Distribution losses: How to reduce

Around 22% of electricity produced in India is lost in distribution. Here’s a review of the core issues and minimisation techniques. By Subhajit Roy

The Indian power sector has witnessed remarkable growth over the last few decades. However, power losses remains a major roadblock. It is estimated that power losses in transmission and distribution (T&D) across India average around 25 per cent and in some areas they can reach up to 50 per cent. That means that half of the electricity being generated either never reaches an end-user or is used but never paid for. Distribution is the weakest link in the entire power sector value chain. Therefore, being the revenue generating link, it is threatening to derail the entire process of power sector reforms as the sector has been reeling under losses. According to a recent report compiled by Power Ministry, around 22 per cent of electricity produced in India got lost during distribution in May 2018. Today, with increasing concerns about energy efficiency and improving the financial health of distribution companies (DISCOMs) of India, distribution loss reduction has assumed a role of prominence in the utility industry. Here, we explain some of the core issues of distribution losses and minimisation techniques.

The core issues

Outdated infrastructure

Rattan Lal Labroo, Joint President – Power Group, Angelique International Ltd said, “The outdated infrastructure is the main problem. It’s compounded by the fact that so many of India’s citizens aren’t on the grid at all. Not only do power lines fail to reach many rural areas, but many of those living in city slums are also without utility services.”

Power theft

Second major additive to this problem is power theft. According to Mr Labroo, “The most visible indication of energy theft occurs when users illegally tap into the public supply. Throughout the less developed world, users without access to electricity tap illegally into existing lines.”

Excessive unmetered use of electricity

The third way that energy is lost is through excess unmetered use of electricity. Power is unmetered in various settings. In urban areas, individual apartments may be unmetered, with only a single meter serving a multifamily dwelling. “Unmetered use is even more common in rural settings where it may be difficult and expensive to install individual meters and even more problematic to ensure that they are regularly and accurately read,” Mr Labroo said.

India deliberately abandoned metering the power supply for agricultural irrigation in the 1970s, as part of the Green Revolution strategy of switching to new high-yield crops, which required regular water supplies. The provision of subsidised power to farmers was considered a critical investment for improving the productivity of the agricultural sector.

T&D losses is a major concern in Indian power sector. Highlighting the core issues, A V Jagdish, Senior Vice President, Havells India Ltd says, “Apart from power theft, poor maintenance and leakages what add to the problem are other technical aspects like quality and type of conductors, transformer capacity, and other equipment used for T&D.”

He opines that these factors cannot be overlooked as they have huge bearing on endeavours to make power accessible to each and every household. “Without having an efficient system supported by right and efficient equipment, ‘Power For All’ is not possible,” Mr Jagdish observes.

How to reduce distribution losses

Upgrade distribution system

T&D losses occur in transmission between sources of supply and points of distribution as well as during power supply to consumers. To stop this, all aspects of T&D needs to be made efficient. Therefore, Mr Jagdish suggests, sufficient investments must be made to upgrade the age-old equipment in distribution system. He said, “From electricity connection with smart meters for homes to best-in-class modern transmission system by production and wheeling companies, India needs a speedup the complete overhauling of the T&D system.”

Mr Labroo is also of the opinion that better equipment and more accurate meter reads should help reduce losses due to old equipment and determine where losses are occurring in the system.

Reduce electricity theft

Reducing electricity theft will go a long way to help curb losses. More tie lines between the regional grids to increase power transfer capacity would help to ensure that the most efficient lowest cost generation is reaching consumer. Otherwise the tie lines are a constraint to the system.

“In coming years India will have to resort to a system, of smart and prepaid meters, like many other countries in the developed world. Though a massive task, looking at the volume, we should be able to achieve it,” states Mr Labroo.

Has UDAY failed to deliver?

Dying DISCOMs under debt is a lurking issue. This paved the way for the Union Cabinet, chaired by the Prime Minister Narendra Modi, to give its approval to a new scheme in November 2015 – Ujwal DISCOM Assurance Yojana (UDAY) – moved by the Power Ministry. UDAY provides for the financial turnaround and revival of DISCOMs.

UDAY seeks to empower loss making DISCOMs to breakeven in two-three years by helping the DISCOMs in improving their operational efficiencies (compulsory smart metering, upgradation of transformers, popularising LED bulbs), reducing the cost of power (increased supply of cheaper domestic coal, liberal coal swaps from inefficient to efficient plants, supply of washed and crushed coal, faster completion of transmission lines), minimising their interest cost etc. However, distribution companies of Punjab and Karnataka have reported an increase in their losses even after joining UDAY.

While answering to a question on whether UDAY has failed to deliver in the context of continuing distribution losses or not, Mr Jagdish of Havells India said, “UDAY is a work in progress and it would be wrong to say that it has failed. It is the flagship program to revive ailing DISCOMs and strengthen their financial conditions. While all stated goals and objectives may not have been met as yet but it is clear that UDAY has a positive influence in reforming the distribution segment. This is expected to have a cascading effect on improving investments in the sector and the operational efficiency of the DISCOMs is also expected to improve significantly.”


India has thousands of electrified villages where the people still live in darkness. Majority are not connected to the grid. They adopt techniques to steal or tap power from nearby distribution lines. “Rooftop solar power or, alternatively, microgrids powered by various combinations of small renewable installations and diesel generators—are the only way their inhabitants will get reliable electricity which will thereby reduce the distribution losses,” concludes Mr Labroo.

By Subhajit Roy