IEEMA recently organized “DistribuELEC 2019” event in Mumbai. The event had a series of covenant conferences and panel discussions where extensive deliberations on the Indian power distribution sector took place. This story by Venugopal Pillai, based on views expressed by various speakers at these conferences, attempts to dwell upon key issues affecting the Indian power distribution sector.
The general impression that one has about a typical power distribution utility (discom) is that of a techno-commercially inefficient entity having a legacy of financial mismanagement. This is of course speaking of state government-owned entities that account for most of India’s power distribution space. In case of private discoms, that are relatively very few in number, the situation is quite contrasting.
Efficient B2C companies
One point that was put across very forcefully was that state-owned discoms should strive to become efficient B2C (business to customer) companies. There has to be a conscious effort by discoms to bring about a change in the way consumers perceive them. The future of discoms lies not only in the supplying 24×7 quality power to consumers but also to bring about overall efficiency in their operations. This would include aspects like fault restoration, general customer care, billing, etc. A discom’s ultimate efficiency will be measured in terms of reactive work, which should be ideally kept to its minimum. What discoms have to work towards it proactive damage prevention.
Private discoms (owned by Reliance and Tata) in Delhi have been able to score very high in terms of proactive damage prevention. Sensors have been installed at key points on the distribution network. This helps in predicting faults thereby reducing downtime.
Even in terms of bill collection, online payment modes are most efficient. It was suggested that online payment should be made compulsory for all electricity bills exceeding a certain threshold value.
One important observation about technology in power distribution was made regarding smart meters. Speakers generally felt that smart meters are currently not technology-agnostic. Smart meter manufacturers must work on an “open platform” so as to make smart meters work irrespective of the technology used in the advanced metering infrastructure (AMI) setup.
Across the panel discussions, one point that ran as a theme was the debilitating effect of solar power on the distribution grid. Firstly, growing solar-based electricity in the grid could cause imbalance and a technically-sound solution could be energy storage solutions. However, the present high cost of energy storage solutions is an issue to contend with.
Currently, the extent of grid-connected rooftops is quite limited and hence there is not too much pressure on discoms, when it comes to grid management. It was also pointed out that with falling solar tariffs, the concept of net metering was proving expensive for discoms. As opposed to that, the concept of gross metering would be beneficial, it was suggested. With respect to RPOs, some delegates were of the view that since solar and wind tariffs were converging, there was a case to make solar and non-solar RPOs interchangeable.
The instance of Open Access (OA) as permitted under the Electricity Act, are now increasing, and this is hurting discoms. Though discoms are imposing open access-related surcharges on consumers, with a view to dissuading them, the OA regime it is still a “financial” threat to discoms. Under the Open Access mechanism, broadly speaking, a consumer can source electricity from any supplier, other than the local discom. Such consumers are usually the large ones, having a requirement of 1 mw or above. The local discom is compensated by way of surcharge imposed on the consumer. The idea behind OA was to create healthy competition amongst electricity suppliers, and help consumers get electricity at the most competitive price. However, discoms are of the view that consumers moving in and out of their ambit is adversely affecting the grid load management as well as the discom’s finances. Apart from OA, captive power plants, typically owned by industrial consumers, is also a threat to discoms.
It was felt during the panel discussion that there should be a very small gap, if at all, between the electricity tariff of the local discom, and the market tariff. This will ensure that there is no flight of consumers from the local discom to other suppliers. In Gujarat, it was stated, the instance of OA is limited to just 3 per cent of the total consumption, as tariffs in Gujarat are generally in tune with those in the market.
Carriage and Content
The separation of “carriage” and “content” is likely to bring about radical changes in the way the distribution grid works. The term “carriage” refers to the physical distribution grid, also called as the “network” or “wire”. On the other hand, the “content” is the actual electricity supply known as “supply”. By current thinking, the ownership of the “carriage” business will continue to be with the state government utility.
It was generally felt during the deliberations that having multiple supply companies will create competition and thus consumers will be able to choose their most efficient electricity operator as it is happening in the telecom sector. This also gives the state-owned utility to focus on operations and maintenance of the distribution grid. The various supply companies, on the other hand, would be the ones interfacing with the consumers.
Experts also feel that separation of carriage and content could create a situation where a discom (supply companies) would not know who their real clients are. Customers could shift from one supply company to another. This would add to the existing challenges of Open Access and captive power plants.
Under the National Electricity Mobility Mission Plan, India aims to be a 100 per cent electric vehicle (EV) nation by 2030. Charging of EVs was a point that was discussed actively during the panel discussion. Firstly, the responsibility of setting up EV charging stations would be that of discoms. However, land acquisition would be an issue to contend with because much of the land would be owned by other government agencies. Further, securing land in busy areas—where EV charging stations would be best located—would be a difficult proposition. Going ahead, the process of EV charging could also cause interference with the grid. For instance, widespread simultaneous charging of EVs could infuse harmonics in the grid. Secondly, the timing of charging of EVs could coincide with those of heavy consumption. For example, in summer nights, charging of EVs will coincide with usage of air-conditioners. Going ahead, there would be need to develop “smart” chargers that would charge EVs when electricity tariffs are low.
Flattening the peak
All across the deliberations, one unanimously accepted fact was that it would be very difficult—nearly impossible—to fulfill the peak demand through creation of generation capacity. For instance, in Maharashtra, the state discom has around 3,600 substations but only a fraction of them are fully loaded. These substations attain full load only to meet the peak load. It is estimated that power purchase accounts for 80-85 per cent of the electricity tariff charged to the customer. If power generators keep adding capacity, much of which will be idle for most of the time, they will be adding to their O&M costs. This will ultimately result in an increase in electricity tariff.
The only viable way out is establishing distributed energy systems, so as to achieve “decentralized loading.” This can be achieved by renewable energy coupled with energy storage. Though energy storage solutions are capital-intensive at the moment, costs are likely to reduce as deployment increases.
One encouraging observation made regarding flattening the peak load is that even small and medium enterprises (industrial units) are proactively undertaking energy audit so as to make their consumption energy efficient, and of course, put lesser stress on the power grid.