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New Age Power Systems - Need For Structural Reforms

The top 5 Agenda points which have been outlined for the Government’s consideration have been summarized below:

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The Indian power eco-system has witnessed sustained growth as well as substantial changes in the past decade. Demand has shifted with rapid urbanization. Growth of E-mobility is only expected to add to this demand pull. Opportunities for private participation in generation and distribution has resulted in increased investments and capacity expansion. The growth of renewables is witnessing healthy and sustained momentum with a share of over 22% by 2018. As a result, the Levelized Cost of Energy (LCOE) is dropping steadily. Battery technology that will enable renewables to provide power 24x7 is becoming a reality, and will only add to this trend.

With generation capacities currently exceeding demand, distribution utilities are leaning towards short/medium term contracts. The share of power traded on power exchanges is increasing. Given the above, transmission planning will also need to reorient itself and shift gradually from providing long-term access towards short – term access. 

The Confederation of Indian Industry (CII) has recently launched a white paper titled “New Age Power Systems for 21st Century India - Challenges, Solutions and Opportunities” which outlines a blueprint for developing an efficient power transmission system. The 8-point agenda drawn up in the paper includes recommendations on planning, operations, costs to name a few. 

The top 5 Agenda points which have been outlined for the Government’s consideration have been summarized below:

1. Flexible Transmission Network Planning 

India is no exception to the fundamental energy transition occurring globally. Primary energy demands shift from fossil fuels to renewables (RE) implies reduced gestation period for adding capacities. Traditional transmission projects extending from 5-6 years were well matched with the 5-6 years of build time required for coal fired power plants. RE power plants, on the other hand, are being built is 12-18 months. Obviously, advance planning for transmission/evacuation of power from such generating capacities will be necessary.

More importantly, the current emphasis on optimum utilization of power lines, currently at around 80%, has limited the growth of the state grid. CERC guidelines allow for system strengthening linked to application for long-term access (LTA) and not for connectivity or medium /short term access (MTOA/STOA). This existing philosophy needs to evolve to provide greater scope for MTOA/STOA, in an increasingly dynamic grid. In this context, the General Network Access mechanism is a step in right direction.

Inter- State network planning/ development without commensurate upgradation of Intra-state network by STU’S will only lead to sub –optional results. This can be offset by providing a role for the CTU in planning of intra- state transmission networks, at least in respect of 220KV and above networks to begin with.

2. Improve Reliability of the network by developing contingencies

Currently, the inter-state network has N – 1 contingency built into the system mandated by the CTU. This is inadequate as there are several instances where tower collapse etc. has resulted in black-outs for upto 24 hours or more. We therefore need to account for N–2 level contingencies and provide for the same at the grid planning stage, particularly where there are critical energy delivery requirements such as Tier – 1 cities and areas of high generation capacities.

3. Compress Project Timelines

The Average time taken currently from notification of project to start of its construction is in excess of 750 days. This can be substantially reduced by adopting more efficient modalities in the bidding process as well as faster forest clearances. Such delays have emboldened the Authority (CTU) to continue to allocate majority of transmission projects on the more expensive cost plus Regulated Tariff Mechanism (RTM). This is despite the Tariff Policy mandating competitive bidding with the “strategic” and “priority” projects being the exception to the rule.

Such misuse of the “urgency” clause can be completely done away with by better and advance planning. The process adopted by NHAI in the roads sector provides a successful model which can easily be replicated. Forest clearance process can for example be optimized by amending the rules where by Compensatory Afforestation can be a parallel activity, and delinked from stage – 1 clearance. The bid process can adopt the single stage two envelope process which can substantially reduce time lines of the bidding process by upto 40%. Lastly, the effectiveness of the Early Incentive Framework can be revisited to further encourage developers to work aggressively towards early completion of projects.

4. Promote Innovation through Freedom of Design

Transmission systems are mandated to follow CEA Technical Regulations 2010. These are wide enough to permit adoption of new technologies. RFPs on the other hand, are invariably prescriptive in respect of both technologies and design, which restricts the scope of optimizing both time and cost.

We need to shift to a framework which specifies the technical performance matrix, rather than specifying material and design. This will enable the country to benefit from new materials and design technologies in upcoming projects. The CTU should be mandated as the Regulator to provide the requisite oversight to ensure safety and manage risk in parallel.

5. Capacity Augmentation of Existing Transmission Infrastructure

Rapid urban growth along with changing Energy Matrix as well as demand patterns will require innovative means of solving energy delivery challenges. The net result of these trends would be in bringing energy from diverse and dispersed sources into large consumption centres. With most cities expanding in an unplanned manner, with space becoming limiting factor, leveraging existing infrastructure would be the optimal solution.

The obvious approach to this challenge would have to include exploiting latent capacities of the   existing system as well as augmenting capacities in the same Right of Way (RoW). This can be facilitated by mandating the use of transmission solutions in the State Electricity Grid Code. Secondly, inputs from all stakeholders should be sought to identify the most “optimal” solutions which envisages least capex with shortest implementation schedule and minimal service disruption to the consumers. The competitive bidding route should be mandated as the default mode for developing/upgrading all such intra-state transmission systems.

In addition to setting up of the CTU as an independent transmission planner/regulator and adopting the competitive bidding route as per the default mode, the above short-term initiatives can be considered as essential imperatives for the New Government’s Development Agenda.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Vijay Chibber

The author is IAS Officer and Retired Secretary, Govt. of India

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