Powering the Power Sector
Sanjay Kaul, President of the University of Petroleum & Energy Studies (UPES) gives an overview of the power sector in India highlighting the Challenges imposed by Renewable Energy in grid operations
Indian power sector is booming at the moment. Last year about 53,000 MW of generation capacity was added, which took the total installed capacity to 2,07,006 MW. The adjacent chart gives the percentage installed capacity on the basis of fuel. Following are the major issues impeding the growth of Indian power sector:
Coal & gas shortage impacting generationDespite large capacity, full utilisation is not possible due to shortage of coal and gas. Almost 25 per cent of the total capacity remains stranded.Coal blocks were allocated to the generating companies, but they could not be developed for various issues, such as, land acquisition and environmental clearances etc. Coal India Ltd. (CIL) has now agreed to sign FSAs (Fuel Supply Agreements) with the generating companies, wherein, CIL would supply 65 per cent of the total coal from domestic production and rest 35 per cent would be imported. But, the change in international markets, such as the enactment of the new law in Indonesia, had significantly impacted the cost of imported coal upwards significantly, thus increasing generation cost. About 70-80 per cent of generation is the fuel cost.
Similar is the case with gas based power plants, wherein, indegeneous gas supply, especially from KG basin, has not kept pace with the requirement. Gas availability has dropped from 80 mmcd to less than 30 mmcd and power production from imported gas / LNG is not considered a viable option as of now due to fluctuation of LNG price in the market and consumer tariff does not support the higher generation cost. Imported gas is almost twice as expensive as the domestic gas.
Under-recovery of tariff from the consumersTariff of most of the states being not cost reflective, the distribution companies accumulated under recovery to the tune of Rs. 1.9 lakh crore. Keeping in view the precarious condition, Government of India appointed Shunglu Committee to suggest action plan for improving the health of discoms. Following recommendations were made by the committee:
Yearly revision in tariff commensurating with the market condition of fuel costs
To achieve targeted AT&C lost reduction
Appointed franchisees for 250 towns in country.
22 States have already revised their tariff, the highest being in Tamil Nadu where they revised their tariff after nearly a decade by 37 per cent increase in power costs.
The Centre recently approved restructuring of debts of State Electricity Boards in a move to turnaround the near-bankrupt power distribution companies. Under the scheme;50 per cent of the short-term outstanding liabilities would be taken over by State governments
Balance 50 per cent loans would be restructured by providing moratorium on principle and best possible terms for repayments.
Challenges imposed by Renewable Energy in grid operationsRenewable energy is now about 12 per cent of the total installed capacity and is likely to go up to 20 per cent by 2020. This is very challenging for grid operations. Grid management becomes increasingly complex with the injection of renewable power generation. Both, solar and wind, are intermittent and varying in nature. Solar energy is available for a time period between 10 in the morning till 4 in the evening. Similarly, wind power is mostly available in the mornings and evenings. The integration of renewable energy sources into the grid will change planning objectives. Renewable energy is normally generated away from the load centres and it being intermittent in nature calls for changing the planning norms for transmission networks. Transmission networks need to cater to high & low generation from renewable and at the same time meet the load on the system catering to various categories of consumer.
Recent grid failure has given us many lessons to be learnt from building inter-regional load transfer capability and operation strategies. Power sector is gearing up for challenges for expansion and operations. Presently, Northern, Eastern, North-Eastern and Western are running in synchronisation. In about 2 years’ time Southern Grid will also be integrated by commissioning of 765 KV line between Southern and Western grids.
Sanjay Kaul is the founder President of the University of Petroleum & Energy Studies (UPES) in India. His responsibilities include positioning of the University nationally and globally among the stakeholders i.e. policy makers, key influencers, academic and research institutions and the industry. He in turn provides valuable and strategic input to the management, board and faculty of the University in preparing to meet the challenges of future industry scenarios and skill sets required for the generation next professionals in a ‘Global’ world.