Vaidyuthiyum Keralavum

Disclaimer ! The facts & figures depicted here are purely an estimation. I will be glad if anybody can point out mistakes. The view point is totally mine & my employer or professional associates are not connected in anyway to this post.

There is a burning issue of electricity deficiency in my home state of Kerala. Traditionally all power houses in the state are based on run of the river hydro power stations. There is practically no fuel cost and hence the cost of production is pretty low. Considering the fact that most of the stations were constructed long back and the return on capital employed had been almost taken out the cost of selling can be quite low. Please bear in mind that cost of construction of a hydro station can be quite high. Especially since there is a huge amount of concreting involved in making of the dam which normally is located in some obscure, difficult to reach terrain. Add monetary equivalent for the loss of land/forest/environmental concerns etc & you get the overall picture. As far as i know, the regular demand for electricity in the state is about 2000 MW. The generating capacity falls just short but there are considerable gap vis-a-vis peak load demand. So far Kerala State Electricity Board (KSEB) is depending upon electricity from the central pool for meeting this shortage. In order to expand the options particularly in view of erratic behavior of monsoon, KSEB constructed small thermal power stations (e.g., Brahmapuram & Nallalam Diesel Power Plants). However the cost of generation is quite high and in the current tariff, these stations can not be economically viable. There was a huge hue and cry when power allocation from central pool was reduced in the past months. However it must be noted that alternating governments never did a thing to make sure that KSEB will add to its generation capacity. Almost every hydel project was stalled in view of environmental concern. (I do not mean to say that concern towards environment is bad). Pretty politics also played its role in stunting the growth of KSEB. The central pool allocation of electricity is mostly from the coal based thermal power plants owned by central public sector companies. The electricity tariff from such stations are fixed by Central electricity Authority (CEA) after considering various factors including each stations cost of generation and economic viability int he long run. Some of the central power producing utilities have tri-partiate agreements in the payment clause of power purchase agreement so that if the state delays payment, the same can be realised from the resource allocation from Centre to the state through Reserve Bank of India. When Kayamkulam gas based power project was being set up by central government undertaking NTPC Ltd, it was heralded as the solution for Kerala's power deficit. The power purchase agreement was signed accordingly. In case Kerala was not taking up power from Kayamkulam, KSEB was to pay compensation to the producer. Owing to shortage of natural gas, Naptha is being used as fuel there. There was high variations in the price of Naptha in the international market and the cost of generation from Kayamkulam power plant got hiked up. At one point of time, KSEB was not taking any power from that station since KSEB will lose more money if power is taken and distributed at a much lower cost!
Now alternating governments in kerala have realsied that it will be foolish to depend only on hydel generation. One MOU was signed between governments of Kerala & Orissa for coal linkage. Recently there were news that Kerala Government will set up a coal based thermal power plant in cheemeni in kannur probably using coal from Orissa. In my humble opinion, it will be better if kerla sets up a captive power plant in orissa itself and transfer electricity from there to kerala rather than transport huge quantity of coal all the way about 1500 km. In addition there is the problem of ash disposal which can be more severe for a densely populated state such as kerala.
One thing is sure, the cost of generation from any thermal power plants will be higher. Already KSEB had resorted to load shedding or power cut for many years. This year a thermal surcharge is being imposed on the consumer to make good the loss to KSEB on account of thermal power purchase. Since there are not many industries in kerala, the domestic house hold, Hotels and other merchant establishments are the major consumers. One more tariff hike is in the offing. There will be lot of agitations afterwards. But we need to look at things more realistically. If KSEB can't make itself at least in break-even position, the state is in for a shock, literally! I hope the alternating governments led by two major political fronts in kerala will set apart their traditional enimity and look at things with eagerness to long term solutions rather than short term political mileage.
It should be emphasised that whenever a powercut occurs, merchant establishments as well as apartments switch to diesel/kerosine based power generators. They are highly costly and produce more harm to environment than thermal power plants. In the interest of all, it might be better if we can make appropriate hike in tariff than to allow load shedding to progressivel increase to 24 hours a day.
On the other hand, it is important for kerala to nurture cordial industrial atmosphere so that there can be more balance in the peak - off peak demand ratio. The continuous factories normally have their own captive power generation capability or at least will be in aposition to buy at higher rate.
Hmm, i guess this had been pretty long. Better stop than to bore you further........