The world's sixth largest economy needs to buck up on the implementation of smart grid solutions, if it wants to ensure quality, 24 x 7 power to service the aspirations of both an expanding population and industry.
The Indian electricity grid or the National Grid consists of 335 GW of connected load spread over an area of 3 million square kilometres, according to data from the New Delhi-based public-private initiative, Indian Smart Grid Forum (ISGF). With 250 million customers and varied sources of power generation, it is also one of the largest and most complex grids globally. With the federal government targeting to add another 175 GW of renewable energy to the grid by 2022, the best way to ensure that the benefits of this network are made widely available to the country's over 1.3 billion citizens is through a rapid, yet systematic rollout of the smart grid, also termed as the energy internet of the future.
With the country emerging as the world's fastest-growing major economy, the arguments favouring a rapid rollout of smart grid technologies across the country have become increasingly vociferous. Opines Peter Herweck, Executive Vice President, Industrial Business, Schneider Electric, "Increasing productivity means generating or producing more with lesser inputs. Obviously, systems then become more complex. For example, if you take the energy chain, in the past, electricity was generated, transmitted, distributed, and used. But now, the whole process is being turned 180-degree in the other direction." For one, this enables users with their own solar panels to also become prosumers (producers and consumers) of electricity.
Opines Shantanu Jaiswal, Head of India Research, Bloomberg New Energy Finance (BNEF), "To maintain such a complex grid, we need smart and fast response systems that help manage the grid operations and also take automatic corrective actions when needed." In fact, BNEF's New Energy Outlook (NEO) 2018 report co-authored by Jaiswal, predicts that by 2050 renewables will supply 75 per cent of electricity in India compared to 62 per cent in China.
As part of its aggressive renewable energy targets, the Ministry of New & Renewable Energy (MNRE) unveiled the draft of wind-solar hybrid policy document in May 2018. "Over the past few years, the country has been moving towards an increased share of renewables in its power mix. However, this has resulted in transmission bottlenecks, as these capacities are usually concentrated in limited areas where wind density is high or solar radiation is high," says Shravan Sampath, CEO Oakridge Energy. He sees the new policy as a welcome initiative to improve transmission efficiencies by adding solar and wind capacities together.
Moreover, the growing use of renewable energy will result in electricity grids becoming highly interactive. They will intervene to seek a reduction in demand from consumers during peak hours. Traditionally, Indian electric utilities have relied on load shedding to avoid an all-out crash in the distribution system to meet shortage during peak hours. However, rather than resorting to drastic power cuts, a smart grid can reduce supply so that consumers can operate at least basic electrical appliances such as lights and fan.
In India, the per capita consumption of electricity remains around 1,100 kWh per person, per year, which is one-third of the global average. Reji Kumar Pillai, President, India Smart Grid Forum (ISGF) feels that with the demand projected to rise significantly, the country needs to move aggressively towards enhancing generation capabilities. "At the same time, there is a narrative that we are a power surplus country because some power stations are lying idle owing to contractual issues. This, together with huge non-performing assets with banks, prevents new generation capacities from coming online and also keeping the investors away," he affirms. Pillai says that with nearly 50 per cent of the 150,000 MW generated daily by up to three-decade-old power plants, there is an urgent need to ensure their renovation and modernisation (R&M) as well as creation of new generation capacities of coal, nuclear, hydro, solar, and wind. "However, if we continue to believe that we are a power surplus country, we will return to the dark ages of the 1970s and 1980s when frequent power cuts used to be the norm," he warns emphatically.
Smart technologies will, therefore, play a major role in integrating electricity from diffused sources of generation. But they come at a cost, which is often much higher than that for conventional solutions. "The precarious financial health of distribution companies and the additional cost of deploying smart equipment will definitely slow down the adoption of smart grid technologies. But, as smartness in the grid becomes more standardised, we will see costs starting to decline and distribution companies being able to adopt new technologies one at a time," predicts BNEF's Jaiswal. He points out that already most of the new equipment being used at the transmission level is smart to some extent and new investments will mostly be needed at the distribution level to have a truly smart grid.
Ensuring Operational Sustainability
The conventional grid is largely based on a system of cross-subsidisation where certain categories of consumers such as commercial establishments pay extra to sustain electric utilities. In the emerging scenario, it would be no surprise to see them migrate to renewable energy.
Summarising the scenario, a 2014 post by the US-based not-for-profit organisation Clean Energy Group noted, "Solar + storage systems will soon reach cost parity with grid-purchased electricity, thus presenting the first serious challenge to the centralised utility model. Customers, the theory goes, will soon be able to cut the cord that has bound them to traditional utilities, opting instead to self-generate using cheap photovoltaics (PV) with batteries to regulate intermittent output and carry them through cloudy spells. Factors such as the plummeting cost of solar panels, the imminent increased production and decreased cost of electric vehicle batteries that can be used in stationary applications have combined to create a perfect storm in terms of technology."
This forecast has raised the spectre of "utility death spiral", where an increasing number of consumers would either substantially reduce or completely stop depending on the conventional grid. With more people self-generating electricity, utilities will be forced to seek higher tariffs from a shrinking consumer base.
"I have had some experience in telecommunications 20 years ago and see something similar happening in the utility industry. With new players and new business models coming in, distribution companies and municipalities will have to discover new business models going forward," proclaims Thomas Zimmerman, CEO, Digital Grid, Energy Management Division, Siemens AG.
Experts feel that in a price-sensitive market like India, this can best be addressed through the time of day (ToD) mechanism of dynamic pricing. Effective ToD mechanism will not only provide a fillip to demand response, but also serve to buttress the renewable energy revolution.
Further, the needs of the hour is "firm" power, as both wind and solar are infirm sources of power that can ramp up or down based on the requirements. It is equally important to also include storage to reduce and balance out the variabilities of both these forms of renewable energy. "That would add enormous value to the utilities as they are presently grappling with the problems of uncertain power availability due to large new solar and wind capacities," says Oakridge Energy's Sampath.
However, Jaiswal views the policy interventions undertaken so far as being more reactive than proactive. "The government is very careful in not indulging in technologies that are either very expensive or ahead of their time. Therefore, policies and incentives will continue to play catch-up especially for capital-intensive projects that do not offer immediate economic benefits," he avers.
Other than the increase in disposable income, the demand from the manufacturing sector on the back of government programmes like Make in India, expansion of data centres, increased use of blockchain technology and growth in electric mobility are all going to whet the appetite for electricity. In anticipation of this explosion in demand, a fast reorientation of mindset is required on both policy and execution fronts to cope up with an increasingly disruptive environment.
"As part of its aggressive renewable energy targets, the MNREunveiled the draft of wind-solar hybrid policy document in May 2018."
- Manish Pant