16 Oct 2019: The Hindu Editorial Analysis
1) On transport workers strike in Telangana
- Even as the transport workers strike in Telangana reached its eleventh day on Tuesday - it began after talks broke down with the government - there has been little by way of official communication to negotiate a solution.
- Two workers lost their lives to suicide, which was attempted by a few others as well, following the peremptory “dismissal” of 48,800 striking workers of the Telangana State Road Transport Corporation (TSRTC) more than a week ago.
- The striking workers were “dismissed” for failing to turn up to work before a government deadline. Their main demand has been the merging of the loss-making TSRTC as a government department, which the government has been loath to concede.
- The enterprise of public transport in most urban centres in India has been a difficult proposition economically today. This has been even more so in Telangana where bus transport has been beset by problems such as ageing fleets and high operational costs largely due to high fuel rates and subsidised fares.
- This has hurt operations and has also resulted in worker angst about a lack of adequate salaries. The government led by the Telangana Rashtra Samiti has been unwilling to take on the burden of operating the corporation under its aegis because of its losses, estimated to be ₹928 crore in FY2019 alone.
- Yet, to grease the wheels of a growing economy, a sustainable urban transport, in which road transport is a key component, is a must. This is possible only by modernisation such as the deployment of new buses, and identification of proper routes and services using information technology among other reforms.
- Without adequate State support, these reforms would not be possible and will force the operations of the TSRTC to remain within a vicious cycle of operating losses, cutbacks and poor services.
- Instead of impressing upon the need for this modernisation to the workers and negotiating a solution, the TRS government has resorted to “dismissing” nearly the entire unit of TSRTC workers in what is clearly a legally suspect move that has been challenged in the Telangana High Court.
- Chief Minister K. Chandrashekar Rao went on to not only justify the layoff as “self-dismissals”, but also took a hard-line position saying that these workers will not regain their jobs.
- These gestures have only intensified the struggle even as public transport in Hyderabad and other urban areas has been thrown into disarray. Telangana should have handled the transport workers’ strike more sensitively.
- In public interest, the government should bring the striking unions back to the negotiating table. More importantly, the dismissals should be revoked to make the talks meaningful.
2) On a cost-effective way to power generation
- India has been aggressively expanding its power generation capacity. Today’s installed capacity of 358 GW is about four times of what it was in 1997-98, which shows a doubling of capacity in each of the past two decades - or about 75 MW per day.
- By India’s historical standards, these are astonishing numbers indeed. In recent years, the major growth drivers have been renewable energy sources such as solar and wind power, and investment from the private sector.
- The private sector accounts for almost half the installed generation capacity. For the last three years, growth in generation from renewables has been close to 25%.
- India aims to have a renewables capacity of 175 GW by 2022 and 500 GW by 2030. Solar and wind power plants would account for much of the targeted capacity from renewables. How can this be achieved?
- Project size and cost: Today, thermal generation capacity accounts for about two-thirds the installed generation capacity in the country. This shows that though there is increasing awareness about the environmental impact of fossil fuels, the reliance on thermal plants is unlikely to end any time soon.
- Table 1 underlines the two major advantages that thermal power plants enjoy relative to solar and wind power plants. Thermal plant capacities are large and therefore targeted capacity additions can be achieved by constructing fewer such plants.
- On average, it would take 18 solar or wind projects to generate the same quantity of power as one thermal plant.
- For the same reason, switching from fossil fuel to renewables will remain challenging as the administrative overheads that would have to be incurred in setting up the multiple projects could significantly add to the cost.
- Not surprisingly, infrastructure projects have an inverse relationship between size and unit cost, indicating economies of scale. As the capacity of power plants increases, the average cost of power per MW reduces.
- The average cost per MW for a thermal plant is about 25% lower than that of a solar plant. In order to surmount the cost advantages that large thermal plants enjoy today, we must focus on developing larger solar and wind power plants that can also exploit similar economies of scale.
- Project ownership: The next point is that of ownership. Over the last two decades, 63% of the total planned generation capacity has come from the private sector.
- Private investment has been even more pronounced in renewables, accounting for almost 90% of investment in wind and solar projects. So has private investment helped?
- Table 2 has the answer. Private sector plants have an average cost per MW that is 12-34% lower for all categories except solar. Lower capacity cost has a direct impact on electricity tariffs.
- Electricity tariffs broadly consist of two components: fixed capacity costs and operation and maintenance costs, which include fuel expenses. In general, capacity costs account for more than 90% of the levelised cost of electricity, irrespective of the fuel type.
- If we are able to create additional capacity at lower cost, then it will play a big role in keeping electricity tariffs low. Private investment in the power sector has not only helped in augmenting capacity but has also helped in lowering cost.