CESC Limited strives to create value for its customers by ensuring 24×7 quality power supply, enabling a digital ecosystem, and deploying disruptive, frugal and innovative solutions and Industry 4.0 technologies, says Debasish Banerjee, Managing Director, Distribution, CESC Limited. Excerpts from a recent interview with Power Line…
How has the power distribution segment evolved over the past decades?
Several government-backed policies such as APDRP, R-APDRP, IPDS and DDUGJY along with technology upgradation initiatives such as augmentation/upgradation of the network, conversion of electro-mechanical meters to electronic/static energy meters, implementation of HVDS and LVDS, and installation of low tension aerial bunched cables brought about an improvement in operational efficiency, and reduction in T&D losses. Traditionally, discoms used to procure power only through long-term power purchase agreements and bilateral agreements. The scenario has changed gradually with the advent of the Open Access Regulations, formation of power exchanges and introduction of the availability-based tariff mechanism. The introduction of 15-minute day-ahead scheduling and settlement of the difference between the scheduled and actual flow through the unscheduled interchange (UI) mechanism has brought in revolutionary change. Since utilities began using the UI mechanism as a regular source of power, the concept has subsequently been changed to Deviation Settlement Mechanism with a stringent penalty system in order to discourage discoms to use deviation as a source of power. India is about to join the ranks of developed markets and is progressing towards a “one price” nation with the implementation of the proposed market-based economic dispatch model, which will provide flexibility to discoms to procure power at lower costs and ensure adequate availability. Network modernisation, investment in infrastructure, various policy reforms and enhanced access to the grid with a sharp increase in power availability have enabled a phenomenal improvement in customer services.
What are the biggest changes that the power sector, the power distribution segment in particular, will see in the coming years?
The availability of quality and reliable 24×7 power supply is crucial and a prerequisite for achieving India’s developmental goals of becoming a $5 trillion economy by 2024-25. Sustainable distribution loss reduction coupled with 100 per cent collection efficiency will be a prerequisite for maintaining the financial health of the discoms and in turn the gencos. The implementation of cost-reflective tariffs with simple and uniform slabs and regular revisions is essential so as not to create any tariff shock and unnecessary build-up of regulatory assets.
Another change on the anvil is the rapid influx of renewable energy. It has zero marginal cost and can cheaply supply kWh value, leading to abundant energy. Other resources would be required to maintain the stability of the power system. A graded and calibrated approach is required for transitioning to a low-carbon footprint for service security where conventional power could provide for the baseload requirement and renewables can meet the peak load demand. The proliferation of distributed renewable energy sources will impact the distribution network planning system. Storage will play an important role, provided its size and cost become economical.
“Taking risks and daring to go beyond is deeply ingrained in our culture.”
What are your views on the privatisation of the power distribution companies?
The unbundling of utilities under the Electricity Act, 2003 encouraged private participation in generation, which resulted in addition of capacities. A similar trend is expected with the delicensing/ privatisation of distribution as envisaged in the draft Electricity Amendment Bill, 2021. Privatisation has the potential for the distribution business to achieve sustained reduction in T&D loss, increase operational efficiency and deploy cutting-edge technology. However, the distribution franchisee model is suited for towns/cities with high T&D losses since profitability is largely driven by loss reduction through improvement in billing efficiency with optimised capital expenditure and operational expenditure. The licensee model will be better suited for cities with reasonably high consumption since profitability is largely driven by return on equity on capex and subsequent improvement in operational efficiency with cost optimisation. In metros such as Delhi, Surat, Ahmedabad, Kolkata and Mumbai, private licensees have brought in operational excellence, providing best-in-class customer services along with the adoption of cutting-edge technologies.
What have been CESC’s biggest achievements in the past few years?
As an organisation, we have worked rigorously to create value for our 3.4 million consumers by ensuring uninterrupted, quality power supply. We have successfully sustained our profitable business growth over decades and are continuously rediscovering and evolving ourselves through continuous business transformations, reimagining customer journeys to be in sync or rather ahead of the drivers of rapid disruptions and changes in our businesses. During the pandemic-induced lockdown last year, we ensured 24X7 power supply and other services to our consumers by improving operational efficiencies, thus leveraging cutting-edge technology and digitalisation to the hilt. We went ahead with pursuing Industry 4.0 with the enablement of embedded censor-based IoT platforms and drones, wireless temperature and humidity sensors, hydrogen sensors, etc. for online health monitoring of our network equipment. We were able to transition from preventive to predictive maintenance. Our digital ecosystem enables us to provide online services to our consumers for supply-related and commercial matters including new connections, name change, AC application and online payments. We have also leveraged our AI/ML digital service platforms like ChatBot (eBuddy) and WhatsApp Bot.
Our investment in technologies such as co-axial cables and theft-proof pillar boxes ensured that our network remains pilferage-proof even without the need for constant physical surveillance. The implementation of innovative technologies like automated remote surveillance through data analytics of smart meters and remote auto disconnection of pilfering supply sources have further bolstered our performance. We are rapidly pursuing the adoption of workforce and process automation technologies (such as RPA) so that our team can directly go to the site and attend to the repair jobs. We are scaling up the deployment of various field force automation technologies like digital twin embedded with augmented reality/mixed reality; disturbance recorder, which records disturbances in real time and can be accessed from remote locations and are available through mobile apps for quicker analysis and decision making in real time; and a GPS-based crew management application for the breakdown repair team.
Sudden and extreme weather changes like hurricanes and storms create new business risks along with obvious physical risks and operational challenges. While we were in the middle of the pandemic, a super cyclonic storm “Amphan” hit the city in May 2020, with the maximum wind speed reaching 133 km per hour in Kolkata and adjoining areas, accompanied by rainfall and gusty winds at 70-80 km per hour, which continued for about seven hours. The majority of our electrical network is underground and a part of our low voltage network is overhead, which ensured a lower degree of impact. Our robust and resilient upstream network was up and running with minimal downtime, with the help of our integrated SCADA system, which provided network visibility, monitoring and control. Essential services such as pumping stations and Covid hospitals were restored promptly through RMU automation. Our state-of-the-art ring main technology enabled faster restoration by quickly isolating the affected network. DG sets were also mobilised for temporarily restoring critical sites. Power was restored for more than 99 per cent of the affected consumers within seven days, which is a global benchmark in itself.
What will be CESC’s focus areas in the coming years?
We have always been focused on growing organically as well as inorganically, and creating long-term value by meeting the needs of all our stakeholders, which include our valued customers, suppliers, employees and shareholders. We will be definitely expanding our distribution footprint, which is quite evident from our participation in various privatisation opportunities across the country. We are in the process of scaling up various futuristic technologies such as immersive technologies, AI/ML, and digital twins. Currently, we are also conducting a pilot for futuristic technologies such as blockchain in the P2P captive energy trading space, and demand response.
At CESC, sustainability is about supplying safe, cost-effective, low-carbon and reliable electricity through a responsible and diverse value chain. We have integrated sustainability as one of our core values and introduced an Environmental, Social and Governance policy. We are closely working with government bodies for setting up the EV ecosystem in the city. We are also supporting the transformation to electric cooking in roadside eateries, restaurants, hotels and homes as it is a safe, affordable and clean medium.