Electricity reforms in the economic strategy of Tamil Nadu

Discussions about the electricity sector have traditionally taken place within a specialised community of experts on electricity. In this paper, we broaden the discussion to look at the problems of the electricity sector in Tamil Nadu from the viewpoint of the economic growth strategy of Tamil Nadu. Electricity investment in Tamil Nadu has faltered. Electricity availability could potentially hamper growth in coming years. Renewable electricity will become particularly important for exporting, and directly connects into the success of Tami Nadu in exporting. There are a group of feedback loops which are playing upon the difficulties of the status quo, which are intensifying the problems of the electricity sector. When we think of the path to a decarbonised electricity sector, a great wave of investment and risk-taking is required. This can only come from the private sector, which commensurately requires 'investibility': a trusted environment of the rules of the game which elicit their confidence. To get to this, policy makers need to grapple with the problems of under-pricing of electricity. While there are many problems in the Tamil Nadu economy, the electricity sector looms large in making a material difference to the outcomes. We sketch a seven part feasible path to reform.