200 units of free electricity? How Karnataka continues with its 'unscientific' subsidy

By Shankar Sharma*
Recent news items (click here, here, here and here) suggest the issue of the financial crisis being faced by Karnataka's public sector units KPCL, KPTCL and ESCOMs, catering to the energy sector. Though not entirely new, the crisis should be a cause of major concern for the overall financial scenario and the larger welfare of our people in the state.

Whereas these power sector entities have been generally facing financial issues for decades, and the financial woes are also being faced by the electric companies in other states also, the increasing level of financial woes within the state, as reported in the media, should mean that the developmental activities in the state can get seriously hampered, if the same are not addressed urgently.
The continued financial burden due to multiple but unscientific subsidies, technical and commercial losses in the system, and the overall inefficiency can only make the situation worse, if corrective measures are not implemented effectively.
One news item has stated: "As per the submissions made before the commission, Escoms will now borrow money to pay transmission fee and power purchase costs to avoid a financial crisis in the power sector."
The recently announced 200 units of free electricity per month can only escalate the financial woes. The fact that all costs associated with the electricity generation, transmission and distributions will only keep increasing, as they are happening all over the world, must not be ignored.
Hence, the challenge for the state can be seen as acute; whereas the revenue from the sale of electricity cannot be increased beyond a certain margin (when we take into account the sensitivity of the price raise as a politically hot issue), the subsidies and freebies will increase the overall cost of electricity. At the same time the costs of taking electricity to the consumer's premises also is increasing.
A multipronged approach is needed to make the electricity sector in the state viable in the medium and long-term. One techno-economically viable option is to encourage various categories of consumers, especially the residential, commercial and agricultural consumers, to optimally harness the rooftop solar PV systems so as to reduce the overall financial burden on the state government.
Since the union government is also providing capita subsidy for such rooftop solar PV systems, the state govt. should embark on a massive campaign to encourage the same along with any financial support if needed.
A domain expert has stated: "Using the Maharashtra government as an example of success, pilots (on rooftop solar OR small size solar PV systems) could be initiated in other states with a national programme on clean energy for agriculture, enhance the reliability and sustainability for rural areas, reduce losses and subsidy burden on states and when linked to a sustainable livelihood program, can accelerate green jobs in rural areas."

It is also credibly reported in the national media that the small size solar PV systems are being deployed in the agricultural sector in the states of Rajasthan and Gujarath with commendable results. The associated policies and experiences in these states should be studied diligently, for implementation in our state.

Option to optimally harness enormous potential of small size solar PV systems will minimise need to divert forest and agricultural lands

In the larger context of the state's overall welfare considerations, it should not be difficult to visualise the techno-economic feasibility of such widespread usage of small size solar PV systems along with suitably designed energy storage batteries, wherever needed (as compared to relying only on large size solar power parks, as is happening in the state), to revolutionise the demand/ supply of electricity in the state for a sustainable and green energy future.
Whereas, the recently announced policy on 200 units of free electricity per month can only directly lead to the escalation of the financial woes of the state, it will also lead to a huge disincentive for the residential consumers to install roof-top SPV systems, and hence will indefinitely delay the green energy transition for the state.
Since the state has no coal reserve within its borders, and has more or less exhausted almost all of its hydro power potential, and also since adding more nuclear power plants is economically non-viable, the roof-top SPV systems must play a critical role in the state's energy scenario.
This option to optimally harness the enormous potential of small size solar PV systems along with suitably designed energy storage batteries, wherever needed, and in as many applications as feasible, will also minimise the need to divert forest and agricultural lands, minimise the pollution/ contamination of air, water and soil.
The concerned authorities in the state energy department should be mandated to come up with a diligently prepared energy policy for the state so as to implement the necessary action plans to encourage highest levels of efficiency, demand side management, energy conservation, and the widespread usage of solar PV systems along with suitably designed energy storage batteries.

Effective consultations with the interested individuals and civil society groups will make such an energy policy highly relevant to the needs of the state. Many experienced individuals, such as myself, will be happy to effectively contribute to the associated discussions.
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*Power and climate policy analyst, electrical engineer with over 40 years of experience in the power sector, including 8 years in Karnataka. This article is based on the author’s representation to Karnataka chief minister Siddaramaiah

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