Going after industrial consumers

The distribution companies are trying to keep industry on the grid

The distribution companies have just raised the stakes, and are about to blackmail industrial consumers  by increasing their fixed charges every month, so that they have to use grid power in preference to using solar power. This has been proposed as a new plan with the International Monetary Fund. This policy may be implemented in two months, higher consumption from the national grid will rewarded by lower per unit costs, while lower consumption by using solar or other off-grid sources will be penalized by higher fixed charges for the load assigned. It is proposed that this model be later followed with domestic consumers The IMF has asked the government to compile and share data on how many consumers have left the grid.

It is almost as if someone wanted to encourage the process of solarization, for industrial consumers at the moment are bound by two constraints. First, if the sun is not shining enough, generation drops.away. Second, after the sun sets generation stops. Both can be overcome  by storing extra generation, because solar generation is so plentiful, it is enough to cover rainy weather, while factories are usually closed at night. Storage on a domestic scale is becoming possible, while it has already been on an industrial scale. Solarized connections usually use the grid as a backup; increasing fixed charges, domestic or industrial, will merely add monetary incentive to installing storage facilities. The Power Ministry mandarins should remember that the switch to solar power that is now so worrisome did not come about except because the grid tariffs were so high that it made economic sense to make the switch. One result has been to end the distribution companies’ monopoly over generation.

The DISCOs have no option but to lower tariffs. That can be done by going in for solar power, as well as other renewables, themselves. For that, they will need to cease to think of large utilities (with large backhanders), and go for innovative solutions like the Keenjhar Lake floating 500 MW generation plant, which offers a 14 percent rate of return, and a tariff of about Rs 12 per unit, as opposed to about Rs 34 per unit at present. Another consideration weighing on the government is the fact that the DISCOs might be impossible to privatize while shackled by capacity payments to independent power producers and the flight of consumers. There is little option but to cut tariffs.