India became net exporter of electricity in the current financial year, reinforcing the turnaround story in the country’s power sector but also underlining the demand slack in the changing narrative.
Using power trade as a tool for diplomacy, India spread goodwill in its neighborhood extending up to Myanmar by exporting 5,798 MU (million units) during the April 2016-February 2017 period. This is roughly 4% more than 5,585 MU it imported from Bhutan, data from Central Electricity Authority (CEA) shows.
India started cross-border trade in electricity since the mid 80’s, essentially with importing power from hydel projects build in Bhutan and supplying small quantities to Nepal as part of government-to-government deals. Since then, the country has established a mesh of cross-border interlinks for supplying to Nepal and Bangladesh.
On an average, India has been importing 5,000-5,500 MUs from Bhutan, while exporting 190 MW to Nepal over 12 cross-border lines from Bihar and UP and 600 MW to Bangladesh through two interconnects from Bengal and Tripura. As a result of rising cross-border wheeling capacity, export to Nepal and Bangladesh have showed an increase of 2.5 and 2.8 times, respectively, in the last three years.
The development also coincides with efforts to export coal to Bangladesh — an indication of the situation changing from shortage to surplus. India’s power plants were facing acute fuel shortage till three years back. But steps taken by the Narendra Modi government in the last three years have brought it to a position where it needs to look at exports, even if in small quantities, to maintain pace of mining and reduce stocks piling up at mines.
But the expanding supplies beyond borders also point to the slow growth in demand at home. Consider: the peak shortage stood at 1.6% in the period till February in the current fiscal against 4.7% in 2014-15, while peak shortage has reduced to 0.7% from 4.7% in the same period. But at the same time, power plants on a national average are operating at roughly 60%, down from nearly 65% in 2014-15.