The face of the Indian power sector is changing. From perpetual deficit, we have moved to a situation of glut at least for certain hours of the day, specifically the solar hours. Both scenarios are painful, though as far as the consumers go, the first was far worse. The situation of glut and the way we are dealing with it is a national waste, but an individual consumer does not really feel the pinch. It is the sector that is suffering.People will not have forgotten how difficult each summer was in the past with frequent power cuts. The problem also included the quality of supply. Voltage used to drop dramatically in the dusk hours, and it was inadvisable to run a television or a fridge without a voltage stabiliser. If this was the position in urban areas, one can imagine the situation in rural areas, where the number of hours for which supply was available was frequently in the single digits. One can, however, add a caveat. Only people connected to the grid faced the problem of erratic supply. A large part of the population lived in the dark because they were unelectrified. Thirty years ago, according to the World Bank, 40 per cent of India’s population did not have access to electricity.AdvertisementDuring the decade 1990-2000, the installed capacity was growing at the rate of about 5 per cent, whereas demand was growing at about 7 per cent to 8 per cent. Deficits in peak demand were of the order of 15 per cent, whereas energy shortage was about 10 per cent. Inadequate installed capacity was not the only problem. Perhaps a bigger problem was a poor and dilapidated distribution infrastructure that just did not have the capacity to cater to the growing load since there was virtually no upgrading. Upgradation required additional funds either through enhanced retail tariffs or through government grants, both of which were difficult to come by. The vertically integrated state electricity boards, with generation, state transmission, and distribution under one roof, were overstaffed, corrupt, and inefficient.Then came the Electricity Act, 2003, which allowed for the dismantling of the State Electricity Boards (SEBs) and the setting up of separate companies for generation, transmission, and distribution. This segregation took years to happen in some states, as the issue became politicised. The Act also mandated the setting up of electricity regulatory commissions so that tariff determination could be an independent exercise, free from government clutches. However, this did not have the desired effect, as the government was loath to give up its control over tariffs and continued to breathe down the regulators’ necks. The regulators, incidentally, gave the impression that they were willing to bend over backwards to stay on the government’s right side. Consequently, the distribution sector remained where it was, financially unsustainable, waiting for a fresh injection of funds at regular intervals.Also Read | At COP, a move from climate learning to climate actionThe good news, however, was that growth in installed capacity got a boost after the setting up of the electricity exchanges in Delhi and Mumbai around 2008. The spot prices of power shot up manifold, and developers saw this as an opportunity and started investing heavily in new power projects, mainly coal-based. A little more than 1,00,000 MW of coal-based capacity was added between 2010 and 2020. Interestingly, about the same capacity was added between 1947 and 2010. It wasn’t just the developers; banks started giving out loans blindly without ensuring that the developers had signed power purchase agreements (PPAs) and had fuel linkages. As a consequence, thousands of megawatts became stranded, the developers started defaulting on loans, and the non-performing assets (NPAs) of banks went up. Moreover around 2015, the solar sector received a push. Prior to this, India had primarily wind and biogas generation. Today, renewable capacity, including large hydro, is a little less than 292 GW, which is about 53 per cent of total capacity. Solar alone is about 162 GW. This massive growth in installed capacity reduced our peak and energy deficits to about 1 per cent to 2 per cent.AdvertisementAs they say, all good things must come to an end. With this massive growth in installed capacity, deficits may have gone down, but other problems have cropped up. This energy transition has made us surplus in solar hours, but we are facing deficits at night on account of unplanned outages in our coal plants, excessive air conditioning load, poor reservoir levels affecting hydro generation, etc. The surplus in solar hours is forcing us to back down our solar generation, even after ramping down our coal generation sometimes to the minimum technical load in order to balance the grid. Two things are happening here. First, we are wasting our solar power by backing down. Second, we are decreasing the longevity of our machines by this frequent ramping up and down.you may likeSo where lies the solution? The answer is to build storage so that excess generation in the daytime can charge our batteries, which may also ensure less frequent ramping up and down of our coal-based generation. Along with storage, we also need to strengthen our transmission system, improve demand-side management, and create a market mechanism that properly rewards flexibility. However, building storage, especially pump storage, is time-consuming, and moreover, the price of storage, as determined through competitive bids, is said to be non-remunerative. This may mean that many of the storage projects will not see the light of day, which will only prolong our agony of losing valuable solar power.The writer is visiting professor, ICRIER and former member (economic and commercial), CEA. Views are personal