Blackouts: The role of India's wholesale electricity sector | Akshaya Jha

Akshaya Jha is an Assistant Professor of Economics and Public Policy, Carnegie Mellon University, Heinz College of Information Systems and Public Policy. Akshaya will be discussing the paper Blackouts: The role of India’s wholesale electricity sector

Abstract:

Electricity blackouts impose substantial economic costs on firms and households. This paper advances a new explanation for their continued prevalence in India, the world’s third-largest power sector.  Using novel data on India’s wholesale electricity sector, we demonstrate that utilities satisfy less electricity demand when wholesale procurement costs are high.  As a result, supply-side misallocation of output across power plants can decrease the quantity of electricity supplied to end-users.  We provide evidence that a substantial share of the supply-side misallocation in India arises from discretionary power plant outages—outages called by suppliers for economic rather than technical reasons.  Reducing supply-side misallocation by returning plants on discretionary outage to service significantly lowers procurement costs, resulting in increases in the quantity of electricity purchased by utilities sufficient to eliminate roughly 70% of reported shortfalls between quantity demanded and supplied.

Please email gri.events@lse.ac.uk  to request the Zoom joining details for this workshop by by 5pm on Tuesday, 8 November 2022.