On 29-05-2013, the average price for the electricity bought on IEX, the country's largest power exchange, was close to Rs 5 per unit (kWh), well over double the power rates for the rest of the country. The peak rate in the south was a whopping Rs 15, five times the quote of Rs 3 in the rest of the country — reflecting a severe power crunch faced by a region that is among the country's biggest manufacturing hubs for automobiles, IT, textiles, leather and heavy engineering.
A key reason for spot electricity prices shooting through the roof in south India is the scramble among industrial consumers and distribution utilities across states such as Tamil Nadu, Andhra Pradesh and Karnataka to arrange for power through the spot market window, including exchanges such as the IEX, to tide over the debilitating shortages. The lack of adequate grid interconnection between the southern region and the rest of the country has compounded the problem, resulting in the sharp variation in the rates.
In terms of energy deficit, or the difference between supply and demand of electricity, the numbers bear out the problem faced by the south. According to data from the Central Electricity Authority (CEA) for April, the energy deficit for the southern region was 18.1 per cent compared to a national average of 8.3 per cent. In Andhra Pradesh, the deficit was a high 20.5 per cent, in Karnataka 17.8 per cent, Tamil Nadu 19.4 per cent and in Kerala it was 3.2 per cent during the month.
The worst affected among industrial consumers in the region are the small and medium sized unit owners, most of whom are left with no option but to either run captive units fueled by expensive diesel or simply down the shutters.
Tamil Nadu houses auto biggies such as Ford, Hyundai, BMW, Renault-Nissan and Daimler Commercial Vehicles. The auto hub adjoining Chennai currently accounts for around 40 per cent of the country's car production and about 60 per cent of automobile exports. While the bigger players have arranged for back-up, including buying power on exchanges such as IEX, the smaller ancillary units are badly hit. These include Tamil Nadu's 760,000 registered micro and small entrepreneurs, along with the 5.3 million people they employ.
The power outages in the state started in 2010, extending from three to five hours daily, but now stretch up to 16 hours a day. According to a CEA official, the state has added a mere 330 MW of power generation capacity since 2005, while demand has escalated by almost 10 times.
Tamil Nadu is currently implementing three types of restriction and control measures to manage the demand-supply gap of 4,000 MW since any partial augmentation of generation is unlikely before end-June, when the first unit of Kudankulam nuclear power project is slated for commissioning.
In Andhra Pradesh too, the shortage is debilitating, with six major gas-based stations adding up to 2,000 MW, including those of GMR, GVK and Lanco, curtailing operations due to lack of gas. This is apart from the fresh capacities of about 2,000 MW awaiting gas allocation.
While the government has been restricting the load shedding for domestic consumers, the industry is badly hit. There is already a 12-day a month power holiday for industrial consumers and unscheduled cuts even beyond that.
Source- Indian Express