Draft Electricity Plan on Generation for the Period 2017 - 2027

Feedback to CEA

Draft Electricity Plan on Generation for the period 2017 - 2027

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Shankar Sharma

Power Policy Analyst

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Abstract: CEA deserves congratulations for having taken a rational and bold stand thatno coal-based power capacity addition is required until 2027. It is also a matter of solace that the govt. of India has the target of 175,000 MW of renewable energy (RE) capacity by 2022 and the target share of non-fossil based installed capacity of 56.5% by the end of 2026-27, which is considerably better than the target stated in INDC. The CEA draft plan also has taken a welcome approach of the beginning of a holistic view of the demand/supply of electricity by focusing on energy efficiency, conservation, and demand-side management (DSM) issues, which should be vigorously pursued against any odds. Whereas it is a welcome step that CEA’s draft plan has started to consider the impact of power sector on the environmental issues in general and GHG emissions, in particular, a lot more commitment inminimisingsuch impacts on a long term basis has become critical from the overall welfare perspective of the nation. Whereas the recognition of facts such as (i) the demand for electricity by 2022 and 2027 will be less than that projected in the 18thEPS, (ii) very many impediments in setting up additional conventional technology power plants, and (iii) the RE sources can take a much higher share of total power generation capacity is appreciated, it will be in the larger interest of our society if the overall approach of the power sector takes into diligent consideration the economic decision-making tools “Options Analysis” and “Cost Benefit Analysis (CBA)” in deploying any technology and before embarking on any project.A diligent approach to the generation planning will reveal that additional coal power capacity in particular, and conventional technology power plants in general, will not be needed in future years alsoif all the other available options are optimally used.The careful deployment of distributed type of RE sources enabled with micro/smart grids need to be given adequate focus in order tominimisethe deleterious impacts of conventional technology electricity sources, and to ensure electricity for all sections on a sustainable basis and at acceptable costs. In all such planning processes, the effective consultation with the stakeholder groups such as domain experts, civil societyorganisations, and concerned individuals should become an avowed norm than an exception.

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1.Introduction

The subject of electricity has acquired huge significance due to many reasons: (i) availability of adequate quantity and quality of electricity has come to be associated with the development of a community; (ii) global projections for 2050 and beyond indicate that more than 60% of total energy consumption will be in the formelectricity due to the convenience of usage; (iii) production and usage of electricity has become a major contributor to global warming. For a densely populated and resources constrained country like India, which has about 25% of its population still without access to electricity, the importance of electricity should become obvious to all sections.

The generation plan prepared by CEA can be seen as crucial in the context of overall development of the power sector because the same is intended to be used by prospective generating companies, transmission utilities and transmission/distribution licensees as a reference document. Since the omissions and commissions in the power sector have huge impact on the overall welfare of our thickly populated and poor communities, the generation plan by CEA must be seen as one relevant to all sections of our society.

At a time when the Indian power sector is witnessing an unfortunate scenario where about 25% of the population has no access to electricity even after nearly 7 decades of independence while many of the thermal power plants are idling due to want of power purchasers, the criticality of a realistic and diligently prepared generation plan for the country cannot be emphasised enough. Such an unfortunate scenario should be seen as an indication of a clear mismatch between planning, implementation and the true needs of the society. It is even more unfortunate that a committee was constituted by the power ministry in September last year to suggest innovative schemes for raising power demand. In view of the unassailable fact that consumption of unlimited quantities of electricity/energy will have huge implications on our natural resources, and hence not sustainable, there should have been concerted efforts to reduce the electricity demand instead of looking for innovative schemes for raising the demand. This approach by the power ministry may indicate a poor understanding of the ecological implications of a high electricity demand. Unless such efforts are intended to rationalise the tariff and to reduce the energy cost to critical manufacturing sectors so as to benefit the overall economy, such an approach to raising power demand artificially across non-productive sectors is against the true interest of our society.

In this context CEA’s discussion of demand side management (DSM) in the draft plan document is a welcome step, and hence it is hoped that the DSM measures recommended in the draft plan will be able to correct the ministry’s approach.

In order to make electricity generation planning highly relevant to the overall welfare of the country the task of generation plan has to be objectively viewed in the context of the relevant mandate to CEA under various Acts of the parliament and relevant policies of the Union government.Such a mandate includes the salient features such as efficiency, economy, responsible use of natural resources, consumer interest protection, reliable supply of electricity and protection of environment. When we look at the performance of the power sector since independence from the perspective of what the conventional power plants have achieved in the past, it is difficult to notice the true compliance of the letter and spirit of Indian Electricity Act 2003, and National ElectricityPolicyas far as salient featuresare concerned.

Whereas the draft plan has referred to Electricity Act 2003, National Electricity Policy 2005 and Tariff Policy 2016, the importance of having proper perspective of the other relevant Acts and policies need not be emphasised keeping in view the impact of power sector on other sectors of our economy. In this context the following Acts and policies can be cited as of high priority.

Energy Conservation act 2001, mandates all the necessary measures for efficient use of energy and its conservation.

Environmental Protection Act, the Forest Conservation Act and the Wild Life Protection Act, all emphasizes the critical need to protect the natural resources, flora and fauna.

The National Forest Policy recommends that 33% of the land mass should be covered by forests and trees for a healthy environment.

The main objectives of National Action Plan on Climate Change (NAPCC):

Protecting the poor and vulnerable sections of society through an inclusive and sustainable development strategy, sensitive to Climate Change.
Achieving the national growth objectives through a qualitative change in a direction that enhances the ecological sustainability, leading to further mitigation of greenhouse gas emissions.
Devising efficient and cost- effective strategies for end use Demand Side management.
Deploying appropriate technologies for both adaptation and mitigation of green house gas emissions extensively as well as at an accelerated pace.

As per the sections 48 (a) and 51 (a) (g) of our Constitution it is the duty of the STATE and every citizen to make honest efforts to protect and improve our environment by protecting and improving rivers, lakes, forests and living beings.

India, claiming to be a responsible member of the international community, also has many international obligations which need to be kept in proper perspective while planning for additional electricity generation capacity. The threat of Global Warming and the associated need to drastically reduce the burning of fossil fuels should never be out of our focus.

Cocoyoc declaration of 1974 at Mexico, as part of UN Conference, has defined the sustainable ways of human development. This definition has to be at the core of our developmental planning.

World Charter for Nature was adopted by consensus by UN General Assembly in 1982, according to which it will be a wise policy to apply Precautionary Principle and take necessary action to conserve Bio-diversity before components of it are permanently lost.

Convention on Biological Diversity which was signed by 156 states in 1992,has the objectives of the conservation of various components of biological diversity, the sustainable use of its components, and the fair and equitable sharing of the benefits arising out of the utilisataion of genetic resources.

The Ramsar Convention on Wetlands seeks commitment from signatory countries to protect the wetlands due to their huge significance to aquatic bio-diversity.

Whereas IV Assessment Report ofInterGovernmental Panel on Climate Change (IPCC)has highlighted the critical need to protect our forests, V Assessment Report has unambiguously identified the need to keep 80% of all fossil fuels in the ground.

When we view the huge inefficiency prevailing within the electric power sector with a holistic perspective of the overall welfare of our society, the efficacy of plans for large addition to conventional power generating capacity in the country (and the consequences on our natural resources, environment and the vulnerable sections of society)becomes fundamentally questionable.

2.Demand Projections for Electricity

A credible electricity demand projection for the next 10 to 20 years is a critical part of the electricity generation plan, and hence it should be linked to a realistic appraisal of legitimate needs of our society at all levels, which will in turn lead to a responsible management of the power sector.

2.1 Thecritical need for a realistic demand projection

The basic need for a realistic demand forecast is that it must objectively take into account the social, economic, and environmental issues such as the changing consumption pattern across different sectors of our economy; limited natural resources; global warming potential of energy consumption; and our obligations to the future generations. A carefully thought out strategy consisting of responsible demand side management and sustainable energy supply options has become imminent for the long term welfare of our communities, and hence should be a critical part of the generation planning process. Instead of projecting future electricity demand with the GDP maximizing paradigm, which has been the practice all these years with devastating effects as reported by the World Bank itself, the country must aim at determining the least amount of electricity required to eradicate poverty.

2.2The issues with high demand projection

The social, economic, environmental, and health impacts on our densely populated communities of huge addition in the form of conventional power plants will not be inconsiderable. All these years a large number of power plants are being proposed without due diligent studies about their true need, and without objectively considering the impacts on our densely populated communities. High demand projections have led to an unfortunate scenario recently where many of the thermal power plants are either idling or operating at low levels because of the lack of so called demand, and the average load factor of the power plants is coming down.

The big question is: whether our society can afford a huge additional demand on the grid, because all of such additional demand may not contribute to the economic development or may not lead to true welfare of our masses. Most importantly the social, economic and environmental impacts of such a huge additional demand will certainly be enormous, and may even defeat the very purpose of high GDP growth, which is the all round welfare of all sections of our society. Hence there is a need to keep the overall power demand within manageable limits keeping our geographical and environmental constraints in proper perspective.

2.3 Needfor reducing the effective grid demand

Additions to conventional technology power generation capacity and the expansion of the integrated grid network are associated with considerable social, environmental and economic concerns. Also, from the perspective of global warming there is clearly a critical need to reduce the GHG emissions from the sector, which is possible only if the generating capacity of the conventional power plants is kept minimum.

Section 1.0 of the draft plan provides a relevant set of data to drive home the need for minimising the effective grid demand. It says: (i) the installed capacity ofpower plants has increased to about 3,02,088 MW as on 31.3.2016 from a meagre 1,713 MW in 1950, (ii) the electricity generation has increased from about 5.1 Billion units in 1950 to 1,107 BU, (iii) the per capita consumption ofelectricity in the country has also increased from 15 kWh in 1950 to about 1,010 kWh. Despite such massive increase in capacities, it is a glaring fact that about 25% of our population is without access to electricity, which is a clear indication of the serious issue of inefficiency in the sector. It becomes obvious, hence, that massive additions to the generating capacities alone will not be able to address the inequity in the availability of electricity in the country.

Section 2.8 of the draft plan has listed major reasons for the slippage of generation projects in the 12th plan period. Keeping in view the growing population and shrinking natural resource base, it is not unrealistic to project that these reasons will only get acute in the future making it hugely costly to implement additional power projects which may require land, water and other natural resources..

While the Indian power sector is witnessing a scenario where about 25% of the population has no access to electricity even after nearly 7 decades of independence while many of the thermal power plants are idling due to want of power purchasers, it is even more unfortunate that a committee was constituted by the power ministry in September last year to suggest innovative schemes for raising power demand.This development shows the criticality of realistic demand forecast and concerted efforts to minimise the grid electricity demand and deploy all feasible options to minimise the need for conventional power plants and the expansion of the grid network.

Instead of looking to raising the electricity demand artificially, only to make use of the already commissioned thermal power plants, the efforts should be to consider using the so called surplus electricity to bring on to the road more electric vehicles for public service in order to reduce the pollution associated with petrol/diesel.

Our power sector’s planning approach should be to determine and provide only that much of electrical energy in such a way and at such costs so as to assist the poor and vulnerable in our society to come out of the clutches of poverty. This should be the primary objective.

2.4 Thevast scope for reducing the effective grid electricity demand

Keeping in view the huge potential in efficiency improvement & conservation measures, and the demand side management measures, and the technological maturity of distributed electricity sources such as roof top solar systems and community based bio-mass plants etc. it is not inconceivable that through the existing techno-economically viable means it is feasible to drastically reduce the effective demand on the grid based electricity network.

Chapter 3 of the draft plan has effectively discussed the huge scope for demand reduction. It has highlighted the effectiveness of DSM, energy efficiency and conservation measures that would modify or reduce end-user’s energy demand.Whereas table 3.2 has estimated the avoided generation capacity as 36,323 MW between 2006-2014, it also saysthat “the benefits reported by BEE, have been mainly concentrated in one ortwo schemes i.e. appliance and industry programs. Therefore, there is lot ofscope in other schemes and larger penetration opportunities of energy efficiency indifferent stages and types of end users.” The draft plan has done well in it that it has listed various options available reduce the demand in Chapter 3.

As per tables 3.3(a) & (b) of the draft plan report, the projected savings in electrical energy due to the efficiency improvement and DSM measures for the period 2017-2027 is estimated as 2,503 Billion Units (BU). At the end of this period, i.e by 2027, the projected figure for the avoided peak power is 13,225 MW. While these figures for the avoided power capacity additions in themselves are considerable, the true potential for reducing the effective demand on the grid is vastly more if we take into account the gross inefficiency prevailing in various segments of the power sector. Some credible reports had estimated that the demand reduction potential can be as high as 40% in 2010. Factoring in the efficiency improvements, which have been implemented since then, it may not be an exaggeration that the demand reduction potential can be as high as 30% as at present. Further, if effective measures are taken to shift many of the smaller and/or remote loads on to isolated distributed RE sources, the demand reduction potential becomes even larger.

2.5 Realisticdemand forecast options