Guest Ar­ti­cle

Power Watch India - - CONTENTS - By Ru­dranil Roy Sharma and Aditya Ravin­dran

Round-up of power sec­tor de­vel­op­ments in last 2 years by Ru­dranil Roy Sharma - GM and Se­nior Con­sul­tant – En­ergy Ver­ti­cal and Aditya Ravin­dran, As­so­ciate Con­sul­tant – En­ergy Ver­ti­cal, Feed­back Con­sult­ing.

It has been two years into the term of a new gov­ern­ment that had swept into power with ab­so­lute ma­jor­ity. This was achieved with the help of a grand vi­sion laid out for the coun­try which promised all-round de­vel­op­ment. We are at a point in time, where we can pause and take stock of how far along we are into the process of ful­fill­ing this vi­sion.

The me­dia has been bustling with the nu­mer­ous achieve­ments of the gov­ern­ment in var­i­ous av­enues guided by the motto of ‘24×7 af­ford­able Power for All’. The Min­is­ter for Power, New and Re­new­able En­ergy and Coal, Piyush Goyal is be­ing hailed as one of the shin­ing stars of this cab­i­net of min­is­ters. With these min­istries be­ing touted as the most pro­gres­sive ones, it is im­per­a­tive that we in­ves­ti­gate the hap­pen­ings in these seg­ments that have oc­curred under the new lead­er­ship.


Deen Dayal Upad­hyaya Gram Jy­oti Yo­jana (DDUGJY) was one of the first ini­tia­tives taken by the new gov­ern­ment to en­hance the reach & ca­pa­bil­ity of the power sec­tor in In­dia. The pro­gramme was carved out of the ex­ist­ing schemes like the Re­struc­tured Ac­cel­er­ated Power De­vel­op­ment and Re­forms Pro­gramme (R-APDRP) and Rajiv Gandhi Grameen Vidyu­tikaran Yo­jana (RGGVY). DDUGJY in­volved steps to beef up the dis­tri­bu­tion in­fra­struc­ture by bi­fur­ca­tion of agri­cul­tural and non-agri­cul­tural feed­ers, strength­en­ing and aug­men­ta­tion of sub­trans­mis­sion and dis­tri­bu­tion in­fra­struc­ture in ru­ral ar­eas and elec­tri­fi­ca­tion of the ru­ral ar­eas.

Around the same time, the In­te­grated Power De­vel­op­ment Scheme (IPDS) was launched to strengthen the sub-trans­mis­sion and dis­tri­bu­tion net­work, to en­sure me­ter­ing of dis­tri­bu­tion trans­form­ers/ feed­ers/con­sumers in ur­ban ar­eas, and weave IT sys­tems into the dis­tri­bu­tion sec­tor. These ob­jec­tives have been car­ried for­ward from the ear­lier R-APDRP scheme, with the aim of AT&C loss re­duc­tion, es­tab­lish­ment of IT-en­abled en­ergy ac­count­ing/au­dit­ing sys­tem, im­prove­ment in billed en­ergy based on me­tered con­sump­tion and im­prove­ment in col­lec­tion ef­fi­ciency.

Both these pro­grammes were floated with a net ex­pen­di­ture es­ti­mate of close to Rs 1, 20,000 crores, of which an amount of about Rs 53,000 crore was fi­nanced from the bud­gets sanc­tioned for the par­ent schemes, R-APDRP and RGGVY. This ex­pen­di­ture was to re­sult into a re­in­forced skele­ton for the power sys­tem in the coun­try in the form of a ro­bust and so­phis­ti­cated trans­mis­sion and dis­tri­bu­tion net­work.

100% ru­ral elec­tri­fi­ca­tion

The am­bi­tion of 100% ru­ral elec­tri­fi­ca­tion has been long held by all the pol­i­cy­mak­ers, with the last ma­jor tar­get of achiev­ing power for all by 2012. But, as of Au­gust 2013, more than 32,000 vil­lages re­mained to be elec­tri­fied. By Au­gust 2015, this num­ber had fallen to 18,500.

Under DDUGJY’s ru­ral elec­tri­fi­ca­tion pack­age, mea­sures were taken up in mis­sion mode start­ing Au­gust 2015 with a tar­get to elec­trify un-elec­tri­fied vil­lages of the coun­try by May 2018, to fit into the grander plans of pro­vid­ing ’24×7 Power for All’ by 2019. Grass­roots level work on this pro­gramme is be­ing tracked through a net­work of 409 ‘Gram Vidyut Ab­hiyan­tas’ (GVAs) and su­per­vi­sors at dis­trict and block level. Data from the ground is be­ing mon­i­tored through an in­ter­ac­tive por­tal which has been made avail­able for the pe­rusal of the public. Of these 18,500 vil­lages that were in the line to be elec­tri­fied, sep­a­rate fo­cus is be­ing given to nax­alaf­fected ar­eas and vil­lages that would be elec­tri­fied us­ing off-grid sys­tems.

These ef­forts have borne fruit in the form of re­duc­tion of num­ber of un-elec­tri­fied vil­lages to a lit­tle over 8,800 within a pe­riod of close to 2 years. The process has been so ef­fi­cient that the tar­get of 100% vil­lage elec­tri­fi­ca­tion is be­ing ex­pected to be achieved a year early, i.e. by March 2017.

This ef­fort has been com­mend­able, but there is

a lack of clar­ity re­gard­ing what hap­pens once 100% vil­lage elec­tri­fi­ca­tion is done? On pa­per, an elec­tri­fied vil­lage does not mean sup­ply of elec­tric­ity to all within the vil­lage. This di­chotomy springs up a ques­tion of how the gov­ern­ment would go about from 100% elec­tri­fi­ca­tion to 24×7 Power for All? As of now there are no clear guide­lines avail­able on how the sub­se­quent steps of 100% house­hold elec­tri­fi­ca­tion, and 24×7 power sup­ply would be made a re­al­ity.

An­nual coal pro­duc­tion of 1.5 billion tonnes by 2019-20

For many years till 2014, coal pro­duc­tion in the coun­try was act­ing as a huge bot­tle­neck for the whole power sec­tor. The in­crease in coal pro­duc­tion was not able to keep up with the in­creas­ing de­mand for coal. The re­sult was that there was a huge short­age of coal at power plants. The power plants were forced to keep a coal stock of about 7 days, which fur­ther dropped to a stock of less than 3 days dur­ing the rainy sea­sons.

These short­ages had forced power plant devel­op­ers to look at costly coal im­ports to en­sure a re­li­able sup­ply of fuel. Even the power plants be­ing set up under gov­ern­ment pro­grammes, like the Ul­tra Mega Power Projects (UMPPs) were be­ing de­signed to be run on im­ported coal.

In re­sponse to this, Coal In­dia came out with a road map to at­tain the 1 billion tonne an­nual coal pro­duc­tion mark by 2019-20. The pro­jected an­nual coal de­mand of the coun­try is es­ti­mated to be around 1.2 billion tonnes around that time, by grow­ing at an av­er­age rate of 7%. Ma­hanadi Coal­fields Ltd (MCL) and the South East­ern Coal­fields Ltd (SECL) are ex­pected to play a piv­otal role in at­tain­ing the 1 billion tonne pro­duc­tion with 250 MTs and 240 MTs re­spec­tively. This move was ex­pected to cost an in­vest­ment of any­where from Rs 50,000 crore to Rs 10, 00,000 crore in the next five years.

This strat­egy of in­creas­ing coal pro­duc­tion is al­ready bear­ing fruits. Coal pro­duc­tion has grown at a CAGR of 7.9% within the last 2 years, and the coun­try is star­ing at an an­nual coal pro­duc­tion tar­get of 590 mil­lion tonne this year. Mean­while, the coun­try is ex­pected to im­port only about 160 mil­lion tonnes of coal this fis­cal, down from 200 mil­lion tonnes in 2015-16 and 218 mil­lion tonnes in 2014-15. The ther­mal power plants have been able to main­tain a de­cent coal stock of about 23 days, against a stock of 7 days dur­ing the same pe­riod in 2014. Ac­com­pa­ny­ing this, there has also been a sub­stan­tial buildup of coal stock at pit­heads. This has spurred the coal pro­ducer to con­duct e-auc­tion for the sur­plus coal.

Plans are be­ing for­mu­lated to bring in pri­vate par­tic­i­pa­tion in a much big­ger way to cater to the ad­di­tional de­mand. 500 mil­lion tonnes of an­nual coal pro­duc­tion is be­ing ex­pected from the pri­vate sec­tor by 2019-20.

How­ever, for some time, there has been a slow­down in in­vest­ments in the ther­mal power gen­er­a­tion space in the coun­try. As of now, about 73 GW of ther­mal power gen­er­a­tion ca­pac­ity is under con­struc­tion, which does not re­quire an ad­di­tional 1 billion tonnes of coal to func­tion. Ad­di­tion­ally, under the con­stant pres­sure from in­ter­na­tional peers to move away from fos­sil fu­els, to what ex­tent does In­dia bank on this coal needs to be seen.

175 GW of re­new­able in­stalled ca­pac­ity

Prior to 2014, re­new­able en­ergy, es­pe­cially so­lar en­ergy, was treated as a niche seg­ment. There were only a cou­ple of gi­gawatts of in­stalled so­lar power, and a tar­get for the year 2022 of 20 GW.

Under the new gov­ern­ment, these tar­gets for re­new­able en­ergy ca­pac­ity were scaled up to 175 GW, of which 100 GW of ca­pac­ity is to come from so­lar en­ergy, 60 GW from wind, 10 GW from bio-power and 5 GW from small hy­dro-power.

The tar­get for so­lar en­ergy prin­ci­pally com­prises of 40 GW rooftop and 60 GW large and medium scale ground-mounted grid con­nected so­lar power projects, amount­ing to a to­tal in­vest­ment of around Rs 6,00,000 crore.

Within a year of this move, the in­stalled ca­pac­ity of so­lar power has al­most dou­bled with equal em­pha­sis on both rooftop and ground­mounted so­lar power sys­tems. At close to 7.8 GW in May 2016, the in­stalled ca­pac­ity of so­lar power sys­tems is close to triple of where it stood in March 2014 of 2.6 GW.

Although, such an over­whelm­ing tar­get sure has worked in the case of so­lar en­ergy, but it has not had a sim­i­lar ef­fect on the ca­pac­ity ad­di­tion of other re­new­able en­ergy sources. Wind power ad­di­tion in the last fis­cal was slightly greater than 3.4 GW, small hy­dro power ca­pac­ity in­creased by slightly more than 200 MW and bio-mass by about 400 MW.

On the other hand, if things go as planned and 160 GW of so­lar and wind en­ergy, both of which are highly vari­able in na­ture, gets syn-

chro­nised with the grid, in­sta­bil­ity is­sues may arise due to the fre­quent fluc­tu­a­tion in re­new­able power gen­er­a­tion. It is still un­clear on how this chal­lenge of sta­bil­is­ing the grid in a re­new­able-rich en­vi­ron­ment would be over­come.


The Ujwal Dis­com As­sur­ance Yo­jana (UDAY) has been one of the most talked about schemes re­lated to the In­dian power sec­tor. The scheme has been de­signed in such a way so as to strike at the heart of the is­sues bug­ging the whole sec­tor – the in­ef­fi­cient op­er­a­tion of the power dis­tri­bu­tion com­pa­nies.

The first step en­vis­aged to­wards this the elim­i­na­tion of debts that are drag­ging down the dis­coms. For this the state gov­ern­ments will take over 75% of the dis­com’s debts which may be fi­nanced by is­su­ing bonds and the re­main­ing 25% would be ad­justed by the dis­com by is­su­ing bonds. This step will re­duce the ef­fec­tive in­ter­est cost on the debt to around 8-9%, from as high as 14-15%; thus im­prov­ing over­all ef­fi­ciency.

In the next step, a per­ma­nent so­lu­tion to the prob­lem of dis­com losses is achieved by states tak­ing over and fund­ing at least 50% of the fu­ture losses (if any) of dis­coms in a graded man­ner. In re­turn, the dis­coms would be pres­sured into in­cor­po­rat­ing ef­fi­ciency mea­sures in­clud­ing ac­cel­er­ated im­ple­men­ta­tion of DDUGJY & IPDS schemes, cost cut­ting and timely tar­iff re­vi­sions.

Even though the plan looks bril­liant on pa­per, but in the back­drop of a sim­i­lar scheme of debt re­struc­tur­ing or­ches­trated in 2012 – the Financial Re­struc­tur­ing Plan (FRP), the UDAY’s suc­cess may ap­pear ques­tion­able. FRP was im­ple­mented along sim­i­lar lines of UDAY with 50% of the debt to be taken up by the state gov­ern­ment, and the rest to be re­struc­tured by the dis­com, and per­for­mance en­hance­ment was to pay for these re­struc­tured debts.

FRP was mainly tar­geted at some of the largest loss-mak­ing state dis­coms. The plan, how­ever, failed to take off at a con­sid­er­able scale. There is no guar­an­tee that UDAY would not fol­low a sim­i­lar path. This un­cer­tainty stem­ming from past ex­pe­ri­ence is one of the largest doubts that cast shadow on the out­come of UDAY.


The long-run­ning Do­mes­tic Ef­fi­cient Light­ing Pro­gramme (DELP), which fo­cused on mak­ing LED-based light bulbs avail­able to the masses at af­ford­able prices, was re­branded as Un­nat Jy­oti by Af­ford­able LEDs for All (UJALA). The re-brand­ing ex­er­cise goes hand-in-hand with the Na­tional LED pro­gramme which was launched in Jan­uary 2015, with a tar­get of re­plac­ing 77 crore in­can­des­cent lamps with LED bulbs.

Against this tar­get, close to 14 crore LED bulbs have al­ready been dis­trib­uted. En­ergy Ef­fi­ciency Ser­vices Ltd’s (EESL) es­ti­mates sug­gest that these LED bulbs are sav­ing about 50 mil­lion units of en­ergy daily, which in mon­e­tary terms amount to close to Rs 20 crore. This en­ergy ef­fi­ciency mea­sure saves about 3.6 GW of peak power de­mand, and a re­duc­tion of CO2 emis­sions per day close to

40,000 tonnes.

Although the UJALA scheme is the flag­ship of EESL, there are many other en­ergy ef­fi­cient prod­ucts that the agency is push­ing out into the mar­ket in a sim­i­lar man­ner in or­der to cul­ti­vate a cul­ture of en­ergy sav­ing. How­ever, ac­cu­sa­tions have been rife against EESL on the way the or­gan­i­sa­tion is ma­nip­u­lat­ing the mar­kets with low prices, es­sen­tially dis­rupt­ing the com­pe­ti­tion of a fair mar­ket.

All-in-all the schemes and pro­grammes that have been put into ac­tion by the gov­ern­ment in the past 2 years have been well or­ches­trated to cure the symp­toms of the dis­ease that had been plagu­ing the sec­tor. In ad­di­tion to the im­mac­u­late for­mu­la­tion of these plans, a great deal of trans­parency has also been in­cor­po­rated through nu­mer­ous dash­boards and fre­quent me­dia out­reach pro­grammes that em­pha­sise the ac­tions be­ing im­ple­mented. How­ever, true vic­tory of these mea­sures would be marked when these schemes would pro­ceed to work in syn­ergy to rid the in­dus­try of the past trou­bles and set it run­ning on a track to­wards financial and op­er­a­tional suc­cess.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.