Transforming energy outlook with distributed generation and micro-grids 

Discussing the transformational trends in the power sector, Prabhajit Kumar Sarkar, Managing Director & CEO, Power Exchange India Limited, highlights various avenues where digitalisation have been augmenting and improving the overall capabilities of the poer providers and traders.

Considering the present trends in the power sector, how do you view the demand and growth of the power trading market in India?

There has been a growing shift towards utilising market mechanisms for power transactions. Market mechanisms have, after all, ushered in transparency of price discovery, allowed equal access to the marketplace for all participants and ensured information symmetry for all.

Since the power markets in the country have demonstrated benefits for all over the last few years, it has helped foster the shift towards deepening it further through new types of transactions and opening up of existing segments.

It is expected that all these efforts, visible through initiatives like MBED, Green Market development through GTAM, GDAM, introduction of longer tenure contracts, resolving market structure issues through market coupling and enhancing RTM, DSM, ancillary services etc would lead to transactions of around 25 percent of all electricity generated compared to 4-5 percent today.

What measures have been implemented by the industry to tap the potential of the renewable energy sector?

PXIL has introduced the Green Term Ahead Market Contract that enables transaction in Solar and Non Solar type of Renewable energy. PXIL has received approval to introduce Integrated Day Ahead Market wherein price discovery for Renewable and Conventional segment is undertaken in an integrated manner. The transactions in GTAM and IDAM provide signals for future investments in Renewable sector. Liquidity in these segments also demonstrates to Renewable Energy project developers the benefits of accessing the market to sell power directly from their projects.

Further, after issuance of Judgement by Hon’ble Supreme Court on 6th Oct 2021, PXIL is developing longer tenure contracts in Green TAM wherein transactions for different delivery periods would be made available to participants i.e. Monthly / Quarterly / Yearly / Seasonal.

PXIL is also introducing contracts to cater to the hydro segment. This would allow specific benefits associated with buying hydro power to be passed on to the buyers and an appropriate price discovery to take place for Hydro power being sold.

The renewable energy sector is growing rapidly and the above steps are being taken to ensure a closer integration and aid in its continued rapid development. 

What are the challenges being faced by the utilities in maintaining the grid efficiency and stability to provide uninterrupted power supply?

Most power utilities, specifically DISCOMs, in our country cater to a large and varied consumer mix across large geographical areas. This includes centres of high demand including large cities and rapidly growing towns as well as vast hinterlands of farms and low consumption areas. The transmission and distribution network within the DISCOM area, including the quality of substations, distribution lines and transformers and continued capital investment for growth, safety and redundancy plays a significant role in maintaining low technical losses and high reliability.

In addition, given the portfolio of generation assets tied up in the long term that are earmarked for each DISCOM, the ability to access the market to reduce the cost of supply is also limited in most cases. This is evidenced from the 4-5 percent size of the power exchange market in the country.

Additionally, the limited ability to recover the full cost of supply from their consumers often leaves utilities with severe financial problems and therefore a difficulty to meet their supply obligations in an uninterrupted manner.

For all load serving utilities, demand-supply mismatch is thus a reality. To mitigate such a situation, participants access the power exchange platform for meeting their trading requirement. The set of contracts on power exchanges is being expanded rapidly to cover delivery duration of hours to days ahead. In addition to longer term policy measures to enhance the financial health of utilities, we feel that the complete set of contracts available on exchange would also go a long way in helping utilities manage their consumption vis-à-vis supply in a more efficient manner.

How do you view the demand and application for AI, automation and digitisation for efficient distribution in the power sector?

There are numerous use cases for AI, automation and digitisation in the power sector including in the power distribution space. Since electricity cannot be stored, therefore real time changes in demand require real time modification in supply. Power distribution requires connectivity with each and every consumer. Each consumer’s demand change therefore reflects in the aggregate on the supply requirements of the utility. Thus, any utility that has efficient data collection, analysis and automated response systems in place would benefit immensely in reducing its costs, removing inefficiencies and enhancing its customer responsiveness manifold.

Digitisation of customer usage data, using AI to build predictive models of consumption behaviour and introducing IoT as well as automation for faster response is just one way of developing a more efficient grid at the distribution level. There are of course many other use cases for each of these technological developments which are expected to strengthen the power sector in the days to come.

How is the industry moving towards securing the grid and consumer data being stored in the cloud?

With the relentless march of digitisation and use of communication and software systems to manage customer interaction including metering, billing and collection data as well as transactional data, it is very important that the power sector entities ensure safety and security of all data and enhance cyber resilience. 

The Central Electricity Authority has also recently issued the cyber security in power sector guidelines, which comprehensively deals with the issues related to data security and management. The provisions of such guidelines when implemented fully by all stakeholders would ensure security of grid and consumer data.

What are the latest and upcoming technologies for the next generation power sector?

The next generation power sector would thrive at the intersection of a few technologies that are rapidly achieving commercial viability and scale. These include large scale information exchange systems, low cost and high throughout communication technologies, increasingly efficient renewable generation technologies, cost-effective at scale energy storage solutions and increasing adaptation of market frameworks for providing access to both consumers and suppliers. 

It would interest your readers to know that electric vehicles had been produced since the early days of automobile development in the mid nineteenth to early twentieth centuries. It was due to the high energy capacity of gasoline (greater energy per kg of mass) compared to batteries, among other reasons, which led to commercial adoption of internal combustion engine. With higher capacity batteries (cost effective at scale energy storage) and a charging infrastructure which allows for longer mileages, EVs are making a comeback!

Similarly, various renewable technologies have been tested over the years, and now with a combination of higher adoption, greater conversion efficiencies and concomitant fall in prices due to economies of scale, renewable energy generation is taking off across the world.

A similar set of convergences are also leading to rise of Digitisation – reflecting in big data, cloud computing, IoT, smart appliances including smart metering as well as Grid scale battery storage – to complement renewables and therefore provide round the clock power supply from RE; Distributed generation and microgrids and many other advances which is changing the way the power system would operate.