India Is A Power Surplus Country; The Problem Lies In Transmission And Distribution

 What sits between power generation and power consumption are two
other critical functions – power transmission and power distribution.
And this is beginning to be addressed - in the three fiscal years from
March 2014, there has been an increase of more than 40 per cent in
transmission capacity.

A debate has been raging in newspapers and on social media whether India, today, is a power
surplus country or there just isn’t enough demand for electricity in the country. This follows from
recent government statements about the power demand and supply gap in India being at an all
time low.

The graph (below) from a Central Electricity Authority (CEA) report explaining India’s power
demand-supply deficit shows that both the peak as well as the average power deficit is
constantly reducing and stands at an all time low at the end of last fiscal.

Power supply-demand deficit

In the past few weeks, some columnists have pointed that this situation is not so much because
there is a lot of power being generated; it is because there is no demand for electricity. Critics
point to load shedding and unavailability of power for retail consumers.

That electricity is a critical component, which drives economic growth, is uncontested. Chronic
electricity shortages have routinely led to low electricity consumption, low industrialisation and
farm distress over many years.
The crucial “surplus test” should essentially ask one fundamental question – if a consumer
today wants more electricity for industry, agriculture or personal use, can this additional delta be
generated in the country. The answer to that question is an overwhelming yes. The challenge
lies in matching the supply to the demand. The challenge of getting the power generated to the
place of consumption demand is being used to question the existence of surplus itself, which is
an incorrect measure of evaluating surplus.

India’s first power plant was set up in 1897 in Darjeeling. Since then, a conventional capacity of
214 GW was built up to March 2014. In the next three years since, under the present Narendra
Modi government, 60 GW or almost 28 per cent of the 117 years worth of capacity addition has
been topped up on the 2014 number. The following power generation data over the last year
demonstrates robust growth.

Power generation data

One key reason of continuing generation capacity addition is the steps taken to remove the
supply bottlenecks, especially on coal. There is no shortage of coal as compared to 2014, when
two-third of the plants had critically low stocks of coal. This quarter, all but three plants in the
country have sufficient coal to continue their operations.

On the demand side too, the government has taken several steps to address power equity and
access. Of the 18,000+ villages un-electrified as of 31 March 2015, less than 4,000 villages now
remain to be electrified. Every village in India will have access to power by May 2018. To top
this, government is now running a household electrification programme – the work will not stop
just at getting a power line to a village, it will ensure every household is electrified. There are 4.5
crore such households and the task of getting power to every household is expected to be
completed by 2022. Critics routinely underestimate the demand boost from complete
electrification because rural electrification is often confused with household electrification, a
problem highlighted by Swarajyaearlier.

The affordability aspect is being addressed through leveraging economies of scale under the
Unnat Jyoti by Affordable LEDs for All (UJALA) programme. The world’s largest LED bulb
distribution programme is now using the same model to supply appliances like solar pumps and
fans to consumers nationally. The hitherto un-served consumer benefits from a low entry price
as well as low ongoing operating costs of the appliances.

The demand boost will likely follow a hockey stick pattern between 2018 and 2022, assuming
both programmes stay on track. The progress of both the electrification initiatives can be
tracked online on the GARV app (garv.gov.in).

What sits between power generation and power consumption are two other critical functions –
power transmission and power distribution. The former is an area largely controlled by the
central government, while the latter is controlled by state governments and private players in
select cities.

Power transmission is critical because often the place of power generation and the place of
power consumption are located far apart. Coal rich states or states with run of rivers can
generate a lot of power, but they may not be rich enough to consume this power. As a rule of
thumb, the eastern and northern states have more generation capacity while the western and
southern states want this power. While this is a known problem, India never invested in large
scale power transmission overhaul, letting regional grids work disparately. This started changing
only in 2014. In the three fiscal years from March 2014, there has been more than 40 per cent
increase in transmission capacity, which has helped increase available transfer capability to
southern states by 116 per cent. India also achieved One Nation One Grid One Price parity in
December 2015. With all transmission grids interconnected, a power distribution company
(discom) could buy the cheapest available power from the power exchanges to manage its peak
load.
Power distribution is the trickiest area. There may be enough coal and every plant in the country
may be working. There may be a customer willing to pay for the power and there may even be
an option to evacuate the generated power and bring it to the state where the consumer is
located. Yet the consumer may not get this power, because distribution – that last mile function -
has been broken in the country since Independence. The state discoms run perennially in
losses as they hardly ever pass the cost of their operations to the consumer. The reasons
mainly are political and economic - these firms were never run like a business. Given their
precarious finances, they hardly ever invest in upgrading the local urban and rural infrastructure
–that’s why a fallen wire or a rain induced malfunctioning circuit, or a burnt transformer in the
neighbourhood are such routine instances.

In some ways, these discoms are like Indian e-commerce firms – the more they sell, the more
loss they make. While the e-commerce firms are funded by deep pocket venture capitalists,
discoms are unfortunately funded by the government and hence the taxpayer.

To ensure that distribution sector is not an impediment in ensuring access to affordable and
reliable power, the Ujwal Discom Assurance Yojana (UDAY) was launched to resolve all past,
present and future problems. By making states accountable for discom finances, there has been
a positive movement to bring about operational and financial efficiencies. UDAY programme has
led to savings of nearly Rs 12,000 crore per year for discoms nationally, translating into lower
prices for consumers. There are some green shoots already in states like Rajasthan, Haryana,
Andhra Pradesh, Uttar Pradesh, and Bihar, where the gap between the cost of power for the
discom and the revenue made by selling it is reducing. Power theft is also on a decline in many
states - an endemic problem leading to shortages and wastages. Another large state, Tamil
Nadu is expected to break even on discom operations by end 2018.

Yet, the discom improvement is a waiting game. Firstly, they need to break even operationally.
Then they need to generate sufficient free cash flows to apportion money for the all important
capital expenditure to improve both urban and rural infrastructure. This process is ongoing, but
will still take a few years to fully reach a logical conclusion. While the central government
continues to support and goad states towards making rapid changes, ultimately the political will
of the states is critical. Even with all these constraints, rapid strides have been made since the
launch of UDAY in curing long-standing historical problems of discoms.

The fact is that Compounded Annual Growth Rate (CAGR) of power generation has been 6.4
per cent between 2014 and 2017. This growth rate was 6.15 per cent between 2004 and 2014.
The power generation CAGR in the last three years is higher than those achieved in the years
when the economy was growing between 8 per cent and 9 per cent. The current CAGR aptly
captures the level of economic activity, and would perhaps have been more but for the
consumption efficiency initiatives in place.

Power generation is the most robust method of calculating electricity growth since electricity
cannot be stored. It is also a metric that directly impacts power generators. These players are in
for a long haul and they are concerned about what they can generate and sell, not what reaches
the last consumer standing. India, today, has enough generation capacity to meet even a 50 per
cent demand rise – the available generation capacity will still meet this ramp up.

If power sector was a simple and unitary demand-supply matching marketplace, the supply
today will easily clear the demand. That’s the essence of power surplus – at the point of
generation. Changes being made across the value chain will eventually keep right shifting (a
right shift indicates an increase in the quantity supplied) this surplus to the point of consumption
and this right shift is also now an accelerated process.The Modi government is targeting 24x7
affordable ‘power for all’ by 2022. Power Minister Piyush Goyal is spearheading this initiative,
methodically resolving problems at various points of a complex value chain. Today, there are
column inches devoted to torturing the consumption data to question the generation surplus.
Quite likely, these column inches will vanish as the intermediary infrastructure deficit continues
to be bridged.

A few hours of load shedding here or there do not change the fact that India, today, is a power
surplus country.
Power Theft

In 2013, a documentary film, Katiyabaaz, dealt with the issue of power theft in India. Loha
Singh, the protagonist of the film steals and provides illegal connections for living in Kanpur.
“Why should I be scared of the government when electricity doesn’t scare me?” asks the
protagonist.
Kanpur once prided itself on being the ‘Manchester of the East’ for its thriving factories. Today, it
is a derelict city, teeming with people and battling with power shortages. Kanpur residents
endure up to 16 hours of power cuts a day as electricity wires hang precariously over congested
roads. The city is notorious for power theft. Political apathy and administrative indifference
contribute largely to it.
Power loss in India
The losses in power sector can be classified into two categories – technical and non-technical.
Technical losses refer to losses in transmission from power plants to end consumers. This
problem is unavoidable. On the other hand, non-technical losses are hard to understand. Such
losses are essentially monetary or commercial losses. They arise when distribution companies
supply electricity without getting paid. These non-technical losses occur because of non-paying
customers.
Reasons behind power theft
There are mainly two ways by which power thefts occur in India and they are meter frauds
(manipulating the electricity usage data) and unmetered usage (where power is enjoyed for
free). Political interference can also be held largely responsible for power theft in India. It has
been observed that in many parts of the country, power theft increases during elections.
Farmers occupy a major chunk of the country’s electorate and political leaders often promise
them free or subsidised electricity. Moreover, most of the overhead electrical wires in India are
still not insulated and that invites illegal hook-ups.
Power theft in cities
Power theft is not simply a rural phenomenon. According to a report in The Times of India,
urban slums are sites of intensive power thefts. In 2002, the Calcutta Electric Supply
Corporation (CESC) sources had revealed that much of the electricity theft in Kolkata was
detected in posh areas. A raid conducted then by the CESC exposed that most of the power
stolen by domestic consumers in Kolkata occurred in upmarket residential areas like Park
Street, Shakespeare Sarani, Alipore and New Alipore. However, the situation has improved with
the implementation of strong anti-electricity theft measures that include imprisonment up to five
years and fine up to Rs. 50,000.
Industrial power theft: Case Studies
In December 2017, the Jharkhand state government had set up a special investigation team to
probe power thefts and irregularities. According to a source in the state’s energy department,
losses of over Rs. 3000 crore were being incurred by the state government due to power theft.
A Jharkhand Bijli Vitran Nigam Limited (JBVNL) source said, “Power thefts by industrial units
have been rampant despite raids by the anti-theft wing of JBVNL. Mini-steel plants having
induction furnaces in and around Jamshedpur, Seraikela and Chaibasa (West Singbhum) are
among the major culprits.” Amarnath Mishra, the General Manager of JBVNL’s Singbhum
supply area stated, “We have managed to curb power theft by industrial units to a great extent
but revenue loss is still prevalent. Owing to a weak billing system, we are not able to say how
much power is being actually sold.”
In 2014, Madhya Pradesh’s Poorva Khestra Vidyut Vitran Company issued a fine of Rs.1.62
lakh against Welspun Energy Private Ltd. for gross industrial theft of power. In 2017, Mumbai’s
civic body-run power utility Brihanmumbai Electric Supply and Transport (BEST) had slapped a
claim of Rs.4.85 crore on the owner of a restaurant in suburban Mahim for alleged power theft.
An official from BEST said, “Acting on a tip-off, our team raided the two – storey restaurant. We
found that a cable for power supply was connected illegally through a changeover switch
arrangement.”
Such incidents occur rampantly across India. Technological innovations are being brought in to
reduce power thefts. Sensors are being used to detect load imbalances. Companies are also
coming up with smart meters and sensors that can detect meter tampering. Smart meters
communicate meter readings directly to electricity distributors, eliminating the need for someone
to come out and read meters and also reduce the risk of tampering.
Impact of power theft on Indian economy
According to a report, published by the Northeast Group, the Indian power sector loses around
$16.2 billion to theft every year. Ben Gardner, President of the Northeast Group stated, “India
loses more money to power theft than any other country in the world. The state of Maharashtra
– which includes Mumbai – alone loses $2.8 billion per year, more than all but eight countries in
the world. Nationally, total transmission and distribution losses approach 23% and in some
states, losses exceed 50%.”
According to the World Bank estimates, power theft reduces India’s GDP by around 1.5%. A
recent study by the NDTV also concluded that 40% of the electricity in India is still unpaid. Of all
the power generated in the country, around one fourth is either stolen or lost in transmission.
Governmental measures to curb power theft
The Union Ministry has suggested that in order to combat various challenges of rural
electrification, power distribution companies should raise awareness among the public on the
uses of electricity. They should take up extensive drives to curb the theft of electricity and
regularise illegal connections and focus on quality, reliability, quantity and timings of power
supply in rural areas. The Indian government has also put emphasis on a rationalisation of “cost
of connection” for rural households, 100% metering at all levels to “facilitate energy audit” and
rationalisation of tariffs in line with tariff policy of 2016.
The central government has pledged an investment of billions of dollars for creating a smart grid
infrastructure. In November, 2014, Prime Minister Narendra Modi announced $4 billion in
funding for smart metering programmes. Additionally, over $ 8billion is available for loss
reduction programmes and dozens of projects are now underway across India. Measures such
as these may reduce power theft in India.
Technological interventions to curb power theft
The high rates of transmission and distribution losses in India are around 60% in several states.
This has led to the emergence of several technologies to address the non-technical power loss.
Companies such as Omron, Sensus and even Nokia have begun operations in this sector
helping power distribution companies detect and address power theft and meter tampering in
real time. Others have begun work to reduce costs by enabling remote reading of meters.
Omron, a Japan-based company, the world leader in securing and controlling technologies,
launched its Integrated Tamper Detection Solution in India in 2017. Integrated Tamper
Detection Solution comprises of a technologically advanced security sensor, embedded in a
smart meter. Vinod Raphael, Country Business Head, Omron Electronic and Mechanical
Components, Business Division in India, said, “Though it is difficult to reckon the proportion of
power theft in transmission and distribution losses, it is certainly one of the major concerns for
the utilities. Omron has launched a security sensor for the smart meter by detecting all kinds of
 (electrical and non-electrical) tampering.” The sensor uses GSM technology to transmit the data
to the distribution company’s central server. Raphael also added, “Now, we have started the
development of sensors that can be clamped on to low tension distribution lines and can detect
load imbalances”. Omron’s new solution is in synergy with the government’s efforts towards
minimising transmission and distribution losses, considering the government setup of a “smart
meter task force” to address this alarming state of affairs and to contribute towards shaping
India as a Smart Grid Nation.
Transmission and distribution losses remain one of the major concerns for the power sector in
India. As per varied industry reports, the country ranks fifth in the world in terms of installed
capacity, but still more than 300 million people do not have access to electricity. The losses give
rise to a vicious cycle – utilities running into losses leading to increase in power tariff leading to
more burdens on the end users which ultimately results into more unscrupulous ways to tamper
with meters.

Due to huge power theft, India is losing billion of rupees because of unbilled consumption and
illegal power usages. If you add all the unpaid bills to this loss, then the electricity distribution
companies and boards will be in a huge loss. The recent estimates say that only half of the
revenue is realized. As per a world bank’s report, there are two components of losses which are
technical and non-technical. Technical losses are mainly because of power supply dissipation due
to faulty transmission and distribution lines, measurement systems and transformers.
Here are other power losses which incurred as a result of actions that are outside the control of
the power supply like errors in accounting and record keeping. Power theft losses also called
commercial and non-commercial losses, which are very difficult to estimate but run into huge
amounts. Brazil and India rank high on the list of the huge power loss. Countries like U.K and U.S
also experience such losses but there are not as significant. The Indian government also
experience huge power thieves across domestic, commercial and industrial establishments, larg e
cities, and rural areas.
Whatever the type of loss is, there should be a proper process to avoid these unlawful activities
so that most of the power loss will be saved.

To avoid such activities and to save the power, the government of India has introduced smart
meters in all the sectors, and in some parts of India. These smart meters have become extremely
relevant in saving the power and giving the exact bill. Now, let us understand what smart meter
all about is; this smart meter is used to measure the usage of electricity and need to tenuously
switch the customer’s power supply off or individual appliances based on the demand response.
It can remotely control electricity consumption and maximize the energy efficiency and load
balancing.

A smart meter consists of two units: a metering device and a display unit.

 A Metering Device: This will be in the custody of the distribution or utility company.
 A display Unit: This will be at the consumer’s place.
Benefits of Smart Meter:
 The smart meters that are deployed in India are capable of one-way communication as they have
enhanced features and cost-effective.
 Smart meters are good for the distribution firms, as they can detect unusual and heavy demand
powers, which may point to a tapping of wires. This is particularly applicable in certain parts of
India where little theft of power is out of control and detecting it manually is difficult.
How Smart Meter Can Help Control Power Thefts:

 Using Smart meters you can shut off the services of households and commercial establishments
which don’t pay their bills.
 Early indications from deployments globally indicate that putting monitoring systems in place can
prevent the power loss caused due to electricity theft.
 Smart meter help to control the lower power consumption and consumers who use ‘free’ power
can cut the usage and resort to using the power only as much as they can pay legally.
One of the strongest reasons to start smart meter in India is to prevent the power
theft which is legally or illegally very huge. The other compelling factors such as
technical power losses, peak power shortfalls and bringing well-organized
transmission of electricity to reward the consumers who help in reducing peak power
also demand smart meter.
At present, governments in Andhra Pradesh, Maharashtra, Karnataka, New Delhi, and
Puducherry have initiated the process of installing smart meters. Hope it spread all
over India to control the power thefts.
Power Quality

Power quality refers to the stability and consistency of electricity supply. In India, the concept has
gained significance over the past few years, especially in light of the government’s target to provide
24×7 “quality” power to all by 2022. Meanwhile, the electricity grid is becoming increasingly complex
with the integration of large renewable energy capacity, increase in distributed generation,
introduction of higher voltages in power transmission and addition of complex loads in the system,
thus bringing power quality issues to the fore. However, in view of these challenges, it has become
even more difficult to maintain power quality in the country.

In India, power quality is often described in terms of power factor, frequency, reliability (number of
interruptions) and restoration of supply (duration of interruptions), etc. Some common power quality
problems are supply interruptions, harmonic distortions, transients and imbalances in voltage and
current, flickers, voltage sags and swells, and frequency excursions, as well as problems associated
with reactive power. These issues also have operational impacts on the electricity network and its
losses.

A look at the power quality scenario in India…

Importance of quality power

Power quality issues may lead to blocked capacity, premature failure of equipment due to electrical
and thermal stresses, equipment damage, unplanned outages, poor power factor, etc. As per a
paper presented at the International R&D Conclave organised by the Central Electricity Authority
(CEA) in February 2018, the direct costs of downtime in India are about $3,128 million per year, of
which about 57 per cent are due to voltage sags and short interruptions, while 35 per cent are due to
transients and surges. However, the expenditure required to prevent such events from happening
are estimated to be less than 10 per cent of the financial loss. Both consumers and the distribution
utilities suffer from equipment failure, and thus from the high cost of operations and maintenance
due to compromised equipment quality.

Quality
improvement solutions

Some of the measures that can be taken to improve power quality are the deployment of automatic
voltage control devices, active power factor correction devices, source and load balancers and
digital substations; control and management of peak power; and efficient reactive power
management. In addition, technology solutions such as energy storage systems at the generation
level; static VAR compensators (SVCs) and static synchronous compensators (STATCOMs) at the
transmission level; and unified power quality conditioners (UPQCs) and harmonic filters at the point
of loads can be deployed. Meanwhile, energy storage solutions such as batteries can be used to
overcome the intermittent nature of renewable power and provide backup power in areas with poor
power quality.

The SVCs increase the power transmission capability of transmission lines and improve the transient
stability and load factor of the system. STATCOMs provide variable reactive power as per the grid
requirements and enable dynamic voltage control. Harmonic filters help in maintain the harmonic
distortion below permissible limits by injecting controlled current to remove harmonic current from
the source side of electrical systems in order to correct the poor displacement power factor. UPQCs
improve the current quality of non-linear loads, reduce harmonics in the current, and help in reactive
power compensation and voltage regulation. Further, smart grids can play a key role in ensuring
reliable power supply. Smart grid technologies such as advanced metering infrastructure and outage
management systems enable faster communication between the utilities and consumers, real-time
monitoring and quicker restoration of power supply in case of outages. Besides, regular investments
in network strengthening and upgradation, and consumer awareness programmes can help in
improving the overall quality of power supply.
 Regulatory scenario

A strong regulatory framework is required for tackling power quality issues. In India, different
regulations are in place for the generation, transmission and distribution segments, specified by the
CEA, the Central Electricity Regulatory Commission (CERC) and the state electricity regulatory
commissions, to help maintain the quality of electricity supply and maintain grid stability.

At the central level, regulatory provisions such as the deviation settlement mechanism, the electricity
grid code and the availability-based tariff provide a framework for quality power. These regulations
focus mainly on voltage and harmonics. While the CEA’s Grid Standards Regulations, 2010 and the
Technical Standards for Connectivity to the Grid Regulations, 2007 address both these issues, the
CERC’s Electricity Grid Code only specifies the acceptable variations in voltages.

The power factor is maintained by the state electricity regulatory commissions through incentives
and penalties determined in the tariff orders. Further, various states regulations require discoms to
maintain data on performance and reliability indicators such as the system average interruption
frequency index, system average interruption duration index and the consumer average interruption
duration index. However, at the state level, there are considerable differences in standards across
states and gaps in their implementation. Further, some states have not yet specified the standards
and some lack the monitoring mechanism and penalties for non-compliance. To ensure quality
power supply, the standards across states and the central level should be made uniform, and
aligned with the international standards.

Discom performance

The two key parameters based on which the reliability of power supply is measured are the duration
and number of power cuts. As per the data available on the URJA dashboard (the web portal for
monitoring discom performance) for February 2018, the average duration of power cuts at an all-
India level stood at 6.92 hours per month as against 7.27 hours per month reported in February
2017. The average number of power cuts in the country in February 2018 was 8.3 as compared to
8.6 times in February 2017. This shows some improvement in the quality of power supply.

However, data on the duration and number of power cuts in a month shows significant variations
across states and discoms in India. State-wise, in February 2018, the best performing states with the
minimum average duration of power cuts (hours per month) were Sikkim (0.63), Maharashtra (0.87),
Goa (1.07), Andhra Pradesh (1.37) and Gujarat (1.93). On the other hand, the top five states in
terms of the average number of power cuts per month were Maharashtra (1.20), Kerala (2.00),
Himachal Pradesh (2.30), Goa (2.70) and Andhra Pradesh (3.10). The minimum average duration of
power cuts and number of power cuts recorded in February 2017 were 1.26 hours and 1.89 times,
respectively.

Tranmission and distribution losses

A day after R K Singh, Union minister of state for power (independent charge), hosted his
first state power ministers’ conference in Delhi, he spoke to Shreya Jai & Jyoti Mukul on the
debt-restructuring plan of discoms, tariff reforms, renewable energy initiatives and more.
Edited excerpts:

Has UDAY (the scheme to revamp distribution companies or discoms) been a

success? What needs to be done by the laggard states?

We have set January 2019 as the deadline by when (transmission and distribution or T&D)
losses should be capped at 15 per cent. Many states will be less than that and we are
confident we will achieve it. In any case, any loss beyond 15 per cent will not be allowed
while fixing the tariff (rate). The Tariff Policy will be amended to provide this. There are 16
states where losses have gone up from 20 to 56 per cent. We discussed a road map to
reduce these. It includes 100 per cent metering, mostly prepaid, except for large customers,
where it could be smart meters or remotely readable meters. Prepaid meters are a step in
favour of poor people. They don’t need to pay for 30 days. They can recharge whenever
they have money. We are doing away with the human interface in metering, billing, and
collection. That in itself will bring down losses by 50-60 per cent. If, despite this, some
feeders are still incurring losses, you can use central funds to replace it with aerial bunched
cables, which cannot be hooked for stealing power. If it still does not work, give it to
franchisees. Using these methods, losses can come down to less than 10 per cent. Special
police stations and courts can be designated for power theft.

How will the direct benefit transfer of subsidy work?

We are saying if states want to give subsidy, they should do so through direct transfer but
the power (supplied) should be metered and valued, so that the consumer is more
responsible and there is a tendency to save. The other thing we are doing under tariff
reforms is to limit cross-subsidy to 20 per cent and reduce the number of (rate) slabs. The
Electricity Act says cross-subsidy should be phased out. The Tariff Policy, under it, says it
should be brought to less than 20 per cent. We want to rationalise rate slabs;there are 80-
90 in some states and we want to bring these down to 13-14. Electricity will be affordable.
When will the Electricity Act be amended and what will be its focus? Will open
access be easier?

Amendments will make a tariff policy mandatory. RPO (renewable power purchase
obligation) will be mandatory and there will be penalties.

The system of penalties would be implemented by a central regulator. Once you rationalise
tariffs, open access will become redundant. It works right now because of cross-subsidy of
200-300 per cent. Power for industry comes to Rs 7-8 a unit and they find it cheaper to get
into an ‘arrangement’ with the generator. Once power from the distribution company
becomes rational, there will be no need for an industry to do this.

Waiver of inter-state transmission system (ISTS) charge levied on renewable power

sold directly to consumers, as in the case of the Rewa solar park selling to Delhi
Metro Rail (DMRC), was taken away. Will that be restored?

In the case of renewables, waiver of ISTS charge was allowed up to 2019; we are extending
it to 2022. RE projects which come online by 2022 will get the waiver. Basically, the
objective of this policy is to ensure our country moves to a more renewable energy mix, so
that we leave behind a greener planet for our great-great grandchildren. We want to
encourage renewables and, hence, their free transmission. This gives us strategic
autonomy. Right now, we are dependent on imports. With increased renewables in our
energy mix, that dependence will go away. As far as DMRC or Rewa is concerned, any
decision or law will be prospective. If the case of DMRC falls in current law, their case will
be so governed. We have to see the reference date in their power purchase agreement
(PPA).

What was your message to state ministers on non-signing and honouring of PPAs?

We are very clear that any tariff which has been arrived at through an open bid has to be
honoured, even by the regulator. The law is clear, which says they shall adopt the tariff that
is arrived at through an open bid. Also, if they had announced a feed-in-tariff, and this was
applicable when this unit came up, it has to be honoured. You cannot go back and say the
tariff that applied then does not now. You cannot change it retrospectively. The regulator
promulgates feed-in tariff and that will apply.

When will states start floating new PPAs to boost power demand?

Every discom must be able to show to the regulator that they have tied up sources of power
to meet the requirements of their licensed area. That is common sense. We are now going
to make this more stringent. Currently, discoms file a plan with the regulator regarding their
power procurement to serve the area. We are going to ask them to stipulate how much
power will come from long, medium and short-term sources, with a bit of flexibility. We will
also stipulate that the licence would be redeemed only when the regulator is satisfied that
the power demand of the area can be met and power has been tied up. This will ensure
PPAs happen.

Would you push for more private participation in last-mile T&D?

There is already a provision for tariff-based bidding in transmission projects and some
states are doing it. So, there is no reason for any gap in transmission, as you don’t have to
put any capital upfront. In any case, we are giving money for feeders under both the IPDS
and DDUGJY (schemes), 33 kv and 66 kv lines, for LT lines and others. There is no reason
there should be any weak area now. And, there is some carryforward money from the rural
electrification programme. We keep pushing for fast execution.

State-level reforms also depend on last-mile infrastructure but the pace of projects
under IPDS has been slow. How is investment being directed there?

The pace of implementation of projects sanctioned by the Union government is slow. We

discussed this with states and asked them to increase the speed of projects the Centre has
approved. On DDUGJY and IPDS, the progress will be faster.

Your view on the (government’s) push for electric vehicles by 2030?

That needs to happen. It’s part of our effort to seek strategic autonomy and reduce our
dependence on imported petroleum products. Gradually, we need to move towards electric
mobility. Its cleaner, greener and gives us this autonomy from import. On e-charging, we will
bring an amendment to the Electricity Act; we will give a deemed distribution licence to
whoever sets up a charging station. This can be anybody — discoms, public, anyone.

What are the recommendations from the power sector for the (coming) Union
Budget?

I am going to have consultations with the industry. There are a couple of issues. One being
hydro power projects and the other on accelerated depreciation for renewables, which
needs to be restored.
To ensure grid stability in the face of massive increases in intermittent renewable generation, India needs
to produce flexible, stand-by generation and battery storage capacity, according to a new report by the
Central Electricity Authority (CEA).
“A permanent mechanism of ancillary services needs to be provided for the country to manage the
balancing of renewables, as well as emergency situations for frequency control,” CEA said in the report.

According to the report, these ancillary services are needed to ensure that the country has un-requisitioned
surplus energy available at all times. It also recommends procuring this capacity through a competitive
bidding process.

CEA envisions a system where various types of balancing sources are categorized based on how quickly
they can be brought online – in seconds, minutes, or hours. The price for each category would be
determined through bidding.

Also recommended is the establishment of a MW-scale battery pilot in the wind-rich state of Tamil Nadu
to prevent power curtailments caused by congestion and deviation settlement mechanism (DSM) charges.

Despite the need for ancillary services, the report found that renewables are still a wiser and more
economic choice for India than coal-based energy generation.

“Even after including the financial implication due to variable renewable generation, it would still be
cheaper in the future to set up renewable generation capacity, as compared to coal-based capacity,” the
report said.
However, the study emphasizes the need to keep standby capacity on hand for instances when wind and
solar power go down, and notes that this ancillary generation capacity comes with a price tag. The cost
includes the price of keeping balancing generation capacity on standby and compensating coal- and gas-
fired plants for the additional wear and tear placed on their systems by ramping them up and down
quickly.

The technical committee of CEA performed a detailed analysis to estimate the potential financial impact
of keeping this capacity on hand based on case studies conducted in Tamil Nadu and Gujarat during the
renewable energy-rich season of 2017. The analysis estimated that having these ancillary services on hand
would have an impact of ₹1.57/kWh in Tamil Nadu and ₹1.45/kWh in Gujarat, with the price spread
across renewable generation capacity.

Key Report Highlights

The trajectory of the revised Renewable Purchase Obligation (RPO) is uniform for all states, and this
creates a need to share the financial implications of balancing charges.
Two types of generation balancing are required: balancing for uncertainty using battery storage, and
generation capacity that can ramp up on short notice when a generation from intermittent renewable
sources falls off due to its natural variability. Renewable generation varies during the day when wind
speeds change or solar radiation dips due to cloud cover. The report recommends developing extra
generation capacity that can make up any shortfall caused by intermittency.

The CEA report says the balancing source could be located either within or outside of a host state.
Modi Announces '100% Village Electrification', But 31 Million Indian Homes Are Still In
The Dark

Indian Prime Minister Narendra Modi's pledge to bring reliable power to all, at the time when the
World Bank reported India has world’s largest un-electrified population, propelled him into office
in 2014. In the year after his election, an audit identified 18,452 villages without electricity, and
he promised that every village would be electrified within 1,000 days. April 28, when Leisang, a
tiny hamlet in the remote northeastern state of Manipur, was connected to the grid, was 988
days since that promise. Modi tweeted that it would be “remembered as a historic day in the
development journey of India.”
28th April 2018 will be remembered as a historic day in the development journey of India.
Yesterday, we fulfilled a commitment due to which the lives of several Indians will be
transformed forever! I am delighted that every single village of India now has access to
electricity.
No doubt a massive accomplishment, but a closer look at what constitutes “electrified” reveals
how much further India has to go. According to official data, only 1,417 of India’s 18,452
villages, or 7.3% of the total, have 100% household connectivity, and about 31 million
homes are still in the dark. The government deems a village “electrified” if power cables from
the grid reach a transformer in each village and 10% of its households, as well as public places
such as schools and health centers, are connected.
Kristina Skierka, of Power for All, a coalition of over 200 public and private organizations
campaigning to deliver universal electricity access by 2025, claims that “total electrification” is
far from reality and can only be achieved when all the hamlets and households are
covered. “As, defined, ' village electrification’ still leaves 90% of the people living in India’s
18,452 targeted villages without electricity ,” she says.
Ambitious goal
Homes without electricity are spread across major provinces of the country, such as Assam,
Bihar, Jharkhand, Odisha, Madhya Pradesh, and Rajasthan, each having nearly 6 million
unconnected households. “Uttar Pradesh, the giant north Indian state, accounts for 14.6 million
households without electricity access,” says Debajit Palit, associate director at The Energy And
Resources Institute.
MORE FROM FORBES
Last year, the government followed up with a $2.5 billion program, Saubhagya, to provide
power connections to nearly every household by the end of March 2019. “The Saubhagya
goal is very ambitious. To achieve the target by March 31, 2019, the connection rate
should be 2.03 million households per month,” says Palit. “However, data from
Saubhagya portal indicates that around 0.73 million connections have been released per
month from the launch of the scheme in last October to end of April.”
More on Forbes: These Startups Are Using Big Data And Smart Tech To Ease The
Pressure On India's Electricity Grid
Electrification is a three-step process, Palit explains. The first is to extend the
infrastructure to the village, the second is to connect the household and the third, the
most challenging, is to ensure reliable and affordable supply on a sustained basis. “The
government has achieved the first goal, and the second goal is progressing. We now
have to look forward to how the most critical goal unfolds,” Palit adds.

Unreliable data and power supply

Efforts to provide electricity to every Indian have historically been hampered by poorly designed
and implemented schemes that encouraged contractors to do the bare minimum to make sure a
village qualified as electrified, resulting in inconsistencies in official data, and
glaring disparities on the ground.

“What is required from the federal government is to push the state-run distribution companies to
carry out robust ground surveys and organize frequent camps to achieve the target so that not
one household is left out from electrification,“ says Palit. “Unless that is done, the reliability of
supply and viability of the distribution business will be difficult to achieve.”

Electricity supply is controlled and maintained by India’s state governments, and, according to
Vinay Rustagi of Bridge to India, a knowledge services provider in the Indian renewable space,
these government-owned distribution companies “remain the weakest link” in the power sector
value chain. “They are badly run and unable to invest in upkeep of the local distribution
infrastructure.” Reliability of electricity supply is “likely to remain a dream” for most consumers in
India for years to come, Rustagi adds.

A study conducted by the Council on Energy, Environment and Water showed that over 50% of
electrified rural households in Uttar Pradesh, Bihar, Madhya Pradesh, Jharkhand, Odisha and
West Bengal don’t even get 12 hours of supply in a day.

The latest Global Off-Grid Solar Market Report shows that grid reliability challenges are more
severe in dispersed rural areas than in cities. According to Anjali Garg, an energy specialist at
International Finance Corporation, though India has put rural electrification in a sharper focus
over the last few years, upgrading of local distribution infrastructure, including metering and
billing, is crucial. “That will determine whether the schemes launched for total village
electrification bear the desired results and lead to true 100% household electrification.”

To achieve a consistent round-the-clock power supply, considerable improvement in the

operational efficiency of distributors through extensive and intensive change management and
capacity-building programmes as well as strengthening of the electricity sub-stations and sub-
transmission network are required. “At the same time, electricity must be priced rationally and
the tariff structure is simplified,” Palit says.

Renewable energy solutions

To truly achieve universal access to energy, distributed renewables have a crucial role to play,
experts say. Since power supplies in many villages remain unreliable, some people have been
using solar energy, which has reached some villages before government power lines, to run
their businesses. “A substantial ‘on-grid’ population in India has also been dependent on off-grid
solutions,” says Garg. “Solar home system and mini-grid connections operating together is the
most sustainable last-mile solution to reach consumers and achieve universal access to
energy.”

Echoing similar sentiment, Skierka says, “Decentralized renewable energy solutions such as
mini-grids and rooftop solar are a critical part of the solution to go where the grid can’t reach or
reliably serve.”

More on Forbes: India At 70: An Emerging World Power With Unfinished Business At Home
Also, with India depending on coal to meet more than 60% of its electricity requirement and coal
production stagnating, it will be no easy task for the government to fulfil its promise of
uninterrupted power supply without the help of the solar energy sector.

Many of India's energy distribution companies have accumulated huge losses, and have no
funds to keep buying much-needed power.

Power failures shave percentage points off the country's growth, inhibiting development and
delaying the time when millions below the poverty line can live a life of dignity. However, India
has made significant strides in electrification since 2000. Electricity reached 82% of the
population in 2016, up from 43% at the turn of century, according to the International Energy
Agency. “Also, there’s a precedent in India that large number of connections can be provided in
short time,” says Palit. “West Bengal’s rural electrification rate more than doubled from 40% in
2011 to 95% in 2016, connecting an additional 7.8 million households.”

The government has said all of India’s rural Indian households will have electricity by 2019. And
about 83% have electricity as of Monday, according to its real-time progress tracker. “I think a
more reasonable time frame to connect all households across different states in India is 2021,
which is a year before India celebrates 75 years of Independence,” says Palit.