THE REAL COST OF POWER (INDIA)


That reliable power is one of the key components for fostering growth is an indisputable fact.The correlation between growth in GDP and addition to power generation capacity is close to 1. This means that to realize our ambition to grow by 9% (as expressed by the Honourable Finance Minister in his Budget speech of July 6, 2009), India needs additional generation capacity of 9%, year after year, after wiping out the substantial deficit existing now. Power outages result in lost economic opportunities for the end consumer. World over, the cost of this opportunity loss is estimated in terms of metrics such as Value of Lost Load (VOLL) and Cost of Unserved Energy (CUE). A simple search on Google will produce links to several reports on this subject. For instance, in one of the projections, Power Grid Corporation of India has estimated the VOLL in India as Rs.34/kWh to Rs.112/kWh. Taking the recorded energy shortfall of 85 billion kWh in 2008-09, and the lower VOLL of Rs.34/kWh, the Value of Lost opportunity for the country translates to Rs. 289,000 crores. In GDP terms, this means a loss of nearly 6%. 

In addition to the growth aspect, the quality of human lives today depends on electricity almost as much as on food and shelter. While load shedding is rampant on one hand, efforts to cope with the chronic power problem continue on the other side. Common citizens as well as commercial organizations have had to resort to various alternatives to deal with this crisis. The source of back-up power varies from candles and kerosene lanterns, to battery Inverters, and generators, leaving aside captive power plants used by large industries. The over all intent of providing cheap and affordable power to the consumers in the country is noble, but if the supplies are inadequate or unreliable, the consumers could actually end up paying a much higher price.

To get a perspective on how different types of urban consumers cope with the power shortage and what is their real cost of power, Wärtsilä India commissioned a pan-India study through a reputed strategy consulting firm. The findings of this study are interesting and provide an insight that the common man in the country will benefit immensely by paying a little extra sum of money in return for reliability in power supplies. A ‘reliability surcharge’ of as little as 50 paisa per unit can support rapid capacity build-up. This surcharge would be far less than the extra charges consumers are incurring today and would also offer the comfort of ’24 x 7′ availability. The nation would benefit from the resulting impact on GDP.

This study raises some important questions, and stakeholders across the power sector value chain need to work together to find and implement the right solutions. Wärtsilä, with its wide experience in the global power market, looks forward to sharing its global experience and contributing to the cause of ensuring ’24 x7′ reliable power to all consumers in a growing India.



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   Matti Rautkivi

   Sales & Marketing Director,
   Wärtsilä Energy Solutions
   
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