Mapping India's Energy Sector

1/13/2016 Print:MappingIndiasenergysectorTheFinancialExpressPage99
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MappingIndiasenergysector
Environmentalsustainabilityiscentraltosolveourenergychallenge.Closeto25%ofIndiaspopulationiswithoutaccesstoelectricityand
percapitaelectricityconsumption,at917kWh,isbarelyonethirdoftheglobalaverage.
InIndia,theregulatoryandpolicyframeworkneedsasubstantialchangetomeettheobjectivesofenergysecurityandenergy
independence,withsustainabilityasthecentraltheme.ItmustbehighlightedthatIndiaisseekingaselfcommitmentinreducingits
carbonemissionperunitofGDPby40%by2030fromthe2005levels.Whileaseparatepolicyfortherenewableenergysector
hasbeennotifiedtopromoteinvestmentinthesame,anintegratedpolicyplanningandregulatoryframeworkwithafocuson
renewableenergyandenergyefficiencyisimperative.
Amajorstepwastakenbythegovernmentwhenitdecidedtoconsolidateministriesdealingwithcoal,conventionalpowerand
renewableenergyunderoneleadership.Thismovewillhelpsteeranappropriatestrategyforoptimalutilisationofconventionaland
renewablefuelsources.Ithastobebroadenedfurtherbybringingtheothertwogovernmentarmsdealingwithpetroleum&natural
gasandatomicenergyunderthecommonframework.Therealsoneedstobeabalancedcoordinationmechanismamong
stakeholdersintheenergydeliverychain,suchasinstitutionsrelatedtofinance,ruralandurbandevelopment,stategovernments,
utilities,industriesand,ofcourse,theendusers.
Someotherrenewablespecificregulatoryreformsarealsoneeded.
*Integratedapproachforharnessingvariousrenewableenergysources
*Longtermoutlookonrenewableenergywithmandatoryrenewableenergyobligationtargets
*Nationallevelregulatoryandpolicyframeworkforrenewableenergysourcesmitigatinginconsistencyanddisparityinregulatory
frameworkacrossstates
*Transmissioninfrastructureforevacuationofrenewableenergygeneration
*Crediblepaymentsecuritymechanismsunderpowerpurchaseagreements(PPAs)
*Changeinexistingutilitypracticestoensuremandatoryabsorptionof100%renewableenergygeneration.
ThepowersectorisontheConcurrentList.WhiletheCentreformulatestheoverarchingpolicies,stategovernmentownedpower
utilitieshaveamajorroletoplayinenablingreformsassignificantchangesarerequiredinthedistributionsector,whichis
controlledbystategovernments.Oncetheseareontrack,growthinothersegmentsofpowersectorcanberevitalised.Infact,
therehavebeenattemptstoimprovetheirperformance,butthelackofpoliticalwillatthelevelofstateshashinderedthereform
process.Stateutilitiesneedtofocusonsupplyingqualitypowerandtakeamoreprofessionalapproachtowardsthesector.
Distributionutilitieshavetoplayamajorroleinbasicoperationalreforms,whichincludesreductioninaggregatetechnicaland
commercial(AT&C)losses,distributionlossesandimprovementinrevenuecollection.Thiswillhaveapositiveimpactonthevalue
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chainofthepowersector.Also,thesesectors,acrosscountries,havecommonfeaturesintheirmacrooperatingframework,while
microoperatingframeworkvariesdependingonfuelmix,regulatory&policyframeworkandconsumersensitivitywithrespectto
affordabilityandreliabilityofelectricity.
Inpowersectorreforms,Indiahasdoneremarkablywellinthegenerationandtransmissionsegments,andisatparwithmost
matureelectricitymarkets,butdistributionsegmentislaggingfarbehind.ExceptforafewurbanareaslikeMumbaiandDelhi,the
utilitieshavemonopolyindistributionandretailsupplyofelectricitywherethereisanurgentneedtoenhanceefficiencyeitherby
improvingperformanceorbyintroducingcompetition.Againstthisbackdrop,themostimportantregulatoryreformwouldbeto
introduceperformancebasedregulations(PBR)fordistributionutilitieswithultrashortterm,shortterm,mediumtermandlong
termperformancemonitoringandbenchmarkparameters.
Therearesomeotherareasoflearnings,too.
*Topromotenondiscriminatoryopenaccessandpromotecompetitionthroughindependentfunctionofthegridoperator
*Toreflectcostofsupplyintariffs
*Tobuildacompetitivemarketfacilitatedbyadequatetransmissioncapacity
*Toendorsediversifiedpowerportfoliosandfocusonothersourcesofpower(conventionalandrenewable)apartfromcoal
*Todevelopsmartgridsandprepaidmetering.
EnvironmentalsustainabilityiscentraltosolveIndiasenergychallengeinthelongrun.First,closeto25%ofIndiaspopulationis
withoutaccesstoelectricity,andpercapitaelectricityconsumptionof917kWhisbarelyonethirdoftheglobalaverage.Alarge
portionofthepopulationisbelow30yearsofageandthecountryaspirestogrowbetween78%overnexttwodecades.Indias
GHGemissionsareexpectedreach5,785MtCO2e(millionmetrictonnesofcarbondioxideequivalent)in2030,incaseofa
conservativeestimateof5%GDPgrowth,comparedtoabaseof1,767MtCO2ein2000.However,totalemissionscanhit8,235
MtCO2eifweassumeGDPgrowthrateof8%.Dowehavethiskindofcarbonbudget?
Second,morethan92millionIndiansdonothaveaccesstosafedrinkingwater,andtheWorldResourcesInstituteratedusasa
countrywithaveryhighwaterrisk.Indiausesanaverageof4cubicmetrewatertoproduce1MWhofelectricity,comparedtoan
averageof2cubicmetreperMWhand2.45cubicmetreperMWhintheUSandChina,respectively.Indiacantaffordtoutilise
wateratthesamerateifitwantstoprovideenergyaccesstoeverycitizen.
Currently,coalcontributestomorethan60%ofIndiaselectricitygenerationcapacity.Manyoftheseplantsuseinefficientsub
criticaltechnologyandburndomesticcoal,whichhasaveryhighashcontent.Theseplantsproducelesselectricitywitheachtonne
ofcoalandgeneratemorewaste.Environmentalimpactofsuchplantsgetsfurtheraggravatedbecauseofmeritorderdispatch
instructionfromDiscom/gridoperator,whereintheplantwiththelowestcostofproductiongetsthechancetofeedthegridfirst.
Sinceinvestmentsinenvironmentallyfriendlytechnologyaddtooperatingcosts,plantsthatinvestinsuchtechnologiesendup
losingagainstplantsthatdont.
Hence,apolicyofpurelylookingateconomiccostsandignoringenvironmentalcostsneedstoberevisited.Thegovernments
movetoincreasecessoncoalfromR100toR200pertonneanditsplantobuildsupercriticalplantsbydecommissioningoldplants
isapositivesignal.
Choosingtherightfuelmixwithoutaffectingaffordabilityofelectricityisimportant.Thegovernmentsplantoscaleuprenewables
fromthecurrent36GWto170GWby2020isamajorsteptowardsthis.Infact,100GWoutofthis170GWwillbefromsolar.The
deploymentofthissizeofgridconnectedandoffgridsolarapplicationswillnotonlyhelpIndiaavoid165MtCO2eannually,butwill
alsohelpmigratefromacentralisedgenerationmodeltoadistributiongenerationmodel,ultimatelyreducingtransmission
bottlenecks.TheSolarParkPolicy,UltraMegaSolarPowerProjectsandproposedreformsinElectricityAct2003topromote
renewableenergyandsmartgridareexpectedtoimproveenvironmentalfootprintofthepowersectorandaccesstoelectricity
withoutcompromisingonaffordability.
Theauthorismanagingdirector,CLPIndia
Copyright2016TheIndianExpressltd.AllRightsReserved
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