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Event | November 2016

The Power Retreat

This year´s Independent Power Producers Association (IPPAI) retreat, themed ´India - Meeting the Aspirations? looked at the aspirations of young India, while minding the ways of improving their standard of living by benchmarking it against the western narrative of development.

The 17th Regulators and Policymakers Retreat, organised by IPPAI, witnessed a power-packed opening session where not only representatives from the power sector, but railways, roads, waterways and shipping gathered on the same platform at the Lalit Golf and Spa Resort in Goa, to address a common question: How are policy makers going to meet the aspirations of Indians? Addressing this theme, Nitin Gadkari, Minister of Road Transport and Highways and Shipping, Govt. of India, emphasised that creation of ´green power´ through products sourced and manufactured domestically, would reduce dependence on imports and also rejuvenate the agricultural sector. He said that power generation based on biomass should be promoted and that the production and use of ethanol from sugarcane can be a good alternative source of fuel. While currently in use in India, this fuel source is uncommon in other nations.

Commenting specifically on the power sector, he spoke about the problems in the infrastructure and suggested new models such as built, operate, transfer (BOT) for the transmission segment, in order to encourage private investment and small network of discoms comprising of government and unemployed engineers to boost distribution. He also suggested de-silting hydro projects in order to improve efficiency.

Moving on to coal, Gadkari suggested that given the surplus of coal in India, the excess should be used to produce urea and other petroleum products. This will boost both the coal and agricultural sectors, besides reducing import dependence. He then spoke about the need to have better coal linkages and the fact that as a country, India has very high logistic costs as opposed to other countries. To solve these issues, he stressed on the need to improve the country´s waterways and railways so that less pressure is exerted on roadways in terms of traffic, and so that logistical costs are also reduced.

In the second session, Suresh Prabhu, Minister for Railways, Govt. of India, while addressing the gathering explained how the Indian Railways is focussed on change in system management to achieve operational efficiency. He also spoke about floating tenders related to power procurement for the railways. Prabhu further explained the focus on the expansion of railway network for the future and stated that there are almost 16 states which are ready to have a JV with IR and that this will eventually impact capital cost of projects. He concluded by stating that there is now more stress on completing bankable projects in the railways.

Galvanizing the Power Sector
The session on ´Galvanizing the Power Sector to meet India´s Aspirations´ was defiantly an eye opener for the audience, where the panellist made blunt remarks on the some of the government´s initiatives. Ravi Arya, President, Hindustan Power Projects Pvt. Ltd, expressed concerns over open access market. According to him the market is still lagging behind even after the incorporation of Electricity Act, 2003, and there is a need to focus on the economic development of distribution companies to bring the AT&C losses at the level of below 15 per cent as per UDAY SCHEME within a period of three years.

Echoing Arya´s view Sunil Wadhwa, MD, IL&FS Energy Development Co. Ltd, stated that the government needs to look at the management of the state discoms and also bring transparency in the Consumer Electricity Bill. This entails, proper segregation of the cost incurred at different verticals such as to have a better idea of costs paid in relation to the transmission losses by the consumer.

Meanwhile, one of the most vocal panellists Dr Pramod Deo, Former Chairman, CERC lauded the UDAY scheme. He pointed to Delhi, that has AT&C losses of 11 per cent for the past five years, and stated that it is an important example to encourage the other state discoms.

He explained that AT&C losses pan-India is around the 27 per cent level, with unmetered agricultural consumers accounting as the worst offenders. Additionally, though Gujarat and Maharashtra have 100 per cent metering in the agricultural sector, MSEDCL has filed a petition stating a revenue gap due to agricultural consumers, which is contradictory.

Meanwhile, GVL Satyakumar, Executive Director PP, Ministry of Railways, stated that the main issue in regard to railways and the power sector is related to the cost of transportation of coal. In this direction, the railways is taking initiative to strengthen the overall infrastructure and has become a deemed licensee for the first time. It is also collaborating with NTPC to produce power in Bihar.

Arun Goyal, Addl Secretary, Govt. of India, Project Monitoring Group, Prime Minister´s Office, explained that there is need to have a balance in the investment made in the generation, transmission and distribution sector in the ratio of 2:1:2. There are almost 50 projects that are still pending for approval and although enough investments are being made in the generation sector, there is need for investment in the transmission sector as well. He further added that as of today, approximately 50 MW of capacity is stranded and opined that Public Private Partnerships in the transmission sector will galvanise investments and improve infrastructure.

At the end of the session Kapil Mantri, Head - Corporate Strategy & BD, Jindal Steel & Power Ltd admitted that despite having surplus availability of coal, there are still many industries that do not have access to that coal. He added that India ranks 98 among 140 countries under reliability of power. It can be noted that there are approx. 34.5 GW of old power plants that need to be replaced with new generating stations, in order to improve efficiency and reliability.

Transmission Challenges
In the session on ´Transmission Challenges´, Dinesh Paruchuri, JMD, APTRANSCO explained that India´s transmission segment faces many challenges and issues. wherein a major challenge is the availability of a transmission corridor for evacuation of the proposed 175 GW of renewable energy, as most of these projects are situated in north India.

He thus suggested the need for projects across the country, in a proportionate fashion. He also advocated for better forecasting tools and increased investments in the transmission sector, with the way forward being better project planning and detailed study of the demand pattern.

Here, Haziq Baig, COO, IEDCL, spoke about the two important concepts of General Network Access (GNA) and transmission pricing mechanism, and their importance in the future of transmission infrastructure in India. He explained that the availability of a green corridor is the first step towards having a GNA enabled system. Furthermore, he pointed out issues in transmission of power at the STU level (400 kV), giving example of a solar project at Jodhpur, Rajasthan which despite being willing to evacuate power at the interstate level was unable to do so due to constraints in evacuation infrastructure.

During the session on ´Distribution Sector in India´ RN Sen, Chairman, West Bengal Electricity Regulatory Commission rightly pointed out that discoms are in a dilemma and there is need to focus on drivers such as regulatory reforms and the need to supply power to all category of consumers.

He added, ´WBERC is introducing some amendments in the regulation, which include separate policies for wire and supply business, calculation of voltage wise AT&C losses, ceiling of cross subsidy surcharge at 20 per cent of tariff, ceiling of industrial tariff at 20 per cent above the average tariff, and consumers whose consumption is more than 300 units will not face frequent increase in the tariff rates etc.´

Meanwhile, Mohua Mukherjee, Former India Energy Team Leader, World Bank felt that the main issues in the sector today are related to the implementation of UDAY Scheme and the progressive increase in cross subsidy surcharge. She expressed concern over UDAY, stating that although it is a laudable scheme, there is a likelihood that it might not work, as it is based purely on financial and not on structural reforms. She added that state discoms do not encourage solar rooftop projects as they fear losing out on the commercial and industrial consumers who pay higher cross subsidy surcharge.

Meanwhile, Desh Deepak Verma, Chairman, Uttar Pardesh Electricity Regulatory Commission, advocated the need to bring in a parallel licensee concept, to address the lack of competition in the distribution sector. He emphasised on the need to have greater energy efficiency and the need to bring more rural areas under the distribution segment.

Changing Nature of Demand
Ergo, in one of the plenary session on ´The Changing Nature of Demand in India´, Ajay Mathur, Director General, TERI, appraised the panellist to the fact that although everybody wants electricity, collective behaviour for demand is what affects energy security. He added that there are many contradictions in the areas of energy access and security, giving example of how installed capacity has increased to 300 GW, but plant load factor (PLF) has dropped.

But why? He explained the drop as due to higher variability in demand, which has resulted in increased volatility, which is being further compounded by variability in supply due to renewable energy. According to him, this situation means that ultimately there will also be an increase in cost of electricity and people will have to pay extra to manage this volatility.

Mathur added that major challenges for the future include the need for robust capacity addition to meet peak demand, the need to maximise green power, to minimise costs and to achieve greater flexibility in matching variability in demand with variability in supply.

To conclude, the event, spanning 3.5 days addressed 10 sessions, over 75 speakers, 1 master class, more than 300 participants, and over 25 awards. During the event, key topics of the debates and deliberations included: Meeting the aspirations û Infinite desires and finite resources; coal and power surplus - what stops Indian consumers from getting 24x7 power?; transmission challenges and the way forward; smart India - smart energy, smart water, smart transportation, smart security; civil nuclear liability - impact on fresh investments, development and mainstream nuclear power; the roadmap and challenges for solar and wind; and environment: India to meet the energy demands of 1.25 billion people through a low carbon trajectory/strategy?

Ajay Mathur Director General, TERI
´Major challenges for the future include the need for robust capacity addition to meet peak demand, the need to maximise green power, to minimise costs and to achieve greater flexibility in matching variability in demand with variability in supply.´

Arun Goyal
Addl Secretary, Govt. of India, Project Monitoring Group, PMO
´There is need to have a balance in the investment made in the generation, transmission and distribution sector in the ratio of 2:1:2.´

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