India's power deficit may reach 5.6 percent in 2021-22: Study

NEW DELHI: India's power deficit is likely to rise to 5.6 percent in 2021-22 as demand starts to outstrip supply, says a study, adding that incentivising hydropower can play a crucial role in filling the deficit.

“India's power deficit may rise from 2.6 percent of peak demand in FY16 to 5.6 percent in FY22 as demand starts to overtake supply,” says a joint study by industry body Associated Chambers of Commerce and Industry of India (Assocham) and consultancy firm PwC (PricewaterhouseCoopers).

"Availability of reliable, affordable and sustainable electricity is an essential requirement for propelling India's growth story and all potential sources of energy will need to be tapped to meet the envisaged demand and ensure its energy security," the study titled 'Hydropower at Crossroads' said.

Considering an energy elasticity of 0.8, India is estimated to require seven per cent annual growth in electricity supply to sustain annual gross domestic product (GDP) growth of around 8-9 per cent, it said.

“In order to achieve the target of 1,800 kilowatt-hour (kWh) per capita consumption and electricity access for 300 million people by 2034, India will require an additional power supply capacity of 450 gigawatt (GW),” the study said.

"Central Electricity Regulatory Commission (CERC) needs to come up with a differentiated peak and off-peak tariff to incentivise hydropower, given its potential to meet peak demand," it added.

Considering that coal-based generation accounts for about 70 per cent of total installed capacity and over 80 per cent of total units generated in India, the study said that such higher dependency on thermal generation sources pose a serious threat to energy security.

"Hydropower can play a crucial role in India's sustainable development and energy security given that it meets the criteria of sustainability, availability, reliability and affordability," the Assocham-PwC study noted.

However, share of hydropower in India's energy mix has decreased almost by 30 per cent in last 40 years owing to various issues like water sharing disputes, environmental concerns, rehabilitation and resettlement issues, land acquisition problems, delays in procuring clearance and approvals, inadequate technical and financial capability of developers.

Moreover, new financing avenues need to be developed along with sufficient funding support from the government in order to attract investment in the sector, it said.

Highlighting the need to expedite various clearances, such as those for environment, forest and land, the study suggested the government to form a specialised institution for facilitating large infrastructure projects in terms of clearances and approvals.

"Government may create a special hydropower development fund or can use the clean energy fund to provide loans to hydro projects at a lower rate of interest," the study stated.