Union Budget 2019: We have achieved 100% household electrification in October 2017 (except 18,000 in Chhattisgarh).
Union Budget 2019 India: We have achieved 100% household electrification in October 2017 (except 18,000 in Chhattisgarh). This has only been possible because of the relentless focus on providing electricity access to all households. More than 2.63 crore willing households have been electrified across various states in the country, taking the customer base up by 12.2% to reach 21.44 crore households. This customer base can be a boon or a bane on utility finances and leveraging them would be key for the sector’s transformation.
As industry and market structures are expected to evolve, business model clarity may be difficult to achieve on the road ahead. While not always obvious, utilities have to improve on several parameters to be future ready and become successful.
Traditional utilities may choose from a range of paths to move forward from where they are today to take advantage of this customer base, given that the revenue gap between retail tariffs and cost structures are unlikely to converge in the short term.
[Notes to graph: * The % addition to the customer base in 18 months since October 2017
*Around 20,000 customer yet to be electrified in Chattisgarh
Source: Saubhagya Dashboard]
As platforms of energy, mobility, communications and house automation look to converge, incumbent utilities need to be as nimble. Given that they have a number of potential advantages with regard to data, policy, relationships, revenues, partnering and regulatory decisions – these should be leveraged for the successful development of future business models.
For example, utilities already hold large quantities of data that have not been effectively utilised, giving them the opportunity to add value through better utilisation and communication of this data. Similarly, utilities are a natural collaborator with regulators in the shaping of responsive policies to accomplish public interest objectives, including how to enable customers to achieve greater control and choice. Utilities are also attractive partners to new entrants that wish to offer high-value products across the platforms.
It is now time to utilise this 100% electrification as a lever for transforming the utility sector.
By Sambitosh Mohapatra, Partner and Leader Power & Utilities, PwC India