The power distribution segment has been facing several challenges, which the government is seeking to address through its reform agenda involving a host of programmes. As the sector moves towards the ambitious goal of 24×7 Power for All, strengthening regulatory governance, stepping up technology intervention and boosting competition would be imperative policy actions. Private utility and distribution franchise heads share their perspective on the sector…
What have been the most noteworthy achievements of the power sector in the past one year?
During the past one year, there were significant changes in the power generation mix with an increasing share of renewables. It was heartening to see competitive price discoveries in the solar bids. What makes this a noteworthy achievement is that it needed the right policy framework, a competitive environment and private sector investments and all these matched up to deliver a strong performance.
Further, thanks to the Ujwal Discom Assurance Yojana (UDAY), discoms are now looking at the aggregate technical and commercial (AT&C) loss reduction efforts with a different approach. In fact, we have seen some positive results under the scheme. Another important achievement for the sector has been the launch of various app-based initiatives taken by the Ministry of Power. This has ensured transparency in information on parameters such as demand-supply, village electrification, etc. amongst all stakeholders in line with international best practices for transparency. This is a welcome departure from earlier times, when sources of information were hard to obtain.
Raghav Raj Kanoria
We believe that the last year has really been remarkable for the power sector. For the first time, there was a situation where surplus power was available at more affordable tariffs on a real-time basis at any time of the day. It is evident from India’s rise in the World Bank’s rankings of Ease of Getting Electricity Index from 99 to 26 last year.
Government reforms (such as UDAY) for the distribution segment have become more pervasive with an increasing number of states, constituting over 97 per cent of discom debt, coming on board the scheme.
Last year saw an unprecedented focus on improving energy efficiency through various schemes such as Unnat Jyoti by Affordable LEDs for All. Moreover, steps towards the large-scale deployment of smart meters via centralised procurement by Energy Efficiency Services Limited will help catalyse technology adoption in the power sector.
Also, 2016-17 will be recorded as the year that put India on the global stage with its impetus to clean and sustainable renewable energy. The net capacity addition of 11 GW in the renewable space was more than that in the conventional power segment at 10.3 GW. Moreover, tariff rates of renewable sources have become extremely competitive with those of conventional sources, which has led to an overall tariff reduction, thus benefiting consumers across the country.
What should be the sector’s topmost priorities for achieving the objective of 24×7 Power for All?
There are two components of electrification – village and household electrification. There is an increasing thrust on getting unelectrified villages under the electrification fold. There is also renewed interest in getting into the 100 per cent household approach. Therefore, while 99 per cent of the villages are electrified, there are some 74-75 per cent of households that need to be electrified. The priority should be to ensure that electrification goes as per the plan.
Another aspect that must be looked at is the continuity and reliability of 24×7 power supply. We have to shift from a restricted demand scenario to an unrestricted demand scenario. This is because many states continue to do load shedding due to economical and other considerations. In addition, it is important to restore the financial health of discoms to ensure that they can buy power to ensure 24×7 supply. Hence, there is an affordability issue that needs to be tackled. While our transmission network and generation schemes are on track, the last-mile distribution segment needs urgent attention.
Raghav Raj Kanoria
The distribution segment will play a pivotal role in achieving the 24×7 Power for All objective. However, the segment needs to take suitable measures like the deployment of innovative strategies and smart technology analytics, and invite participation from the best resources across the power sector value chain in order to achieve its objective.
Further, to resolve issues pertaining to targeted AT&C loss reduction, improvement in administrative efficiency and last mile connectivity will be required. Incorporation of technology would further help manage the demand-supply mismatch. All these measures would require participation from various players and should not be restricted to the conventional franchise models.
Integration of renewable power into the conventional grid would require significant technology intervention for improving grid reliability amidst the diverse mix of power generation sources. The development of green energy corridors for the offtake of renewable energy would be of critical importance in ensuring sustainable renewable energy integration.
The sector would further need to address the larger issue of developing a unified strategy for the generation segment wherein any capacity addition should be looked at after considerable deliberations based on the existing generation asset base.
What is your outlook for the power distribution segment over the next few years?
We have seen several policy reforms and schemes launched for the segment such as the Integrated Power Development Scheme and the Deendayal Upadhyaya Gram Jyoti Yojana. However, the trouble is what I call the leaky bucket, wherein there is a hole at the bottom of a bucket, which means that the biggest problem is yet to be curbed. Therefore, funding in the distribution segment needs to be directed to areas that will help state distribution companies curb losses and, more importantly, discoms need to set up accountable practices either through their own efforts or through private sector participation. Fortunately, the government is not looking at the private sector for funding since adequate resources are available. However, there is a serious issue of accountability, which needs to be fixed. This will require the government to look at appropriate private sector participation models in the next three to five years.
Another key trend that would be seen in the distribution segment will be the increased use of technology by state discoms to ensure that the information stream is captured correctly.
Raghav Raj Kanoria
The power distribution business should not be seen in isolation, as the power sector is an integrated sector with all the other activities such as generation and transmission developed to meet the requirements of consumers connected via the distribution networks. Hence, we believe that power sector reforms, started a few years back, will continue to yield benefits as the majority of states would increase their focus on reducing power losses with the emergence of innovative public-private partnership models in the distribution segment.
Going forward, there will be demand for stronger customer engagement owing to the growing digital penetration among various stakeholders in the power sector value chain. Further, there would be the emergence of prosumers, wherein consumers will also become the producers of power. Power distribution will become highly efficient with the sector witnessing the emergence of separate distribution infrastructure and supply in an area. The concept of net metering may further increase the bidirectional interaction between the utility and the consumer.
The drive towards the use of energy-efficient devices and integrated smart meter systems would enable the use of technology to perform intelligent analytics, which will further aid in power forecasting and scheduling. A holistic approach towards smart meter deployment as an integrated activity along with its communication and network infrastructure will assist in leveraging data analytics for targeted loss reduction and improving the overall efficiency of the power distribution ecosystem. In sum, the power distribution segment is poised for growth, driven by forward-looking policies along with the continued introduction of technologies, analytics and grid management practices, which would eventually assist in contributing towards achieving the 24×7 Power for All objective.