Shankar Sharma: White Paper on Electric Power Sector – a Civil Society Perspective

The Scenario

The Indian power sector can be said to be at cross roads. The policies and practices in power sector since independence, which have not undergone major reviews, have led to many serious problems from economic, social, environmental, and inter-generational perspectives. The power sector has come to be known as a major hurdle in achieving the desirable level of socio-economic development.  While electrical power is being clearly associated with human development index, the sector as a whole also has lead to many issues from social and environmental perspective so much so that a lot of debate is ongoing across the world to make it people friendly and environmentally safe. The fast evolving Climate Change threats have made it imperative to review the sector urgently and holistically so as to make it suitable to address the multiple challenges of the fast changing modern society. The power sector in India has thrown up multiple issues of serious concern to the society:

  • Chronic power cuts since decades; poor quality (voltage and frequency issues); poor reliability; brown outs and blackouts are still a cause for huge concern;
  • Whereas 30 % population is without access to electricity even after 6 decades of independence the per capita electricity consumption of urbanites, and especially elite sections, are crossing the global average; the situation indicates gross inequity;
  • Unacceptable levels of inefficiency; huge T&D and commercial losses; low PLFs for thermal and load factors for hydel stations;
  • Health and safety concerns associated with coal and nuclear power projects; Climate Change issues;
  • Unsatisfactory tariff regime; unscientifically targeted subsidies; ever increasing tariffs; absence of 100% and accurate metering; poor revenue realisation;
  • Lack of clarity and stable policies; lack of professionalism; political interference; gross inequity continues;
  • Poor financial status of electricity companies; financial institutions hesitant to extend loans; lack of adequate finance for improvements;
  • Huge demand growth predicted for the future; 1.5 Billion population by 2030 (UN estimate); increasing aspirations and growth in urban areas;
  • No consumer category, including farmers, is satisfied; sector has not been in full compliance with many Acts of parliament including the Constitution.

The issues with the business as usual scenario in Indian power sector

The business as usual scenario cannot be continued keeping in view the serious challenges ahead. The past policies and practices are unsustainable for the growing population, and cannot address the existential threats associated with Climate Change satisfactorily. The social, economic and environmental issues, as listed below, associated with the conventional technology power sources are too great to ignore any longer from the sustainability perspective.

  • At the projected rate of growth in electricity demand, the indigenously available coal and hydrocarbon resources will not last for more than 3 or 4 decades. Continuing dependence on such resources will force the country to increase its dependence on imports which will adversely affect the energy security; climate change and health issues from fossil fuel burning have become too great to be ignored any longer;
  • Apart from cost considerations (as evident from the recent global experiences), nuclear cannot be an option for meeting the increasing demand for electricity. The present nuclear policy will erode India’s energy security (imported reactors & fuel); no satisfactory technology available for handling the spent fuel; consequences of nuclear accident are too great for a densely populated country;
  • Due to riparian and other constraints developing hydro power capacity any more (from the present level to 150,000 MW total as envisaged in the integrated energy policy) is highly problematic; Climate Change implications can threaten the viability of dam based power plants in the long run; social, economic and environmental issues associated have become too important to be ignored any longer;
  • Economics and logistics of centrally controlled and grid based power system is denying electricity access to 30% of the population; this scenario is unlikely to change and not suitable for remote areas; benefits of new capacities are largely flowing to existing customers, especially in urban areas;
  • Conventional power plants (based on fossil fuels, dam based hydro and nuclear power technology) have serious concerns associated with forced land acquisition, land submergence, forest felling; pollution of air, water and land; health issues; denial of access to natural resources to poor people. Credible and popular opposition to these issues should not be ignored any longer. An unfortunate nuclear accident will have unimaginable consequences to our densely populated country, and hence must be avoided at all costs.  It is entirely feasible to design our power system without nuclear power plants.
  • The global concerns on Climate Change and the efforts to minimise GHG emissions have imposed serious limitations on how much more of the conventional power plants we can build; since the associated resources are not inexhaustible, and also because they pose health issues, the society has the need to adopt suitable alternatives to meed the electricity/energy demand of all sections of our society;
  • More than half of all buildings, which are likely to be seen in India by 2040, are yet to be built along with increased urbanisation; these will lead to many fold increase in electricity/energy demand; the approach from a business as usual scenario will not be able to meet this increased demand in an acceptable manner.

Paradigm shift needed for the power sector

A paradigm shift has become essential w.r.t the way we consider the issue of demand and supply of electricity.  Instead of maximising the electricity production, the objective of the power sector should be to determine the lowest quantum of additional electrical energy needed to lift the poor from the clutches of poverty, and to supply the total electricity at the lowest overall cost to the entire society so as to enable all sections of our society to achieve acceptable level of HD index on a sustainable basis without having to compromise on our natural resources. The focus should be to ensure equitable access for adequate quality electricity for everyone at reasonable prices, and to harness our natural resources responsibly to minimise our import dependence.  The policies and practices in the sector have to undergo corresponding changes.  Since India has huge potential in renewable energy sources (REs), the focus should be to move away from conventional technology power plants and towards 100% RE based power at the earliest to minimise the pollution of air, water and soil.

 

  • Realistic demand projection should determine the total quantity of electricity to be produced within the nature’s limits; focus of electricity planning should shift from supply-orientation towards demand side management; priority should be to improve the end use efficiencies in every sector; demand side management(DSM) and energy conservation should become the primary plank for the power sector; energy auditing should become a common practice to most of the consumers, instead of applying it only for large consumers;
  • Adequate investment in T&D sector is needed, which should ensure correct voltage profile at all points of the integrated grid; the ratio of LT line length to HT line length should be as small as economically viable;
  • First preference should be for improving the overall efficiency and/or enhancing the capacity of existing generating plants instead of building new capacities; sites of old and inefficient plants should be used to set up highly efficient and higher capacity plants; no new green site power plants should be planned unless the PLF / capacity of the existing plants reach international best practice levels;
  • It is critical to consider all these measures such as efficiency improvement in the existing asset base for each MW of demand increase, before investment is considered for green site projects; the concept of ‘Energy Service Companies’ should be implemented to get the ‘NEGAWATT’ service instead of setting up green site power plants;
  • In view of the enormous potential in REs, their plunging costs, and suitability to Indian conditions, the dependence on conventional power plants (based on fossil fuels, dam based hydro and nuclear power technology) should be gradually reduced so as to completely eliminate them once our own experience with REs reaches satisfactory status, say by 2040/50.
  • In case of REs the preference should be for distributed energy sources such as roof top SPV systems, community based bio-energy systems, hybrid systems etc. Such distributed systems have many advantages over the centralised power plants, and are most suited for rural areas;
  • Highest priority should be given to provide adequate electricity access at reasonable price to every household in the country, before aiming to reach higher per capita electricity consumption of the global average; to start with the distributed RE sources ably supported by micro grids in the rural areas should be preferred for this purpose.
  • Since REs are the future of the power sector, a separate national mission should be launched to promote R&D to develop different RE technologies to suit various applications in the country. Indigenous production of solar cells, enhancing solar conversion efficiencies, effective recycling of solar panels, development of efficient small size bio-energy plants and wind turbines, and harnessing the huge potential of ocean energy along vast coast line etc. should be the focus of R&D.
  • Micro grids and smart grids should form the backbone of the power sector in the future, and should be connected with each other through advanced information, communication and protection technologies. These can reduce total costs, increase overall reliability and improve overall environmental performance while empowering the local communities to manage their own energy resources.
  • Much of the investment in T&D sector should shift from the transmission segment to the distribution segment to bring down the distribution losses below 5%, and to make it highly efficient and reliable to fully support the micro/smart grids; the focus should be, instead of building new lines and substations, to maximise the usage of the existing network infrastructure, such as adequate strengthening of distribution systems to ensure good voltage profile at all points of the grid, and to minimise interruptions. Adequate investment in R&D efforts to prepare the existing T&D infrastructure to accept large scale integration of REs within a time frame, say before 2025, should be another priority.

 

Costs, benefits, finance and tariffs

The costs, benefits and finances of these reforms have to be considered from the long term welfare of the society.  They will become obvious if all credible options available to our country, and the relevant costs and benefits (both direct and indirect) are studied diligently for each option.  There should be effective incentive/encouragement for the end users to invest adequately (so as to become PROSUMERS) and also participate in all the decision making processes.

  • Concerted efforts should be made to minimise or completely eliminate the need for the diversion of forest/agricultural land and fresh water to new power projects. Keeping in view the massive development of the sector since independence such an objective should be eminently feasible with the necessary political will. For each of the new projects requiring land acquisition and/or huge investment, the project developer must demonstrate beyond reasonable doubt that all other options have been carefully considered, and that the chosen option is the best for the whole society through a diligent analysis of costs and benefits.
  • A scientifically determined tariff structure for each category of consumers should fully recover the cost of supply for that group of consumers; subsidy, if any needed, should be scientifically targeted at the most deserving population, and should be fully funded by the state govt.
  • All possible encouragement, including appropriate feed-in-tariff, should be provided for the consumers to become ‘PROSUMERS’ so as to reduce the financial burden on the STATE, and to enable them to become responsible users of our natural resources; gradually most of the capital, operating and developmental investments of electricity companies should be raised from the participating public, and budgetary reliance on the STATE should be minimised/eliminated; this will be possible only through large number of distributed RE sources, such as roof top SPV systems and community based hybrid RE systems, enabling the consumers to invest effectively.
  • Most of the finances for these reforms can come from the public in the form of private investments, thereby drastically reducing the burden on STATE finances.
  • Distribution, transmission and generating companies should be mandated to operate under a service code determined by the public, and their performance should be measured by suitable yardsticks, and compared with the best at the global levels.

 

Societal  Participation

Active participation from various sections of the society in all the important decision making processes is critical in the efficient and responsible functioning of the power sector.  This should be ensured as is done in developed countries, and the experience and knowledge available in the civil society should be fully utilised for the overall welfare of the country. A standing committee of suitable domain experts, consumer groups and civil society leaders should be set up to advise the ministries/departments on all the associated issues. Effective public consultations should become a norm than an exception.

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Explanatory notes for the Electric Power Sector White Paper

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  1. The Indian power sector can be said to be at cross roads. In order to face the future challenges from the perspective of its growing population there is an urgent necessity for our society to review the sector’s performance since independence, analyse the same in the backdrop of the global experience gained since then, and take a rational approach as to how it needs to be transformed to meet the complicated electricity requirements of a huge population, and equip it to mitigate and adapt to the fast evolving Climate Change (CC).
  2. In this context the present NDA govt. has taken many laudable initiatives. The following are some of them in the right direction, and hence can be appreciated; (i) declaring a very ambitious target of 175,000 MW of renewable energy (RE) capacity by 2022; (ii) stating a target of reducing the coal import to zero within few years; (iii) focusing on improving the T&D system in the country; (iv) declaring through INDC, the intention to reduce the emissions intensity of its GDP by 33 to 35 percent by 2030 from 2005 level; (v) To achieve about 40 percent cumulative electric power installed capacity from non-fossil fuel based energy resources by
  3. Keeping in view the vast challenges lying ahead of our society many other initiatives are needed to strengthen the initiatives by the govt.. Some of the challenges faced by the power sector are: (i) growing population from an already huge base, demanding vastly more investment in electricity production and supply networks; (ii) mostly unmet demand of our people of which about 30% have no access to electricity; (iii) growing aspirations of the people to use electricity for more and more applications; (iv) limited natural resources such as land, water, forests, minerals etc; (v) fast depleting coal reserve and a tiny reserve of natural gas for power production; (vi) already existing huge pollution issues of land, water and air which can only become unbearable with more of conventional technology power plants;  (vii) projection of huge implications on our people from the Climate Change for which power sector is already known to be the major contributor; (vii) international pressure to contain the country’s total GHG emissions, which can reach huge levels in a business as usual scenario; (viii) as per many published reports more than half of all buildings, which we are likely to be seen in India by 2040, are yet to be built with vast implications on urbanisation and the energy demand; (ix) acute inequity between ‘haves’ and ‘have nots’, and between urban and rural areas in electricity supply.
  4. Primary energy use worldwide is projected to increase 60% by 2050 (“A Plan for Action on Climate Change”, MIT study of 2015). Since the mostly unmet demand of vast Indian population will be a major contributor to this increase, it is not  unrealistic to project that India’s own energy use may increase by more than few times the present level. India’s electricity demand itself is projected to increase by 3 to 4 times by 2050 (as per different studies including that by the erstwhile Planning Commission);
  5. It becomes amply clear that the total power generating capacity to meet the demand of about 1.75 Billion people, which is projected by 2050, will have to be humongous in a business as usual scenario. In order to meet this demand the total installed capacity of various energy sources will have to increase by many folds.
  6. The technical, economic, environmental and social implications of such a scenario, where the country has to have a huge power production capacity including that of coal and renewable energy sources, on our population will probably become unmanageable, unless we take suitable advance actions to minimise those implications.
  7. It becomes obvious, hence, that in order to minimise these implications on our communities the total power production capacity has to be contained to a level, where the consequences are acceptable / manageable. This in turn will require that our population has to use electricity in a highly efficient and responsible manner, which in turn will need a paradigm shift in the way we view the demand and supply of electricity/energy.   Such an approach will require our society to undertake due diligence on all the related issues, some of which may be highlighted as below.

 

Demand Forecasting

  1. A crucial aspect of power system planning is the projection of future electricity demand as realistically as possible. While it is well acknowledged that demand forecast in the Indian context, where about 30 % of the present population has no access to grid electricity, and where true demand of even those who are connected to the grid is not fully met, cannot be sufficiently accurate, all efforts should be made to forecast the demand for the future on the basis of true needs of our people, and our geographical and resource constraints.
  2. Unrealistically high demand, as has been done by few projections in the past, may lead to massive power project construction activities with huge consequences on our people and the environment. Few projections as in table 1 may indicate the enormity of the problem in a business as usual scenario.

 

table 1

  1. Another projection by Dr. S. P. Sukhatme of IIT (Bombay), who was also the Chairperson of AERB, has been in stark contrast. This projection, based on a per capita consumption of 2,000 kWH /annum for a population of 1.7 Billion by 2070, indicates that the projected total electricity production requirement in the country should be 3,400 Billion Units (or TWH) by 2070. This is about 3.4 times the present actual electricity production in the country. Keeping in view the fact that government’s aim is to have much higher percentage of RE in the total power capacity (which have much lower capacity utilization factor than coal power), the country will need more than 6 or 7 times the present installed capacity to have this much of annual electrical energy production.
  2. Another way of looking at the importance of realistic demand projection is to project the demand linking it to the CAGR (Compounded Annual Growth Rate) of GDP. The table 2 indicates that a growth in power capacity at CAGR of 4% will lead to doubling the total capacity in about 19 years, whereas CAGR of 8% will lead to four times the size in about 22 years.

 

                                       Table 2: Time taken for power capacity to get multiplied at constant CAGRtable 2

 

Keeping in mind that the present installed capacity of about 278,734 MW (end of Sept. 2015) has taken us more than 65 years to build, the enormity of the challenges (logistically, technically, economically, socially and environmentally) of increasing power capacity by 3 or 4 times in a business as usual scenario shall become obvious.

  1. Keeping all these issues and the country’s natural limits in proper perspective the future power demand should be determined by the constraining factors such as the legitimate demand for acceptable levels of HDI (human development index) and the challenges associated with logistics, technology, economics, social relevance, and environmental sustainability. It may not be incorrect to say that the objective of the power sector should be to provide the lowest possible quantum of electricity of adequate quality at a reasonable price on a sustainable basis to all sections of the society which will enable the elimination of poverty.

 

Scope for huge Demand Side Management (DSM)

 

  1. A good understanding of the prevailing efficiency in generation, transmission, distribution and utilization of electricity in the country indicates that there is a huge potential to reduce the true demand on the grid by reducing various kinds of This may mean that about 30 % of the population which have no access to the electricity, can be supplied with  at the least a life line electricity without having to add to the existing generation capacity.
  2. Low levels of generation efficiency (low PLF of coal power plants), high T&D losses of about 25%, inefficient end use appliances, unscientific street lighting systems, absence of disincentive against wastage, lack of awareness, theft etc. indicate that it may be feasible to reduce more than 40% of present demand on the grid.

(Reference: IEP, National Electricity Policy, Prayas Pune reports)

  1. Effective energy auditing and adequate financial incentives/disincentives to industrial and commercial consumers to conserve energy, and shifting agricultural pumping loads to solar power can reduce the grid demand further by considerable margins.  Whereas the agricultural pumping load is said to constitute about 25% of the annual electrical energy sale at the national level, the same is reported to be about 35% in states like Karnataka, Andhra, Telangana, Maharastra, Punjab etc. Shifting all these agricultural pumping loads to distributed solar PV systems, which is being increasingly recognised as an ideal option for our farmers, can save much more than 25% of the electricity at the national level taking into account the present 25% T&D losses. Such a scenario will also assist in much better voltage profile across the grid, and in vastly improved financial status of the electricity distribution companies which can sell the saved electricity to commercial and industrial consumers at remunerative prices.
  2. Taking all these efficiency improvement measures to the global best practice levels, can bring down the future grid demand also by a considerable margin. It is pertinent to note here that even in countries like Germany and Japan, which are already in the forefront of energy efficient technologies, the efficiency improvement measures are considered to be important aspects of managing the future power grids.

Issues with the conventional power generation technologies

 

  1. The conventional power plants have been throwing up many serious concerns to our communities since independence. These issues have impacted the social, economic, environmental and inter-generational issues. Forced displacement of the project affected families is a common but credible threat to our communities because of each of the conventional power generation technologies. Loss of livelihood; denial of access to stretches of forests, rivers and oceans; inadequate or nil compensation for forced land acquisition; destruction of habitats etc. have impacted the lives of millions of people from such projects since independence.  Such major concerns can be listed as in the table 3. While the negative impacts of coal power sector have been reported widely, the impacts from dam based hydel as well as nuclear power plants also are huge [Chapters 4 & 5 of book on “Integrated Power Policy”].

 

 

table 3

  1. As per IPCC, the Global increase in CO2 concentration, which is the most important anthropogenic green house gas leading to Global Warming, is due primarily to fossil fuel burning and land use change. Large conventional power plants (coal, gas, dam based hydro and nuclear), are all closely associated with fossil fuel burning and land use change.  Accelerated depletion of natural resources such as forests and rivers; unmanageable pressure on agricultural land and fresh water; unacceptable level of pollution of air, water and soil; never ending displacement of poor people from their natural habitat, for which electricity sector is a major contributor, have all been resulting in massive socio-environmental problems, and in drastically reducing what should have been massive contribution of rural areas to the overall wealth of the country.
  2. The fifth assessment report of IPCC has indicated that emission of the greenhouse gases must fall by 2050 by 50-85% globally compared to the emissions of the year 2000, and that the global emissions must peak well before the year 2020, with a substantial decline after that. As per this report “Emissions from deforestation are very significant – they are estimated to represent more than 18% of global emissions”; “Curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions.”  The planning processes in the country do not indicate any drop in the proposed addition to coal, hydel and nuclear power plants in the near future.  Large additions to conventional power plants will not only add massively to the already high GHG emissions in the atmosphere but will also reduce the thick natural forest cover, which are the best sinks of CO2.  The same IPCC report has made unambiguous recommendations to move away from the over-reliance on fossil fuels, saying that in order to have decent chance of keeping the global warming from running away situation more than 80% of the identified fossil fuel reserves must remain below ground.
  3. While the economic, social and Climate Change considerations indicate that the country’s dependence on coal power should be drastically reduced in the medium to long term, the official agencies have been advocating that the coal power has to remain a major source of electricity in the foreseeable future. Whereas the common belief has been that India has huge coal reserves lasting for few hundred years, IEP in 2006 had stated that at the prevailing level of coal extraction, the economically extractable coal reserve can last for about 4 decades only. With the ever increasing levels of coal extraction since then, the left over coal reserve may not last for even three decades as of today. Hence it should be high time for us to plan for alternative sources of energy.
  4. Financial analysts and the experience from around the world have indicated that electricity from renewable energy, especially solar, will be cheaper than coal within few years; so the economic rationale for investing in what might well be stranded assets (or those continuing to spew GHG emissions for decades) needs serious consideration before we build coal power infrastructure, at huge costs to the society.
  5. A World Bank report “Diagnostic Assessment of Select Environmental Challenges, Economic Growth and Environmental Sustainability: What Are the Tradeoffs?” has many revelations of critical importance to the future of our communities in the context of high GDP growth rate. It says that although the past decade of rapid economic growth has brought many benefits to India, the environment has suffered, exposing the population to serious air and water pollution. The report finds that environmental degradation costs India $80 billion per year or 5.7% of its economy, and that green growth strategies are needed to promote sustainable growth and to break the pattern of environmental degradation and natural resource depletion.
  6. The report says that a low-emission, resource-efficient greening of the economy should be possible at a very low cost in terms of GDP growth. While a more aggressive low-emission strategy comes at a slightly higher price tag for the economy it promises to deliver greater benefits. It says that for an environmentally sustainable future, India needs to correctly value its natural resources, and ecosystem services to better inform policy and decision-making.  GDP growth rate will be negligibly reduced by about 0.02 to 0.04 % in scenarios of 10 % to 30 % particulate emission reduction.  However, there will be significant health benefits under different scenarios of emission reduction, which will compensate for the projected GDP loss. The savings from reduced health damages will range from $105 billion in the 30% case and by $24 billion with a 10% reduction.
  7. Urban air pollution, for which coal burning is a substantial contributor, is linked to up to 1 million premature deaths and 1 million prenatal deaths each year at the global level. Urban air pollution is estimated to cost approximately 5% of GDP in developing countries. The Global Burden of Disease assessments for 2010 (by WHO) has estimated that 6,27,000 premature deaths in India can be attributed to outdoor air pollution. A study by the Conservation Action Trust, Urban Emissions and Greenpeace India warns that air pollution in India from coal-fired power plants is causing 80,000 -115,000 premature deaths every year.
  8. Keeping all such relevant issues of true cost to the society and the looming threats of global warming, the true relevance of continued reliance on coal power plants needs to be diligently studied.
  9. Similarly, the true cost to the society of large dam based hydel power plants and the nuclear power plants have to be analysed thoroughly, and on the basis of such analysis the relevance of these power generation technologies to our society under the changed circumstances needs to be determined.
  10. The issues of large tracts of agricultural land and high value forest stretches to be diverted for large dams, and all the associated ecological and social concerns, including reservoir induced seismic tremors as witnessed in Himalayas are major concerns, which cannot be ignored any longer.
  11. Similarly, the issues associated with large tracts of land required, the energy security associated with the import dependence on the fuel and technology, enormous capital costs, unacceptable level of risks associated with any unfortunate nuclear accidents, and the safe disposal of spent nuclear fuel are some of the serious concerns in nuclear power technology. In view of the fact that nuclear power capacity is only about 2% of the total power capacity in the country despite massive financial support to the nuclear industry since independence should indicate the urgent need for highly diligent studies on all the related issues, before the country embarks on additions to nuclear power capacity at humongous costs to our society.  The estimation by BEE (Bureau of Energy Efficiency) that the replacement of all incandescent lamps in the country by LEDs can provide more than 5,000 MW of virtual power (NEGAWATTS), as against the present nuclear power capacity of 5,700 MW, should help to clearly establish the irrelevance of nuclear power to India, and the unacceptable costs to our society by continuing to build more of nuclear power plants against popular opposition.
  1. Various concerns to the civil society on these conventional power technologies, including that of civil structures, roads, wastes during construction and operation, vast lengths of transmission lines etc, are detailed in the book “Integrated Power Policy”.

Issues with Renewable Energy (RE) technologies

 

  1. India has a huge potential in REs.Whereas the target of 175,000 MW of RE capacity by 2022 and the target to achieve 40 percent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030 are laudable, the social-environmental issues associated cannot be ignored during the planning and implementation stages.

 

 

table 4

  1. Large scale RE projects such as GW size solar power parks or wind power parks have their own social-environmental foot prints such as land acquisition, impacts on the local population, flora and fauna, additional T&D systems, impact on grid operation by steep variations in electricity outputs etc..
  2. The experience of Tamil Nadu in failing to effectively evacuate wind power and of Karnataka in absorbing all RE power produced within their borders should be important lessons. Large size RE installation in one location can adversely impact the grid stability as in the case of quick cloud cover or sudden variation in the wind velocity.
  3. In this context it will not be incorrect to say that even with 100% RE in the power sector (as and when such a scenario can materialize), unlimited demand for electricity cannot be in the best interest of our society. There must be a rational limit to the electricity we need.

Un-sustainable tariff regime

  1. Unrealistic financial / commercial (and tariff) policies in the power sector have been major concerns from the perspective of economic sustainability. Huge and unscientific subsidies and lack of efforts to recover even the cost of supply, in most cases, have led to unacceptable financial problems to the sector. Overall efficiency of the sector cannot improve unless sustainable and realistic tariff regime complemented by scientifically designed subsidy regime is implemented across the sector.  It has been reported that since few decades less than 50% of the actual cost of supply on an average are being recovered.  Many distribution companies are reported to be close to financial bankruptcy with the accumulated losses running to more than 3 lakh Crore Rupees at the national level.
  2. National Electricity Policy (of 2004) has provided adequate focus on the un-sustainability of the tariff regime in the power sector. It says: “Very high level of technical and commercial losses and lack of commercial approach in management of utilities has led to unsustainable financial operations. Cross-subsidies have risen to unsustainable levels. There is an urgent need for ensuring recovery of cost of service from consumers to make the power sector sustainable.”
  3. Keeping all these issues in proper perspective, and looking ahead of the true welfare requirements of our county by year 2040 – 50 and beyond there is a critical need for the power sector in the country to adopt a paradigm shift in the way we look at the demand / supply of electricity, by objectively reviewing the past policies and practices.

Power Infrastructure for the future

Generation Segment:

  1. Power sector of the future need be designed and developed in such a way so as to cater to the true overall welfare needs of our communities (not just meeting the ever growing demand for electrical energy) at realistic prices on a sustainable basis. Such an approach will require objective consideration of our societal needs, natural resource constraints, global warming considerations, obligations to future generations, and full compliance with our own laws.
  2. All possible efforts must be made to contain the electricity demand on the integrated grid to a manageable level, and such a demand should be aimed to be met by resources available within our own borders on a sustainable basis. This course of action will need effectively coordinated efforts by all sections of the society; and hence planning agencies have to engage in effective public consultations on a continuous basis. Maximum efficiency, effective demand side management and optimal levels of energy conservation efforts should be the primary planks in our power sector policy.
  3. Adequate focus should be given to maximizing the usage of the existing power sector assets, before new assets are planned for.
  • PLF of thermal power plants and annual load factor of hydro power plants must be increased to the global best practice levels through all possible measures.
  • In the short term the old and inefficient thermal power plants should be replaced at the same site by highly efficient plants such as super critical plants with low pollution levels. Subsequently only REs should be used. RE plants should also be considered to be installed at the locations where old and inefficient thermal power plants are identified for decommissioning. Such an approach will reduce the need for additional land diversion.
  • No new conventional power plants should be planned to be added until the efficiency of every one of the existing conventional power plants is taken to the global best practice level, OR until they are replaced by most efficient power plant at the same site.
  • These steps alone can do away with the need for most of the additional green site conventional power plants.
  • Massive encouragement for setting up distributed RE projects such as roof top solar PV systems and community based hybrid RE projects should become a major plank in the power sector. This approach will lead to vast benefits (direct and indirect) to our society when compared to grid based large size conventional power system.
  • By adding most of the RE capacity in the form of projects distributed all over the existing network we can address most of the issues such as intermittent supply, the need for additional transmission lines / substations, the need to acquire vast stretches of forests/agricultural land, voltage instability etc.. The efficiency loss due to smaller size of the RE projects (as compared to large size projects such as solar power parks) will be more than compensated by so many other benefits of distributed RE sources.
  • Almost all the agricultural loads such as irrigation pump sets (IP Sets) can be met by solar power, which is ideally suited for Indian conditions. This can reduce the present grid demand by as much as 30%, when we also consider the huge T&D losses. With suitable modifications such solar power panels meant for IP sets can also be made contribute hugely to the grid power capacity by exporting the surplus electricity generated back to the grid.
  • Similarly, the solar power deployment in lighting and heating applications can reduce the grid load by another 10 – 15 %. CSP (concentrated solar power) technology when used effectively at critical points on the distribution grid can provide back up power during non-sunshine hours. A well designed CSP system along with thermal storage facility can overcome the issue of intermittency in a scenario where a high percentage of REs is planned. The ability of solar thermal power plants (CSP) to store electricity confers huge grid management benefits which help offset its high up-front cost, as per an US government report.

(Reference: National Renewable Energy Laboratory (NREL), US Department of Energy.)

  • The vast potential of wind power and bio-mass power should also be fully harnessed in distributed mode close to the existing power network.
  • Adequate emphasis on development/harnessing the other RE technologies such as waste to energy, geothermal and ocean energy should be accorded within a time frame.
  • Technological development of energy storage technologies, such as efficient and affordable battery technology.
  • Priority for off-grid power supply options through RE sources and micro/smart grid should be given to electrify those villages/communities where grid extension is considered techno-economically less attractive.
  • Micro/smart grid should also be favorably considered for other communities or compact sections of the existing grid (such as small townships/colonies/project sites etc.) wherever feasible by adding distributed RE sources and advanced protection and communication systems.
  • All such micro/smart grids can be connected to the integrated grid, if found useful /necessary later, through advanced protection and communication systems.
  • It is not inconceivable that the future power system in the country can be seen as a large number of micro/smart grids connected by interconnecting transmission lines.
  • Such micro/smart grids have the potential to address most of the problems faced by the conventional centrally controlled grid system, and will enable efficient, accurate and reliable demand/supply of electricity to all sections of our society.

A key component of the future power sector should be that the electricity consumption patterns must change to make it highly efficient and to make use of sunlight and wind as much as possible.  This requires as many electricity applications as possible should be shifted to the day time (when sun light can be utilised without having to store the energy), or to windy times.  The focus should be to make the end use applications highly flexible to make the maximum use of such natural conditions.

  1. A number of reports from around the world have indicated that it is techno-economically feasible to meet most of our electricity demand through RE sources by 2050, if supported by suitable policy intervention.

      (References: ‘Energiewende in Germany and India’;    ‘Sustainable Future, Scientific American, Nov. 2009’; Intermittency Report by UK Energy Research Centre; Energy White Paper 2012, Australia; Cost-minimized combinations of wind power, solar power and electrochemical storage, powering the grid up to 99.9% of the time  (Journal of Power Sources in March 2013); Reports from WWF and WISE)

Transmission Segment:

  1. With a high level of RE presence (penetration of say 50% by 2035 and 100% by 2050 into the power network), as will be necessary, there can be drastically reduced need to expand / add to the existing transmission schemes, and hence the reduced complexities. Wide spread use of distributed REs such as roof top SPVs and community based hybrid of wind/solar/bio-mass plants, which are designed basically to cater to the local needs will have reduced complexities and risks; at the same time they will restrict the power disruption, if any, to a small geographical area. The overall cost to the society of such smaller and simpler power evacuation/connection system will be much less.
  2. Instead of the need for more of extra high voltage / Ultra high voltage (EHV and UHV) transmission line corridors for transferring large chunks of power over hundreds/thousands of kM, the electricity grid of the future will have to be strong and reliable at lower voltage levels, and may be basically designed to connect a large number of mini/micro grids. Since most of the power produced in the large number of small size roof top SPVs OR wind turbines OR community based bio-energy/CSP type solar power plants is expected to be consumed locally, only a small quantity of excess power may need to be transferred between local areas OR between mini/micro grids. The need for additional high voltage / extra high voltage lines may become very small, and may be needed just to evacuate power from the clusters of renewable energy sources from remote areas/off shore wind turbines or from few solar power parks.  More emphasis should be given to make the integrated power grid by the Year 2050 to be much stronger and reliable at distribution level voltages than it is at present .
  3. Instead of the need for huge investments in EHV/UHV lines, HVDC lines, back to back HVDC stations, sub-stations, capacitor banks, reactors, SVCs (for voltage management) etc. much of the future investment can be expected to be in strengthening the distribution system where much of the power will be handled.
  4. Another feature of the power grid of the future has to be that it becomes an intelligent grid, where the monitoring, information flow and control functions are likely to be handled by electrical/electronic/pneumatic devices, than by humans. Such grids are already termed as ’Smart Grids’, and the demand/supply of electricity at individual consumer level can be expected to be monitored and controlled much more accurately from remote locations (such as area/state load dispatch centres) through the automated usage of advanced communication and control mechanisms for optimal utilisation of the existing infrastructure, as opposed to simply adding to the generation capacity. One obvious advantage of such a Smart Grid will accrue to the end consumers, because a Smart Grid must be highly reliable in its availability and in various parameters such as voltage, frequency and harmonics.

Distribution Segment:

  1. An electricity distribution system supplied by a group of distributed RE sources, which caters to a small group of consumers who are spread over a smaller geographical area, will be much simpler to manage as compared to the one which is designed to cater to a conventional system connected to a complex transmission network. Such simpler distribution systems are well suited to rural areas, and remote areas. Such networks are termed as Micro Grids and have to be equipped with advanced protection and IT enabled communication systems, and hence are also known as Smart Grids.  Such smaller grids, once they meet the local needs satisfactorily, can be connected to other similar grids or to the larger integrated grid depending on the larger societal needs and facilities through advanced protection and communication technologies.  Such micro grids eliminate the complex problems of larger grids, provide effective control for the local population to manage their own resources, and costs much less to the larger society. Energy efficiency and careful usage of the natural resources goes hand in hand with such micro grids.
  2. The distribution system in future should get maximum focus as compared to the priority given to EHV/ UHV systems now. In view of a large number of small size roof top SPVs OR wind turbines OR community based bio- energy/CSP type solar power plants, and mini/micro grids, the distribution system will have to discharge a very critical role in maintaining the stability of the network in connecting power sources and consumers, and in ensuring reliable and quality supply. In order to minimise the distribution losses the distribution companies will be expected to have much higher ratio of 11 kV to LT lines as compared to what it is at present, and much larger number of pole mounted distribution transformers of appropriate size to cater to the requirements of individual consumers. High Voltage Distribution Systems (HVDS), to avoid unauthorized use of grid electricity, can become mainstay of the system.  Each mini/micro grid has to be a Smart Grid with the capability to measure, monitor and control all the parameters of the grid to ensure reliable power supply at lowest overall cost.

Tariff Regime, costs, benefits and finances

  1. Because of a large number of distributed RE sources, such as roof top SPVs, solar IP sets and community based RE hybrids supplying micro grids, the commercial burden on the grid or larger electricity supply companies can be expected to be drastically reduced. Most of the domestic and agricultural consumers can be made to shift to roof top SPVs, and become PROSUMERS, thereby reducing the financial burden on the supply companies. The remaining consumers of such electricity supply companies will be large consumers such as industries and commercial establishments. The cost recovery from this segment of consumers will be much easier and satisfactory.  However, the true cost of supply to each category of consumers must be measured and determined accurately, and recovered fully without any cross subsidies.
  2. The costs, benefits and finances of these reforms have to be considered from the long term welfare of the society, and hence will become obvious if all the options available to our society, and the relevant costs and benefits (both direct and indirect) are studied diligently and implemented effectively. There should be adequate encouragement for the end users of the electricity to invest adequately in the grid and participate in all the decision making processes. Most of the finances for such power sector reforms can come from the consumers of electricity in the form of private investments, thereby drastically reducing the burden on STATE finances.

Summary 

  1. India can be said to be at cross roads wherein its long term welfare pathway should be decided carefully after highest levels of due diligence involving participatory decision making processes. The existential threat of Climate Change has provided a golden opportunity to objectively review the country’s experience since independence and to adopt a sustainable welfare pathway for all sections of its society.  Similarly, the power sector, which is acknowledged as a major contributor to the GHG emissions, also has the opportunity to review its past policies and practices so as to apply the necessary course corrections to meet the future challenges.  Since even the most optimists cannot say that the power sector has covered itself with glory in the past, there is a necessity even without the threat of Climate Change to undertake a diligent review of the sector, keeping in view the fast changing circumstances. The serious issues associated with economic, social, environmental and inter-generational aspects of the grid based and conventional energy source based power system have to be carefully deliberated on to decide the future course of policies and practices.
  2. In order to secure its energy future, India urgently needs to design/implement innovative policies and mechanisms that promote increased use of abundant, sustainable, renewable energy resources, and drastically reduce the dependence on conventional energy sources.  The global experience since year 2000 indicates that all of India’s future energy demand can be met by careful implementation of technologies associated with utility-scale and rooftop PV, concentrated solar power, onshore and offshore wind, bio-energy, geothermal, and small hydropower.  Such an approach would require building many more solar power systems and wind farms, hybrid solar-natural gas plants, solar thermal storage and advanced battery-based grid energy storage systems.  Investment in these technologies would create millions of new jobs and provide humongous economic stimulus, including vast employment potential across the country, especially in rural India, if all indirect (ripple) effects are considered objectively.  Other major changes involve use of electric vehicles, electric traction across the entire country, and the development of enhanced Smart Grids.  Making the transition to 100% renewable energy is both techno-economically feasible, but requires strong and consistent political support.
  3. Developing off-grid powered micro-grids have the potential to change the way communities generate and use energy, and can reduce costs, increase reliability and improve environmental performance.  Micro-grids can be used to take substantial electrical load off the existing integrated power grid and can reduce the need for building new lines, or expanding existing transmission systems. Such individual micro-grids can be connected to each other or to the larger integrated grid with the help of advanced protection and ICT tools, if considered necessary. In order to achieve these goals the active involvement of various stake holder groups will be required, which is possible only through effective public consultations on a regular basis. Electricity consumption patterns must change to make it highly efficient and to make use of sunlight as much as possible.
  4. It will be vastly useful to constitute a review committee / standing committee at appropriate level to review all the related issues, and make specific recommendations to the Minister on the action plan needed to put in place all the elements of a power system for the future. Civil society groups and domain experts can play critical role in the deliberations of such a committee.

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References