How Does Mumbai Keep the Lights On?

Mumbaikars enjoy arguably India’s best urban electricity supply.
Can its model be replicated across other mega-cities?

You’re probably not reading this under kerosene-lantern light. Affluent, urban Indians or those of us living in the United States probably take our electricity supply for granted. When we flick a switch, we expect the lights to come on. This is not the reality for many across India. Stable electricity supply is essential to India’s development but has been a major challenge, for many
reasons. I lived in Bangalore between 2004 and 2012 and we experienced frequent power cuts, spending a fortune in money and greenhouse gas emissions on back-up generation. However since we’ve moved to Mumbai, we get a power cut maybe a once year? Why is this and what lessons can we learn?

The power sector experts I spoke to pointed to four inter-linked reasons why Mumbai’s stable grid stands out among other Indian cities.

First, and perhaps most importantly, Mumbai has historically been powered by private utilities like Tata Power. The “private versus state-run electricity supply” debate is at the heart of India’s power sector struggle. While private players are free to charge customers the higher prices needed to recover their costs and operate efficiently, state utilities are hamstrung by politics. It’s no secret that for politicians, offering free or heavily subsidised electricity to massive voting populations in rural areas is part of many an election manifesto. The following point cannot be stressed enough: if you charge less for something than what you paid for it, you will always lose money and
perform badly. This has been the case for many of India’s state-run utilities for years. Even India’s super cheap solar power has to be paid for by someone, somewhere. Which politician will have the courage (and political capital) to first optimise and then cut wasteful electricity subsidies that burden the entire system? I’ve asked this to former chief economic advisors, to think-tank policy
wonks and to fellow beleaguered journalists and I rarely get a coherent answer, never mind a heartening one. There are signs of improvements in Delhi, for example, but at the nearest sign of election defeat, populist policies come back all too quickly . We need a visionary leader who can turn the Indian farmer from a drain on state coffers to a net power producer, through the use of solar irrigation pumps, direct cash transfers and whatever other means we can muster to attack the status quo. The Mumbaikar has shown a willingness to pay high tariffs for stable electricity, but privatisation is just one piece of the puzzle.

The second reason Mumbai’s lights don’t go off when the rest of the state faces power cuts is called “Islanding”. In a traditional power grid, power plants put electrons onto the transmission system and your home’s electricity will probably come from the power station that’s geographically nearest to you. You generally can’t allocate the electricity from a specific power project to specific points on the grid. However, through Islanding, Mumbai isolates itself from the rest of Maharashtra and does just this, creating a closed loop between its power generators and consumers. Is this ethical? Should other parts of Maharashtra go without power so that Mumbai’s millions stay connected? Depending on where you are on the political spectrum, you
could probably argue either way.

Third, Mumbai’s electricity grid is largely urban. Whereas other state grids have to cater to numerous, dispersed, rural farmers, Mumbai’s customer base is relatively more compact and affluent. If there’s one lesson I took away from my energy policy classes at grad school it is that urban electrification is much easier than building and managing power projects and transmission lines in agricultural hinterlands. My hope is that as more and more Indians move to urban centres — as badly managed as our cities are — it will become easier to provide electricity to every household. My grandparents grew up in villages, studying under kerosene lantern. Many children still do. We cannot accept this reality in the 21st century.

Lastly, experts cite Mumbai’s proximity to ports and therefore coal-import infrastructure as a reason for the relatively reliable coal-fired power projects that that feed it. Cities further from coal supply may be more vulnerable to fuel shortages. It will be interesting to see how Mumbai’s grid performs this month, as Maharashtra is facing an acute coal shortage.

You’re probably asking yourself: so what? Mumbai has set up a nice system for itself — but what’s the lesson for the rest of India? I’m afraid I don’t have many answers. The analysts I spoke to said the Mumbai model is not replicable, because of its coastal, privatised, islanded, urban structure. From a policy maker’s perspective, one thing the Maharashtra government has done well in
Mumbai is allow private companies to operate as transmission and distribution franchisers. These companies manage the grid but are not allowed to increase power prices for consumers, so their profitability depends on how efficiently they can deliver electricity and collect payments. Torrent
Power’s operations in Bhiwandi is one example of franchisee model success, which is seeing traction across other Indian cities. However, for more recent, scalable models of electricity supply we can look to Gujarat’s decoupling of agricultural and household supply, privatisation in Delhi which has lowered “aggregate technical and commercial” losses from 52% to 12% in the last
decade, and better grid management in West Bengal, Telangana and Madhya Pradesh (though the latter three have taken a financial hit). CSIS has a great state-by-state policy reform tracker you can check out.

India’s electricity grid is a fascinating, confounding beast that gives us cause of optimism and frustration in equal measure. Tweet me if you feel I’ve missed anything important or simply want to geek out. I think Mumbai shows that we have the means to deliver stable electricity to a large urban population — I believe what we often lack is the will.

Shravan Bhat is a reporter at Power Finance & Risk. The views expressed here are the author’s.