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National Electricity Plan on Generation – 12th & 13th Plan periods

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Shankar Sharma

Power Policy Analyst

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Part I: Executive Summary

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1.  Introduction

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 mandate include 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 Electricity Policy as far as salient features are concerned.

When we view the huge inefficiency prevailing within the electric power sector with a correct perspective, 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) become fundamentally questionable.

2.  Past experience of Capacity addition

The past record of capacity addition in the previous 5 year plans, as also in 11th plan, is known to be much below the target. The constraints in achieving capacity addition target seem to be only increasing with each passing year if the recent past performances are any indication. The difficulties in ensuring adequate fuel; land acquisition issues; people’s opposition to large scale displacements; and the ever increasing levels of environmental awareness amongst the public will all pose obstacles in achieving high capacity addition targets. Hence, there is clearly a need to factor-in these constraints in CEA’s growth targets for the future plans.

3.  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 needs of our society at all levels which then will in turn ensure responsible management of the power sector.

3.1 The critical 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; nature’s limit; 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. Instead of projecting future electricity demand with the GDP maximizing paradigm, the country must aim at determining the least amount of electricity required to eradicate poverty.

3.2 The issues with high demand projection

The social, economic, environmental, and health impacts on our densely populated communities of huge addition will not be inconsiderable. It seems 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.

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. But the social, economic and environmental impacts of such a huge addition 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.

3.3 Need for reducing the effective grid electricity demand

From the perspective of global warming there is clearly a 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.

3.4 The scope for reducing the effective grid electricity demand

Despite phenomenal increases in generation capacity since independence, considerable sections of our population are still deprived of electricity connection, and various forms of electricity crises are continuing. Huge inefficiency prevailing in the power sector is rendering any amount of additional capacity inadequate as seen by the power cuts year after year. So, massive addition to generating capacity alone cannot be seen as the panacea for our power sector problems.

Keeping in view the huge potential in efficiency improvement measures and 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.

3.5 A realistic demand forecast

In view of the fact that that there is a steep decline in CAGR of electricity consumption from 6.87% in the 30-year period (between 1974-5 and 2004-05) to 4.30% in last 5-years (between 1999-2000 and 2004-05), and taking into account the huge potential with efficiency improvement measures to reduce demand, it can be credibly argued that not more than 4% of CAGR of electricity generation for next 20-25 years seems reasonable. More importantly, it appears feasible to restrict the actual electricity demand growth to this level without compromising the welfare of our communities.

3.6 Credible electricity demand by 2021

A high level analysis of the power scenario in the country throws up an interesting picture, and may point towards a viable solution to the power sector woes.

·  Installed Generation Capacity (as on 31-3-12) was 199,877 MW with 175,377 MW of conventional power and 24,500 MW of renewable power.

·  The peak power and annual energy demand for year 2011-12 was 130,250 MW and 936,568 GWH (as per CEA website). When this peak power demand is compared to the capacity available in the system, it allows a spare capacity of about 45,000 MW of conventional power capacity alone. Allowing for 10% outages and 10% reserve (a total of about 26,000 MW) the system seem to have surplus of about 19,000 MW installed generating capacity without taking into account the renewable power capacity.

·  The actual/deemed peak demand on the grid of 130,250 MW during 2011-12, when viewed from the perspective of gross inefficiency prevailing in the sector means that in real term it is much less. CEA itself admits that there is a saving potential of 15% in the end use (as per Table 12.1). The T&D loss reduction of 10% is techno-economically feasible during the 12th and 13th plan periods if adequate emphasis is provided. Through DSM the actual peak demand on the grid can be brought down further.

·  Even assuming the demand reduction potential of only 25% (15% from end uses PLUS 10% from T&D losses), the true demand on the grid as on 31.3.12 could have been only about 98,000 MW of peak power, and 702,426 GWH of annual energy during 2011-12.

·  On the basis of these figures for peak power and annual energy demand as on 31.3.12, and at an assumed CAGR of 4% demand growth, the power demand in the country can be projected as 139,485 MW of peak hour demand and 999,771 GWH of annual energy by 2021.

·  What this basically means is that the power sector may not need a lot of additional capacity if the existing infrastructure is put to use optimally. But it requires concerted efforts not to allow the true demand on the grid to escalate without checks and to increase efficiency at all levels/segments of the power sector.

·  As compared to the huge logistical and societal problems associated with the planned capacity addition of about 79,000 MW in each of the 12th and 13th plan periods (or about 700,000 MW of capacity which are reported to be in the pipeline), this approach brings huge benefits to the society while avoiding humongous costs.

·  In view of the huge potential existing in the distributed type renewable energy sources such as roof top SPVs and community bio-energy plants, the additional annual energy requirements by 2021 and beyond should be met by them as far as possible, by shifting all smaller loads from the grid to these distributed power sources.

·  The huge solar power potential should be made use of to meet the additional peak demand also in future by installing CSPs of 10 to 15 MW capacity at suitable locations (such as each taluka places) to feed to the grid.

CEA plan should consider this approach seriously starting from 12th plan period itself.

4.  Global warming and environmental considerations

Considering the huge contribution of the conventional power plants to GHG emissions, it is impossible to imagine how India’s total GHG emissions can be less in the future five year plans as compared to that in Y2011, unless definitive measures are taken with concerted efforts to reduce the GHG emissions form the power sector.

Additionally, it should also be kept in mind that those activities in our society which will result in GHG emissions will also have impact on the pollution of land, water, and air; on accelerated depletion of natural resources such as forests and fresh water sources; on the food & agricultural products; on the access to natural resources for livelihood of vulnerable sections etc. Hence, the total GHG emissions of the country should be a huge concern from the all-round welfare perspective of our people even if we care less from the perspective of our international obligations.

Well known difference in magnitude of the order of 30 - 180 times in life cycle CO2 emissions between conventional power plants and renewable energy sources should clearly dictate the electricity generation planning strategy for India.

5.  Credible generation Planning

In view of the critical role of the power sector on our society and the environment, while a credible projection of electricity demand for next 5, 10 or 25 years is essential in generation planning, the long term perspective of the society’s overall welfare, the sustainability of the technologies deployed, global warming impacts, the true cost & benefits to the society of these technologies, the concerns of the affected population are all even more important. Without such objective considerations, CEA’s generation plan has the risk being termed as irrelevant form the civil society’s perspective.

5.1  A holistic approach through Costs & Benefits Analysis (CBA)

A common problem with the successive generation planning has been the complete absence of calculating the true costs and benefits of the conventional technology to our communities; and objective consideration of all the available alternatives to bridge the gap between demand and supply.

Without determining the relative costs and benefits of a given technology and without comparing them with other alternatives, how can that technology be considered as the most beneficial? The alternatives available in individual state or the region in the form of efficiency improvement measures or renewable energy sources may be able to provide equivalent amount of virtual capacity addition at much less overall costs and many more benefits. As a resource constrained and poor country the continued practice of proposing large size and costly power plants in different parts of the country with an objective CBA is a huge concern to the public.

5.2  Different paradigm for generation planning

CEA should adopt least cost planning process in an objective sense by taking an integrated resource management approach. While doing so the total cost (both the direct and indirect costs) to the society should be the criteria instead of only the financial cost to the project developer.

5.2.1  For each additional MW of demand various alternatives available within the existing power infrastructure should be the priority 1; efficiency improvement measures such as T&D loss reduction, DSM, agricultural pumping loss reduction, PLF improvement, R&M of power plants etc.

5.2.2  A substantial portion of the proposed investments and efforts in generation sector should be diverted to these measures.

5.2.3  Priority 2 could be to transfer as many loads as possible to roof top solar or community based hybrids such as solar/wind/bio-mass power systems.

5.2.4  Priority 3 could be to replace old and inefficient coal power plants with efficient super critical plants at the same site. Land available at an old coal power plant of 4 or 6 of 210 MW units may be adequate for 2 or 4 of 800 MW plants.

5.2.5  Priority 4 could be to utilize the large roof top surfaces available in schools, offices, factories, shops, warehouses etc. to install SPV systems. Additionally, the CSP systems of suitable size should be considered in smaller towns/cities to provide adequate power during the absence of sun shine hours.

5.2.6  This process should be employed to determine the order of costs and deploy most economical option to the society. It is important that CBA as a decision making tool is deployed objectively in every step/project.

5.2.7  In this approach the conventional power plants should be the last resort: mini/micro hydro, gas power, coal power, and nuclear power in that order. It is not difficult to appreciate the fact that an objective consideration of all the technical, economic, social and environmental issues will reveal that nuclear power projects score the least.

5.3  Planning for peak coal power consumption

IEP had indicated in 2006 that the total extractable coal reserves (including proven, indicated and inferred) in the country will run out in about 45 years. Since a large number of additional mines are being permitted to feed the huge number of coal power plants, the coal reserve may not last beyond another 25 years. In this context there is clearly a need for the country to look beyond coal. It is therefore necessary to have a definitive plan to phase out coal power plants (and so also other conventional power plants) in the next 25-30 years.

5.4  Role of renewable energy sources

On the basis of an objective consideration of many national and international reports, it appears safe to state that the energy future of our country depends on how effectively our society will be able to harness the huge renewable energy potential within the country. There has been a spate of international reports in recent years, including the one from IPCC, expressing credible confidence in and advocating for a definitive shift towards renewable energy sources.