Power Vaccination

The power sector in India, hit hard by COVID-19, is slowly getting back on track. Here’s an attempt to showcase how the India’s electrical and power sector is turning the tide in its favour.

The COVID-19 pandemic has devastating impact on the energy demand globally this year. The World Energy Outlook by International Energy Agency (IEA) shows that a return to pre-crisis levels of demand not expected until early 2023. It said, “Global energy demand rebounds to its pre-crisis level in early 2023 in the STEPS (stated policy scenarios), but this is delayed until 2025 in the event of a prolonged pandemic and deeper slump, as in the DRS (delayed recovery scenario).”

Prior to the crisis, energy demand was projected to grow by 12 percent between 2019 and 2030. Growth over this period is now 9 percent in the STEPS, and only 4 percent in the DRS.

However, the IEA Outlook adds, “With demand in advanced economies on a declining trend, all of the increase comes from emerging market and developing economies, led by India.”

Of late, power demand has started showing drastic improvement in India. As per a recent report by Emkay Global Financial Services power generation in India grew by 4.5 per cent year-on-year to 120.3 billion units in September 2020 as the demand improved by 4.3 per cent year on year.

Commenting on the recent performance of power sector in India, Anil Saboo, CMD, Elektrolites (Power) Pvt. Ltd. said, “The current COVID-19 situation has completely changed the global supply chain scenario and also given an opportunity to grow the local manufacturing and industries. Industry is also ready to grasp the opportunity. A lot of policy changes have been done by the government to promote local manufacturing e.g. proposed amendments to the Tariff Policy with tariff rationalisation and promotion of competitive market for power procurement by industries, standardisation of MSME definition, and initiative of replacing the L1 criteria of procurement.” Mr Saboo is the President of Indian Electrical & Electronics Manufacturers’ Association (IEEMA) – the apex association of the Indian electrical equipment manufacturing industry.

He observed, there are still few more steps required like augmenting domestic testing facilities to cover the type testing of all equipment, mandating type testing of imported small equipment in Indian labs, supporting SMEs in technology up-gradation and testing, standardisation of product ratings and specifications, keeping a provision for type testing of small equipment picked up from site, etc.

Presently as economic activities and business operations have started to shake off the COVID-19 effect, power demand is going to rise considerably throughout the coming quarters. Hence, an open door for the power sector to begin fixing the inadequacies that kept it away from improving the per capita energy consumption. The Economic Survey 2018-19 too noticed that India needs to increase its per capita energy consumption three-fold to prod financial development and economic growth. However, Gautam Seth, Joint Managing Director, HPL observed, this is only achievable if the sector can address the systemic flaws at the dissemination side, guaranteeing reliable energy delivery for the end users with better execution.

The recent decision to privatise the DISCOMs in Union Territories is being considered as a huge and important step in this direction. “Expanded private sector investment in the distribution space won’t just assist DISCOMs to manage the financial stress at the same time it will improve the nature of services and encourage healthy competition,” Mr Seth said.

Meet local or go global? (para)
Undeniably, Indian market offers tremendous business opportunities as there are lots of untapped potential. At the same time the government is promoting “Vocal For Local” to encourage domestic manufacturers to go global. In this context, the question arrives: Should an Indian electrical equipment manufacturer go global or consolidate locally? Sharing his thoughts on this aspect, Mr. Seth suggested the homegrown companies need to go for ‘local consolidation’ to be successful in the overseas markets. He said, “At HPL, before getting in to the international markets, we consolidated our presence in the local markets with setting up footprint in almost every district in the country. Today we have almost 5,000 employees working in HPL with seven factories and we are now exporting to 42 countries.”

He adds, “When one (a homegrown company) is looking to go global, there are certain minimum parameters need to be achieved in terms of product quality and technology to meet the required international norms. It has to be noted that electrical and electronic products need to be adhered to high safety norms as they can endanger the human lives.”

Focus on Standardization (para)
Also, speaking at the EPR magazine interactive session on ‘Power Vaccination’, Vimal Mahendru, President at Legrand India shared his thoughts on 3S i.e. Sustainable Development Goals (SDG), Standardisation and Self-reliance. Mr. Mahendru is presently the International Electrotechnical Commission (IEC) Standardization Management Board (SMB) member from India and Chair of the IEC Systems Committee on Low Voltage Direct Current and Low Voltage Direct Current for Electricity Access (SyC-LVDC). He is also the Chair of the Bureau of Standards (BIS), Sectional Committee 39, for standardization of fuses and fuse accessories.

Commenting on how an electrical equipment manufacturer can maintain profitability while targeting Sustainable Development Goals, Mr. Mahendru said, “The beauty is working towards sustainability should not negatively impact profitability, but on the other hand, if done properly it will add profitability. The biggest profit is that you will feel good about it, that you are leaving behind a better world for future generations. There is no monetary equivalent for that comfort and that knowledge that we are leaving behind a better world by working on sustainability and sustainable development goals.”

He adds, “There is enough research done worldwide that working towards sustainable solutions does not really add cost. At the same, one can demand premiums for sustainable solutions. So I’m convinced that working towards sustainability will not add so much to the cost per class, but much more to the profitability of the business simply because the premiums that you can command and the better world you create.”

Nurturing Start ups (para)
To address the skill-gap within the country and more specifically in the electrical equipment segment, IEEMA is engaging with technical institutions. “IEEMA is focusing to collaborate with educational institutions and in time to come, we will further enhance our engagement. During the ELECRAMA exhibition, we IEEMA provides platform to startup companies to showcase their products and technologies in front of the global audience. That’s how we are focusing on nurturing the young entrepreneurs,” informed Mr Saboo while talking at the recently organized EPR magazine interactive session on ‘Power Vaccination’.
Future of Indian power sector (para)
India to be world’s largest market for battery storage (sub-para)
The pace of change in the electricity sector puts an additional premium on robust grids and other sources of flexibility, as well as reliable supplies of the critical minerals and metals that are vital to its secure transformation. According to the International Energy Agency, “Storage plays an increasingly vital role in ensuring the flexible operation of power systems, with India becoming the largest market for utility-scale battery storage.”

Renewable energy push (sub-para)
Power Minister of India Mr. R K Singh, while addressing the third assembly of the International Solar Alliance, said, “Solar energy is already contributing around 2.8 percent of global electricity and if trends were to continue, by 2030, solar will become most important source of energy for electricity production in large part of the world.”

According to the IEA’s Energy Outlook, the share of coal in the global power generation mix falls from 37 percent in 2019 to 28 percent in 2030 in the STEPS, and to 15 percent by then in the SDS. The Outlook says in the stated policy scenarios (STEPS), renewables meet 80 percent of the growth in global electricity demand to 2030. “Hydropower remains the largest renewable source of electricity, but solar is the main driver of growth as it sets new records for deployment each year after 2022, followed by onshore and offshore wind,” it adds.

Huge scope for electrical equipment industry (sub-para)
Experts believe that electricity sector would be among the few industry verticals which will be first to come out of the current phase of recession or slowdown.

“India’s share in the cumulative world market of electrical equipment of about USD 480 billion is less than 2 percent. So, there is the scope to increase India’s share up to 5 percent till 2025,” Mr Saboo said. However, he suggests, “The government needs to support the industry by providing funds at globally competitive rates of interest and help industry to establish clusters of electrical and component manufacturers and provide them funds for technology upgradation.”

Ensure access to reliable power (sub-para)
Access to reliable power plays a key part in expanding the per capita power utilisation and enlarges the business opportunities. According to Mr Seth, “The post-pandemic stage in the power sector should address issues like power burglary, erroneous bills, delays in new connection setup and incapable complaint redressal instruments, to quicken development and guarantee expanded financial stability.”

Quotes
India’s share in the cumulative world market of electrical equipment of about USD 480 billion is less than 2 percent. So, there is the scope to increase India’s share up to 5 percent till 2025.
Anil Saboo, CMD, Elektrolites (Power) Pvt. Ltd. and President, IEEMA

Working towards sustainability will not add so much to the cost per class, but much more to the profitability of the business simply because the premiums that you can command and the better world you create.”
Vimal Mahendru, President, Legrand India

Expanded private sector investment in the distribution space won’t just assist DISCOMs to manage the financial stress at the same time it will improve the nature of services and encourage healthy competition.
Gautam Seth, Joint Managing Director, HPL