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Feature | August 2017

Implementation is Key

Formulating policies is only the first step, the success of smart grids depends on the time-bound implementation of projects.<br /> Technology enabled systems and solutions have become the driving force for electricity segment in the last few year. It may not be wrong to say, smart metering, smart grid applications, two-way metering, growing generation of power from renewable energy sources have driven the power grid market. However, India is still away from rolling out the smart grid. What is lacking? In one word, the answer is implementation. <p></p> <p>In the past decade, India was successful in formulating and taking baby steps towards the technology-intensive smart grid roll out. The country is on par with its peers as it was quick in adopting the technology. In the recent times, the price sensitive Indian market saw products that are designed for its geographical and climatic conditions. But, yet to see any sizeable investments in research and development. </p> <p>On the policy front, the country has made noteworthy imprints. In the year 2010, the India Smart Grid Forum (ISGF) and India Smart Grid Task Force (ISGTF) were set up. In less than two years, the government had allotted 14 smart grid pilot projects. 2013 saw release of Smart Grid Vision and Roadmap. The National Smart Grid Mission (NSGM) was constituted in 2015. In the same year the Forum of Regulators (FoR) approved the Model Smart Grid Regulations, an enabling document. The states have started drafting smart grid policies for the implementation. Interestingly, in the last three years, 27 state electricity regulatory commissions have issued Net Metering Regulations. And also the Electricity Tariff Policy of 2016 mandated smart meters for all customers with a monthly consumption above 200 kWh by the end of 2019.</p> <p>Smart grids are the best answer to a country which is looking at enhancing energy efficiency, reducing load shedding, efficient use of the existing networks, ensuring reliable and quality power and reducing transmission and distribution (T&amp;D) losses. Power produced has to be consumed and canot be stored even today, that makes it even more challenging. A technologically advanced system, smart grids not only enables the state power distribution companies (discoms) in load management, but also help consumers to realign their consumption patterns. In turn, it helps the user to bring down their energy cost. </p> <p>All appears to be smooth and appealing regarding the steps taken from the government side. But what happened to the 14 smart grid pilot projects which were sanctioned in 2012? 'Owing to various reasons, we could not do much on the implementation side. None of the pilots could be completed till date. Four of the 14 projects have been cancelled. We see two or three projects may be completed in 2017,' said Reji Kumar Pillai, President, ISGF. </p> <p>The pan India roll out of smart grids to a greater extent hinged on the success of the pilot projects and the data collected from them. As these projects too failed, the natural question is how far are we are realistically from developing smart grids in the country. The industry experts are of the opinion that the pilot projects were location/state specific. And for a pan-India roll out you need to look at projects that can generate sample data which can be used by any state in India. And, they also feel that the states are yet to be ready with solid implementation plans. </p> <p>Agreed that even the bigger countries and the developed nations implemented smart grids in phases and for a country like India, with a vast geography and geography-specific challenges, a mass roll out may not be a good idea. Realistically, it will take three to five years before India sees a sizeable smart grid network in place. </p> <p><span style="font-weight: bold;">Why Smart Grids?</span><br /> Indian discoms and the transmission entities face a lot of challenges. For the transmission companies, it is primarily the fight against the Aggregate Transmission and Commercial (ATC) losses. And for the discoms it is a combination of financial issues to operational efficiencies, fight against power theft and upgrading itself to smart grid, i.e., deployment of smart metering. </p> <p>UDAY (Ujwal Discom Assurance Yojana), a scheme was approved in November 2015 to restructure the state discoms' outstanding loans to the tune of Rs 4.3 laKh crore. Also, aimed at strengthening the financial health of discoms, the scheme also mandates discoms to follow the following four steps (i) Improving operational efficiencies; (ii) Reduction of cost of power; (iii) Reduction in interest cost; and (iv) Enforcing financial discipline. For improving operational efficiency, it mandates compulsory deployment of smart meters, upgradation of transformers, meters etc. It also mandates discoms to bring down the transmission and distribution (T&amp;D) losses to 15 per cent levels in 2018-19 from the current 21 per cent levels. </p> <p>India has recently shifted its focus from conventional energy to renewable energy. It has set an ambitious target of adding 175 GW of renewable energy to the grid by 2022. Of which 40 GW is going to come from solar PV on 20 million rooftops. Which will be connected to low voltage distribution grids straight away. This means the discoms need to look at technologies that can enable flexibility in power systems that can integrate the increasing share of renewable energy. This flexibility should be both in handling supply and demand. </p> <p> <span style="font-weight: bold;">Impediments</span><br /> In an earlier interaction, Dr Pramod Deo, former chairman of Central Electricity Regulatory Commission (CERC), pointed out, ôThe present structure of cross-subsidy will be the major hurdle for smart grid implementation. In states like Maharashtra and Gujarat, the revenue from agriculture is only 13 per cent, whereas the revenue from industrial consumption of Maharashtra 47 per cent and in Gujarat it is 67 per cent. But agriculture consumes electricity which is double the cost and pays just half. So, how do you tackle this? It again trickles down to the political will.'</p> <p>On the other hand, Pillai was candid in pointing out the lack of trained manpower in discoms; the existing procurement frame work etc. as challenges. He said, 'Implementing smart grid systems are not like buying electrical products and equipment. These are sophisticated technologies integrated with two-way communication systems, which cannot be procured on lowest bidder route.' </p> <p>The Indian market is price sensitive, at the same time it is also a big volume market. So, for product manufactures it is challenging. However, the prices of smart meters have come down to Rs 70 a year. And this cost according to Pillai should be shared between the consumer and the utility at equal proportions. </p> <p>A global player like Sensus admits that they bet big on India. Amit Vaidya, Director- Strategic Customer Team, Sensus India, said, 'The Indian Prime Minister's initiative -Make In India - is helping MNCs like us to plan for local manufacturing and bring the cost of products down.'</p> <p>An integrated smart grid will consist of a network of devices that are connected to the central controlling point. These include asset management system, control systems at various points, automation of distribution network, a management system for the distribution grid, energy management system, information and communication devices, power quality and power management devices, security systems, and a two-way smart meter at the consumer end. </p> <p>To give you an example, Sensus network technology offers near real-time data from the network, which helps one to monitor and manage the services to identify any issues on the distribution network and address them quickly.</p> <p> <span style="font-weight: bold;">Cyber Security</span><br /> Cyber security plays a critical role in a smart grid. The recent cyber attacks witnessed globally have stalled the operations of aviation and logistics segments. In May 2017, an attack had left the British Airways services in chaos worldwide. And in June 2017, one of the largest container shipping company had a tough time when Patya virus attacked their system. Same was the case when FedEx holding company TNT Express was thrown out of gear due to cyber attack. If a similar attack were to happen on an electricity network, the whole grid could collapse in no time. So, building a foolproof system and managing it, and safeguarding it from such threats would be a challenge.</p> <p> <span style="font-weight: bold;">Way Forward</span><br /> The policy is in place, the price of products are suitable for the Indian market conditions, countries like US, European Commission, Canada, Sweden and Japan are extending their support in terms of funding and technology. So, what is preventing the implementation of smart grids?</p> <p>Apart from the procurement and discoms' financial health, the regulatory commissions' approvals also are essential for the implementation of smart grids. The introduction of dynamic tariff structures based on time of use (ToU)/time of the day (ToD). These are absent in many of the states currently. </p> <p>The state regulators in the normal course approve investments if the benefits outweigh the cost. However, in the case of smart grids, the benefits could be intangible and call for higher capital investments. A supportive investment approval framework that promotes technological innovations is required.</p> <p>An interoperability framework in place will also be a requirement for the large scale deployment. The discom employees should be given adequate training to handle the technology-intensive grid. And last but not the least, the consumer should be given ample awareness on the benefits of smart metering in reducing their electricity bills. Now, discoms have to pull up their socks and act. For the mass roll out, push from the Ministry of Power in the form of encouraging incentives may be quite imminent.</p> <p> <span style="font-weight: bold;">-Renjini Liza Varghese</span></p>
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