermal plant being 4-5 years, a committed adherence to a rolling plan was necessary. Unfortunately, this never happened. In the period 2006-2012, there was a total addition of only 350 MW, while demand kept growing at a brisk pace. The shortfall has steadily increased and is estimated to be 4500 MW at present. The wide gap should have attracted private investors but they were reluctant to step in as TNEB’s financial position, without timely tariff revisions, was quite precarious and its net worth considerably eroded.

Projects with aggregate capacity of 4000 MW are under various stages of implementation and all of them have been delayed by many years for various reasons. Instead of investing “management resources” to get these projects back on track and inject the much-needed baseload MW into the grid in due course, some short cuts were found to show an addition in MW. One such move was to offer generous incentives to private promoters to develop wind power projects. While this ensured quick addition to the MW base for which the government could claim credit, it hardly helped in the load management. Power supply from wind turbines is unreliable, seasonal and unschedulable. Located in multiple sites, evacuation poses a big problem, as transmission lines are often not in place. These factors make the task of the grid manager more difficult and add to the burden of existing baseload plants during off-season, which is most of the year.

Today, Tamil Nadu takes pride in claiming that it has the largest installed capacity of wind turbines (over 7000 MW), but the large, “feel-good” MW base has limited use in addressing Tamil Nadu’s power shortage.

Having milked the cow of wind energy dry, attention has now been diverted to solar power. The Chief Minister has articulated a vision of adding 3000 MW of solar energy in the state within 3 years (not coincidentally, before her term gets over and next state elections are held). The entire state machinery has been cranked up to promote solar projects and meet the CM’s stated target. While more predictable than wind energy, solar energy is still restricted to the daytime. Again, as in the case of wind energy, this will provide the illusion of high MW, without the comfort of schedulable baseload power.

With solar and wind projects carrying the aura of green and renewable energy, they can be pushed without much resistance or reasoning. Examples will be cited of Denmark and Germany that have a high mix of wind and solar energy, without pausing to note that these countries had met their baseload needs adequately with gas-based and nuclear plants before they turned actively to renewable energy. India does not have this luxury yet. Many states have not met their baseload needs.

Apart from fast-tracking the planned coal power plants, Tamil Nadu ought to have evolved a policy to set up gas-based projects in the state. Gas is the only other alternative to coal (not counting nuclear) when it comes to baseload power. As a coastal state, Tamil Nadu should have pushed the Central agencies to speed up the LNG terminals at Ennore and Tuticorin and also the pipe network to distribute the gas. If this had been started in right earnest 5 years back and completed by now, it would have helped in quickly setting up large number of smaller (50-100 MW) power plants close to load-centres for baseload as well as peaking requirements. Power from gas-based plants is more expensive than from coal-based plants, but it provides consumers an alternative to power cuts that require use of diesel sets that cost Rs 18/kWh. It is worth noting that 80 percent of Singapore’s electricity needs is met by gas-based power (with gas sourced from Malaysia and Indonesia and piped). It is also poised to commission a large LNG terminal in the first quarter of this year, to reduce the dependence on piped gas.

It has been said that Chinese planners manage to come up with long-term infrastructure projects because they are not constrained by the 5 year time span that weighs heavily on the minds of democratically elected ministers. In the last five state elections in Tamil Nadu, no incumbent party in power has been re-elected. Not surprisingly, successive governments have looked only at populist schemes that had the highest probability of gaining votes at the end of the term. Projects that would have added to baseload capacity were allowed to languish when it was apparent that their commissioning dates would fall beyond the five year horizon. Good bureaucrats are supposed to ensure continuity of schemes regardless of which party is elected. Sadly, that class of empowered officers doesn’t exist any more.

Photo: Andy Herd


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