Electricity Sector in India: Coping with Changes in Demand and Supply
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Case Code: ECON087 Case Length: 11 Pages Period: 2018-2020 Pub Date: 2020 Teaching Note: Available |
Price: Rs.300 Organization : Government Agency Industry : Energy Countries : India Themes: Micro Economics, Economic Slowdown, Pricing |
Abstract Case Intro 1 Excerpts
Excerpts
Background
The development of the power sector had been key to India's economic development. The sector had been given adequate priority by the Government since the country's planned development began with the first five year plan in 1950. Over the years (since 1950), the growth that the country had experienced had led to the extensive use of electricity in all sectors in the successive five year plans. By December 1950, around 37% of the installed capacity in the Power Plants (Utilities) was in the public sector and around 63% was in the private sector. 7 Indian Industrial Policy Resolution 1956 8 envisaged that generation, transmission, and distribution of power would remain exclusively in the public sector. However, the liberalization policy of the Government of India (1991) and the subsequent amendments in the Electricity (Supply) Act opened up an opportunity for private players to invest in the electricity industry. Since then, the Government had made considerable efforts to attract private investments in the sector....
Impacting Factors
The power sector in India witnessed a significant change over the years due to the government's efforts to foster investment in the sector, according to the Economic Survey of India, a flagship annual document of the Ministry of Finance, Government of India. According to the Power Sector in India Report in April 2018, sustained economic growth drove electricity demand in the country. India's fast growing economy and population led to an increased demand for electricity. The Indian Government’s universal electrification drive and increase in power generation and transition capacities gave a fillip to the sector. The drive accelerated capacity addition in the country. In the meantime, the competitive intensity increased on both the market and supply sides...
The Road Ahead
After declining for five consecutive months in 2019, power demand in the country grew 3.5% year-on-year to 105.3 billion units and energy supply increased 3.6% y-o-y in January 2020. However, electricity demand in January grew at the slowest pace in nearly two years. In February 2020, India’s electricity supply rose 7.1% to 3.62 billion units per day as against 3.38 billion units in February of the previous year, 45 marking the second straight month of growth after the decline in 2019. At this time, power supply increased to an average of 3.62 billion units per day, up from 3.38 billion units the previous year, according to an analysis of the daily load despatch data from POSOCO. According to analysts, higher electricity supply could mean a rise in power demand in India, as electricity deficit in the country was marginal....
Exhibits
Exhibit I: Installed Generation Capacity in MW (as on January 2019)
Exhibit II:India Peak Power Demand Growth (FY2015-2020)
Exhibit III: Electricity Generation from Conventional Sources (FY2015-FY2020)
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