The road ahead for the power sector


New Delhi: Union coal secretary Anil Swarup, U.P. Pani, director, human resources, NTPC Ltd, The Energy Resources Institute (Teri) director general Ajay Mathur, ReNew Power Ventures Pvt. Ltd chief executive officer Sumant Sinha, share their views on clean, reliable, and affordable power at a panel discussion moderated by Banmali Agrawala, president and CEO, General Electric South Asia at the Future of Electricity conference. Edited excerpts:

Agrawla: Mr. Swarup, we discussed a lot about having reliable, sustainable and affordable power. In your mind, is this a kind of combination that is going to be difficult for us to achieve in the short term?

Swarup: It certainly would be difficult, but that should be the objective because if you don’t accomplish these objectives, then the purpose will not be served. Purely from the coal point of view, I think coal will continue to be the basis on which we will develop all that.

Till about a year ago, I think we had serious problems in coal and, now we have another problem with coal, we don’t know where to sell the coal. But in future also, I think our dependency on coal will continue for the reliability that coal-based power plants offer. Although solar energy is the future, its reliability is questionable. So is the case with wind energy. I think when we talk of reliability, I think the base power will be provided by coal but as is the commitment of the country, as a percentage of overall energy requirement, share of coal will come down.

I think we are bringing it down to 40% but then, the absolute numbers will continue to grow. We are looking at a billion tonne of output from Coal India Ltd by 2020, and a total of 1.5 billion tonnes of coal output. On the question that you asked, I think we have to aim for those three factors. Though my understanding is that it won’t be very easy, the commitment that the government has shown in the past couple of years to achieve things that were considered to be impossible at some point of time, I think we should be able to achieve that.

Agrawala: We have seen a history of tariffs not keeping up with the actual cost of inputs that go into producing electricity. Do you see tariffs becoming realistic?

Swarup: Tariff rationalization will happen over a period of time; that will be the order of the day. But I think a lot of efficiencies will also come in. There was a very inefficient way of transporting of coal in the past. We have rationalized linkages, which reduced the distance coal has to travel. The rationalization happening for last one year has resulted in saving of more than Rs.1,300 crore a year, and this will go up to Rs.6,000 crore a year, almost a billion dollars in terms of saving the transportation cost.

When this happens, the cost of power will come down and that could be accommodated in the tariff. But if the other costs go up, like coal cess coming in, if you are going to bundle solar energy with thermal power, some sort of rationalization will be required to be done.

Agrawala: Mr. Mathur, could you explain in simple terms what is the commitment that India has made as far as COP 21 is concerned and what is our plan to get there?

Mathur: There are a number of commitments. One of the two most important ones is that the emissions intensity of our economy, that is, the amount of green house gases emitted per rupee of GDP would decline by 33-35% in 2030 as compared to what they were in 2005. In simple terms, it means that while emissions would increase because energy usage increases, we will keep on using it more efficiently for each new installation that comes in; that’s the only way you can ensure that the emission per unit of GDP keeps declining.

The second is that at least 40% of the electricity installed capacity by 2030 would come from non-fossil sources like hydro, nuclear and renewables. Now for a variety of reasons particularly because of the time it takes and the availability of the hydro sites, you won’t see a huge change in hydro or nuclear till 2030. In other words, as the minister said, the vast bulk of it would come from wind and solar. This is the reason why there is a huge emphasis on energy efficiency, we have talked about supply side efficiency but equally on the demand side, the vast amount of energy usage that is yet to come and therefore, every new industry has to be more efficient than the previous one.

Every new building has to be more efficient. The presentation made the point clear that the vast amount of building and industry which are out in the future have to be more efficient and of course, there was a huge amount of discussion in the previous session; so I am not going to repeat that. There are various steps being taken to ensure that we get more and more renewables in the country.

Agrawala: Mr. Mathur, how do we go about achieving energy efficiency?

Mathur: Actually there are two things. Firstly, every new installation, every new place, where either energy is generated or used has to be more efficient and therefore, a set of codes and standards needs to be put into place that the additional capacity that is added is more efficient. Secondly, even the capacity we have has to be used a lot more efficiently and that’s where big data comes in useful because that’s how I know what is happening and what has happened in the past and therefore when a particular situation comes, let’s say there is a sudden decline in load, then what plants do I switch off, what transmission lines do I put on, that will be driven by data.

And therefore, integrating information technology (IT) and communications into an exercise both on demand and supply side and I hope that’s what you mean by holistic, is how we will drive efficiency in implementing operational efficiency.

Agrawala: Sumant, when you set up this phenomenal base that you have of renewable power and I know you have been working on integrating that and making it mainstream and leveraging data as Mr. Mathur was saying. Could you just share with us where are you on the journey and what more could be done in terms of integrating renewable better by the use of data?

Sinha: Well, you know I think that right now most renewable companies are really scratching the surface on using more data. I think at this point, most people are not even capturing the data that is coming in. I think it’s really being in a very surface level as it were, in terms of just monitoring the base line performance of solar plants or wind plants.

So, I think that there is a lot of work that can be done and we can get into much deeper analysis of exactly how wind turbines are performing, all the different components, if we start doing at a much deeper level then I think we can get into much predictive analytics, maintenance and so on, which can fundamentally improve wind turbines. But you know the funny thing in India is that when we talk about wind turbines, what we have discovered is that actual plants do not work as they should which is actually not because of machine performance but because of grid issues.

Very often, when the grid is down and that causes us to lose much more production than the most finely analyzed wind turbine performance that we can get to. So, I think there are a lot of issues that we need to do in the grid itself that I think are sort of much more impactful for us in terms of our overall performance. And I think as far as solar is concerned, I don’t think anybody has really started doing any work on solar at this point. Nobody has really carved a matrix as to how to measure solar panel performance over the longest period of time, the details, what are the important issues to monitor and I think the big upstanding questions right now with regard to solar is that nobody really has seen panels perform over a period of 25 years. May be the maximum age of commercial solar panels is 15 years thereabout.

So, we really have to see how they perform over a longer time period. But there are a lot of exciting developments that are taking place. People are looking at drones, for example, to inspect solar panels and really getting into each panel by panel performance. So, I think there is a lot of work that can be done, but again, I think in a country like India, we need to focus on bigger issues right now which are really around grid management. Not just the power grid, but also the external grid that we are connecting to.

Agrawala: As more and more renewable capacities get added, it is concentrated in states where you have the resource available. Its integration with the grid—Is that an area that you are looking at?

Sinha: On the data side, we are trying to get into scheduling and forecasting, which is a basic requirement of the grid. They have to figure out when they are going to get power from us so that they can manage at their end better. One of the issues that we are already facing in some of the states is, curtailment is beginning to be pushed on us simply because the grid is not able to take so much power. We are trying to start forecasting our power generation better and for that, a lot of algorithm has been worked up so that is allowing us to forecast with much higher level of efficiency than we were doing earlier and we are hoping that when we do that, the grid will be able to receive our power more easily.

Agrawala: Regulation generally trails innovation. How do we make sure that the regulation is contemporary and recognize data?

Swarup: Regulation normally follows what’s happening… In my 35 years of service that I have been, I don’t think regulations solve any problem. It may create a few. I am not enamoured with regulations per se. The more we de-regulate, the better it is. Minimalistic regulation in terms of data.

Mathur: Clearly the issue of the availability of electricity, when the sun is not shining and the wind is not blowing, becomes important as the share of renewable increases. Thankfully, we are not there yet. We will be there very soon. Consequently, the amendment to the Electricity Act that is before Parliament has a provision for creating a market for balancing power.

To me, the real cost of renewable power at that time will be the cost of renewable power plus the cost of balancing power. If we can create the institutions that help iron this out, then hopefully, we reach this stage by 2025 or so, we will have a mechanism in place through which we can find the least cost through which both renewables and cost of balancing power can be managed together. As you know, the amendments to the act have been seen by the committee, they provided a supportive report obviously with a note of dissent and if Parliament takes it up, we can at least start off on this issue.

Sinha: Even at 175 gigawatts (GW) of renewables in the system, provided we achieve that target, seems like a huge number, but in terms of the total generation of power in India, it will account for 15-16%. So, it is still not a very large number. If we do move to the current government’s desire of one grid, one nation kind of an environment and allows us to move power across different parts of India.. I think with better grid management and a little bit of extra time on our hands to get to that point, I think some of these problems can be addressed.

I think one of the big benefits that we have is unlike China where most of the generation centres are in the middle of China which is in Mongolia and load bearing centres in Eastern China and they have to carry this power across the country, in India, it is much more dispersed and distributed and therefore, you are able to sell into a number of different sub-stations where the power can actually be consumed fairly, locally as well.

Swarup: If you don’t diagnose the problems correctly, you will not come to the solution. We have sufficient data to indicate when we require power and we also know intuitively that solar power will not be available in the evening. So, that’s the problem. The distribution system, China, USA, won’t help us. We have certain amount of power at certain point of time and in certain point in time, it is not available. Even today, during the day there is no crisis and it is only in the evening that we run into crisis.

It is extremely important for us to understand at this point in time that this is the problem that we will face three years from now. If I have to plan for hydro, I can’t plan for it three years down the line, I have to plan for it today for hydro to become available five years down the line when I have a lot of solar power coming in.

Agrawala: Is there a way to get access to different parts of the country rather than just stringing transmission lines out there?

Mathur: It goes to the heart of the question as in where and what time was the electricity used. What we are seeing is the change in those patterns. One of the features emerging is in urban centres, we have started to see a peak during summer afternoons, which is an air-conditioning peak and the national peak occurs on some day in the last week of August when humidity is very high.

So, we thought we have moved away from the evening peak but now what happens is the evening peak goes up because you see air-conditioning happening in both office and homes. We are now moving towards a two-peak system. How do we meet this? When you look at the other side which is ensuring that everybody has adequate electricity, again let us see what the need is today, tomorrow and day after. Today, there is relatively low need that excess availability of electricity can take care of it, if the last mile connectivity is there. We have tried to reach out to every village. The goal is to connect every village in three years. Would it be better to do it through solar? Possibly.

But, one of the sets of data that is coming out when a lot of solar sales is happening in the private market, is that they are going to applications in places which are already electrified but do not get enough electricity. It bothered me for sometime why this is happening, but then I realized if I have not seen electricity, then am I going to pay for solar electricity. But, if I have seen electricity, then I will pay even for solar electricity, then I will pay even for solar electricity.