Power, T&D Outlook 2021

Industry’s leading experts rightly address the challenges aroused from the increased transmission and distribution requirement. They also talk about impacts of the same across infrastructures.

Sustained financial growth continues to endure India’s electricity demand. With the transmuting tendencies of power sector in the recent years, India has attained a laudable stature. With the government initiatives like Electricity for all and the recent amendments in Electricity Act 2020 and efforts to recover the financial losses of T&D, leaders are optimistic towards India’s T&D outlook. 

According to a recent report by TERI (The Energy Resource Institute) India’s power demand is expected to come down by 7 – 17 percent. This downward trend is supposed to be the set-back of COVID-19’s economic impacts. To offset this, it is necessary to retire inefficient and end-of-life coal plants in reducing CO2 emission whilst boosting the plant load factor on the efficient and effective ones.

T&D overview for 2021 

Going by the better-than-expected comeback in the economic stand, we remain positive that the industry present condition will improve in 2021. In a recent report on ‘State of the Economy’, RBI asserted that despite substantial headwinds, India is recovering much faster than expected from the economic slowdown, even as its coronavirus situation is improving.

On this note, Latish Babu, Director, Power & Grid Segment, Schneider Electric India feels “There is inequitable sharing of burden as electricity for the agriculture sector is free whereas, energy cost for the industries seems more. As expected, the Union Budget announcement showed some relief to deal with the anomalies through a fair compliance burden. Also, I think the tariff revisions should be addressed at the earliest to bring more ease to the sector.  

Moreover, there should be a striking equilibrium between strategies, protecting the interest of consumers and the power sector. Always keeping the lowest common denominator at the centre of policy-making can impact the interests of the industry and the economy.

Indian cities are amongst the world’s fastest growing cities. So, any unplanned urban development can impose immense pressure on the utilities to meet exponential growth in power demand from the power sector, including from the ageing transmission infrastructure.

Here, “Constructing only greenfield transmission infrastructure would call for more land acquisitions, capital and time along with potential RoW challenges. This is because, availability of free space is inhibited in India. Moreover, the focus on building new infrastructure alone could potentially damage the environment, vegetation and convenience. “, says Manish Agarwal, CEO, Solution Businesss Sterlite Power Transmission

So, transmission system planning and philosophy must optimise additional capacity by expanding present assets. Sterlite Power partners utilities to uprate and upgrade overhead brownfield transmission projects, thereby addressing its critical encounters around network congestion through the framework of time, space and capital. “This helps Utilities address the tremendous growth in demand for power by decongesting their transmission networks to be able to deliver power to the last mile in a timely and cost-effective manner”, Agarwal added.

Over 3-4 years, it is being realised that is possibility of mismatch in timelines in commissioning of generation companies and associated transmission lines. The regulators deny compensation since the line is not being used. Lack of agreement with generation companies closed hopes of compensation. The investors to these transmission lines have started worrying over collection of the charges. This is a very positive development.

Selective solutions for enhanced performance

According to Ajay Shankar, Distinguished Fellow, TERI, “Demand has to keep on increasing as our per capita consumption towards power needs to be doubled and tripled. The infrastructure should be ahead of demand, so that robust quality supply is ensured for every consumer.” In Delhi and Mumbai, the carrying capacity is now good enough. When there is a sudden rise in peak demand due to high temperature in summer, the power network is not under stress.

Also, if we ensure that the transformers assets are thoroughly conditional monitored and are very well managed, then it is possible to resolve and even avert such incidents at the inception level and can be rectified instantaneously.

Moreover, with planned outages, we can have a better power supply and can give the biggest benefit to the companies owning capital assets, because this will reduce the cost of downtime and the loss of capital assets. It has a high RoI and I think as far as the DISCOMs and consumers are concerned, we should be investing in these technologies.”

Raj Singh Niranjan, Managing Partner, Trans India Law Associates, talks about the critical aspects that the world altogether is dealing with. According to him, around 1.2 billion people are still powerless. They do not have access to electricity, whereas, 3.2 billion people have no access to clean fuel. As a result, the alternative mode of energy generation is being used out of no choice, which has been impacting the environment and the other climatic factors. So, with the government initiatives like Electricity for all, their new amendments under the electricity bill 2020, gives a hope to a lot of people who can pay only to their consumed energy, and no additional cost will be incurred for them. This means, the minimum number of units per person (basic) will only be accounted. 

There are countries whose per capita power consumption is 500 units to 1500 units per annum, whereas, in North America and the Europe, the per capita power consumption is 15,000 to 30,000 per person per annum up gap the cubicle 500 to 15 115,000 to 30,000 per person. We need to look for ways to bridge this consumption gap. When we talk about the Electriciy Act in particular, we must not forget that recently the government has invoked special powers to direct electricity regulator to make changes in regulations freeing power plants delayed due to justifiable reasons from paying penalties to associated transmission projects.

“Penalties for delay in COD (commissioning) of generating stations, or for delay in completing transmission system, or operationalising the LTA (long-term agreement) shall invite penalties to be paid to CTU (central transmission utility). The penalties shall be equitable; and shall not extend to compensating either the Generation companies for power it could not despatch because of delay in transmission or to compensate the transmission company for the delay in generation or the associated transmission,” the central government directions to CERC to amend Sharing of Inter-State Transmission Charges and Losses Regulations, 2020 said.

Over 3-4 years, it is being realised that is possibility of mismatch in timelines in commissioning of generation companies and associated transmission lines. The regulators deny compensation since the line is not being used. Lack of agreement with generation companies closed hopes of compensation. The investors to these transmission lines have started worrying over collection of the charges. This is a very positive development. 

Addressing the demand and eliminating the consumption gap 

The goal for power transmission utilities is to be able to cater uninterrupted, reliable and quality power; and all the related industries and offices are doing their best to meet this vision. That being said, there are a few issues that need to be ironed out for robust power transmission. “Utilities need to whole heartedly embrace the deployment of new state-of-the art technologies and solutions that can help resolve challenges swiftly. These may look more expensive vis a vis traditional solution, but their ROI is very high,” says Agarwal. Hence, it is important for utilities to take a long-term view and think in the direction of opting for new technologies and solutions to stay ahead and cater to growing demand for uninterrupted reliable and quality power.

Shankar on the other side, feels that the revenue collected from consumers would suffice to pay the generators. He says, “So, eliminating the gap between cost and the revenue realised per unit can be enough to invest for improvement of the power network. This can be achieved by increasing the tariff and reducing the AT&C losses so that as much revenue can be collected as possible without leakage of electricity or non-payment for consumption of electricity. This challenge varies from state to state. So, I think the ideal approach would be for the central government and its agencies to focus state by state and try to work out how a turnaround can be brought about in each state.”

Continuing to the same Niranjan adds, “I want you to see the gap between the numbers which we have seen pertaining to the per capita energy consumption, this gap is addressed as ‘energy poverty’. These facts change the entire outlook towards power sector. Energy also be declared as a basic human right, and we are progressively working towards it. According to Indian Constitution, electricity is a concurrent subject effectively, which basically means it is a joint responsibility of both central and the state government.

Final Note 

Centre must initiate major reforms so power companies, including State-owned distribution players, can turn the tide. Steps should also be taken to boost the implementation of projects for transmission network infrastructure at the intra-state as well as inter-state levels. Fast-tracking of such projects backed by higher budgetary outlays are the need of the hour. It is worth noting that regulatory reforms such as UDAY have led to improved off-take credit profiles, generating a 15.5 percent return on equity. Finally, the good news from India’s new renewable energy projects is that these have achieved grid parity at par with coal-fuelled power plants. All these factors are a cause for optimism in 2021.

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Opting for new technologies and solutions to stay ahead and cater to growing demand for 24×7 reliable and quality power.

 Manish Agarwal, CEO, Solution Businesss Sterlite Power Transmission

Keeping the lowest common denominator at the centre of policy-making can impact the interests of the industry and the economy.

Latish Babu, Director, Power & Grid Segment, Schneider Electric India

Demand has to keep on increasing as our per capita consumption towards power has been increasing. 

Ajay Shankar, Distinguished Fellow, TERI 

The per capita consumption is an concern towards the power transmission scenario which need to be taken care of.

Raj Singh Niranjan, Managing Partner, Trans India Law Associates