Impact of water crisis: Power prices set to zoom!
So much talk about water crisis in Bangalore, I wish we cared about the crisis beyond the city’s boundaries too.
Because, the impact is multi-faceted, and particularly positive for power generation giants like TATA Power, Adani Power, NTPC Limited.
Let’s deepdive and understand in detail!
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The problem is, the water level in half of India’s total 150 water reservoirs is less than 40% of their capacity right now.
In fact, for over 2/3rds of these reservoirs, the water level is less than half.
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Why did this happen?
Well, the biggest factor is something for which the Central and State Govts can’t be blamed.
Last year, India was hit by the El Nino effect which is an adverse climatic pattern. And that caused severe droughts in several parts of the country due to delayed Monsoons.
But, wait, how’s that related to power prices?
Here we go!
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Well, less water in the reservoirs also means, lower ability to generate hydropower when needed.
This is so because most of these reservoirs are built as attachments to hydropower dams.
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India already logs power shortage at peak hours, and is projected to hit a record peak demand of 250GW this summer.
So, with hydro power likely to fall short in supporting that demand, the pressure on coal generated thermal power will go up significantly as renewable power is still a small part of the total energy mix.
And when it comes to thermal power, well, India is already struggling.
It’s importing a lot of foreign coal in advance.
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And what does imported coal mean?
Higher price of coal, which means higher cost of producing power.
Just for context, due to power shortage last year, discoms in India purchased power for as high as Rs 42 per unit on the exchanges like Indian Energy Exchange (IEX).
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So, water crisis is going to leave a lot more scars than we think about.
And definitely way beyond just the major cities like Bangalore or Hyderabad.
And the only one to benefit? Power companies which will be able to quote higher prices in spot exchange markets.
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Meanwhile while El Nino was beyond the control of Govts, I think, it is also their responsibility to plan and build for such contingencies.
And that is one area, with respect to which our Govts have miserably failed, across the board.
We need more accountability. And, ownership. And that’ll happen when voters make this an election issue.
What do you think of this?
