Meghalaya’s Power Surplus
By KN Kumar
Meghalaya’s Power Minister recently announced that the state has transitioned from a power-deficient to a surplus state, now generating excess electricity and earning revenue by selling it through the Indian Energy Exchange (IEX). With a capacity of 360.75 MW from state-run plants and support from central utilities, Meghalaya is meeting its yearly demand of 600 million units while generating ‘surplus’ power, mainly from the Umiam reservoir. In 2024, these sales brought in over Rs 50 crore. So goes the statement. This marks a significant achievement for Meghalaya, but the claim warrants scrutiny given the state’s energy dynamics and the Minister’s caveats. Let us analyse:
Trading surplus power on the IEX is a good step. By turning extra water from reservoirs into electricity, Meghalaya prevents waste and brings in money to improve its energy setup. As part of India’s competitive energy market, which saw huge electricity trades in 2024, Meghalaya is stepping into a new role, balancing local needs with national contribution. This change from scarcity to surplus reflects better resource management and offers hope for energy security, and clearly, monetizing the surplus bolsters the MePDCL’s liquidity. But the state’s reliance on central utilities like NEEPCO and NTPC for 367.5 MW of its power supply suggests that this surplus is partly contingent on external agreements. If these agreements falter or demand spikes, Meghalaya could revert to a deficit state. Increasing power demand is a marker for a vibrant economy, and if the demand growth has been stagnating, then it tells us a different story, about which, some other time.
The shift to surplus status, as the Minister himself noted, is a delicate balance, heavily reliant on favourable weather conditions and the uninterrupted operation of power-generating units. With 85% of its energy coming from hydropower, Meghalaya is at the mercy of unpredictable rainfall, made worse by climate change. The Minister was therefore right in pointing out the uncertain nature of this surplus; a dry season or problems with old power plants could quickly change things. But it is not very clear how the Minister intends to immunize the state from such shocks. Without robust contingency plans or investments in alternative energy sources, this ‘surplus’ could be highly slippery. In 2023, Northeast India experienced a 15% drop in hydropower due to erratic weather, and the nagging worries about low water levels in the Umiam reservoir keep raising flags once in a while, about long-term reliability. So, the risks are real, just as the cash is.
Now, let us examine how selling power through the IEX is promising, with all its uncertainties. Prices fluctuated between Rs 3 and Rs 10 per unit in 2024, and high inter-state transmission costs can eat into profits, as seen in the case of Arunachal Pradesh. While revenue from sales is beneficial, focussing too much on outside markets might neglect local needs. The power sector has had its ups and downs. In the 1980s, Meghalaya had a surplus, but crises in the 2000s hit due to some management issues at the Meghalaya Energy Corporation Limited (MePDCL), which still faces a huge debt. While the current surplus is good news, prioritizing IEX sales could lead to repeating past mistakes by putting short-term gains over long-term stability. Market dynamics bring additional challenges. The IEX dominates India’s power exchange market, but there’s concern that future shifts could lower prices and reduce revenues in the future. Such changes, seen in European markets, show that a balanced strategy is sine qua non to prioritize energy security alongside making money.
Then the real concern – only 79.4% of Meghalaya’s 7,000 villages have electricity, and the average energy consumption (675.19 kWh) is behind the national average (778.71 kWh). Many rural areas, especially in remote places like those in West Khasi Hills, or South Garo Hills, have spotty power, making it hard for people to access healthcare, education, and jobs. Strictly, therefore, there is no surplus. But if such ‘surplus’ sales take precedence over local electrification, it could worsen the situation in rural areas.
Then, how about the diversification of our energy sources? Meghalaya has untapped renewable resources that could help. The state has potential for 3 to 9 GW of solar, 403 MW of small hydro, 165 MW of biomass, and 90 to 136 MW of wind power, but progress in using these resources is slow. By 2024, there was only a little solar capacity installed. What are the budgetary allocations for the renewable energy domain? And, how are institutions like the MNREDA functioning? Has any serious review been done recently at the highest level? MNREDA’s functional “surface” of operations vis-à-vis the limited project outcomes, or the lack of large-scale impact, do not give me any reason to be hopeful.
India is also struggling to meet its renewable energy goals, which may make it difficult for Meghalaya to trade renewable energy certificates without robust policies. Additionally, the aging transmission grid restricts new renewable projects. Focussing on community-based microgrids could supply power to rural areas while reducing their dependence on hydropower. Community-driven projects, such as the pilot solar plant in Ri-Bhoi, demonstrate potential but require support and investment to expand. Above all, the state should prioritize bringing electricity to the remaining 20.6% of villages to foster inclusive growth. Many rural households still depend on kerosene for light, so investing in local energy access could enhance lives, particularly in critical sectors like agriculture and tourism. Progressing toward India’s goal of universal electrification by 2030 would ensure that the advantages of surplus power benefit everyone. These efforts would align with national objectives while addressing local needs.
The Minister’s vision for planning through 2035 is encouraging, but without solid investments in modernizing the grid and renewable energy, the state could still be at risk. Environmental and social factors also complicate the situation. Hydropower projects like Umiam can hurt local ecosystems, with studies showing fewer fish in the Umtru River. Previous plans to sell power to Bangladesh fell through due to environmental issues, and IEX sales may preclude crises in the short term, but cannot solve structural issues.
While the vision for long-term energy planning up to 2035 is commendable, the lack of detailed strategies to address infrastructure vulnerabilities or diversify energy sources leaves the announcement sounding optimistic but fragile. For Meghalaya to solidify its surplus status, it must immediately opt for energy diversification to ensure stability beyond short-term gains.
To conclude, Meghalaya’s power surplus (with all its riders) is still a big milestone, showing better management and market involvement. More importantly, it is the cultural shift of doing business, which has been a bit alien to the psyche of government agencies, not just in our state, but in the whole country. It is a positive shift, undeniably, but not a solution. By broadening energy sources, updating infrastructure, and ensuring everyone has access to electricity, Meghalaya can turn its ‘surplus’ into a stepping stone for a better future for all its people. Yes, generating some cash is good, but that is only half the recipe.
(The writer is a Former member of the IAS)