Leading Voices

The future energy world will be in the hands of the people

Interview with Pankaj Batra, Member(Planning) – Central Electricity Authority, India

How is the future Energy World shaping in your opinion?

The future energy world will be in the hands of the people themselves. In about 30 to 40 years, it is expected that solar power, which is the only inexhaustible source of energy in the globe, at least for the next million years or up till the ice age comes, would be supplying all the energy needs of the globe, with solar power becoming cheaper by the day. Even without radical innovations, people are finding it cheaper to generate their own electricity through roof top solar PV. At present, the only disconcerting thing for this type of self-generation, is that energy cannot be stored cheaply for use at a later stage, when the sun goes down. During the day, even when there is no Sun, diffused light can generate power through solar PV to some extent. However, with battery costs reducing at the rate of 10 % per year, battery storage is also expected to become cheaper. Even now, solar + battery, when called through bids in USA, have come down to about 40 dollars per MW hour, which, as per present foreign exchange rates, works out to about Rs. 2.50 per unit in Indian currency. In addition, lots of innovations are going on in battery technology, with various configurations and chemistry, which are definitely likely to yield positive results for reducing the cost of energy. If battery costs along with solar power become viable, then there will be no requirement of any fossil fuel or nuclear based power generation. Vehicles, which, presently, are primarily based on Internal Combustion Engines, are also expected to switch to electricity, with battery prices coming down. Old Hydro power plants, however, the life of which can be to the extent of about 30-50 years for electro mechanical equipment and about 100 years for the civil structures, can be continued for a long time, unless the water inflows to various rivers start reducing, as has started happening on account of climate change. In such a case, the utilities, as they exist now are going to face challenges, with respect to their viability.

Please share the challenges that utilities are facing these in your region?

As stated above, generation and distribution utilities in India, and indeed, globally, are facing challenges. Generation utilities are facing challenges due to two reasons, one a lack of increase in demand, due to efficiency measures of the national governments and the other, due to a substantial number of consumers switching to self-generation through renewable resources of energy. Industries are now finding it very viable to either generate power through roof top solar PVs, if they have enough roof space, given that they do not have to even own a battery due to net metering, because of which the grid acts as a battery for them. They can also set up group captive power plants based on renewable energy, which works out much cheaper than the industrial tariffs that they have to pay in most States, since industrial and commercial consumers tariffs cross subsidize the other consumers. If these cross-subisidizing consumers keep on reducing their off-take from the grid, the distribution utilities can survive, only if they raise the tariff, for the other categories of consumers, which may be difficult politically, as well as from affordability point of view. Many of the residential consumers also, even though they are subsidized, are finding it cheaper to set up roof top solar PV power plants. Generators, which have long term Power Purchase Agreements (PPAs), based on two-part tariff, i.e. capacity charge and fuel charge, are still safe from these changes, since they continue to get the capacity charge, which includes the pre fixed return on equity. The fuel charges are, of course, affected due to running at lower plant load factors, and therefore lower efficiencies. The CERC have already compensated the inter-State generating stations for this purpose and State Regulators may follow soon. However, Generators which do not have long term PPAs would be the worst affected.

As far as Distribution Utilities are concerned, they are the most affected, due to this reduced rate of demand increase, since they have tied up long term PPAs for the same to the extent of 80-90%, and are burdened with the fixed charge, even if their off take from these utilities is reduced, and beneficiary Distribution utilities of inter-State Generating Stations, also have to compensate these inter State Generating Stations with long term PPAs for their reduced efficiencies, because of the CERC regulations.

The Transmission utilities are not affected, since they have to be paid the annual transmission charges by the Distribution Utilities, which are pre-fixed, even if utilization of the Transmission system is reduced. The effect, therefore, comes again on the Distribution Utilities, since the per-unit cost of power procured would increase.

What is your vision for the future of the energy systems in your region?

My vision for the future of energy systems in India is that the policy makers, regulators and utilities would need to accept these changing realties in the method in which energy is going to be generated in the future, since all these measures have been triggered by the effects of climate change and global warming, which if not attended to, could threaten the very life in the planet. What the Transmission and Distribution utilities could in future be used for, is transmission of surplus electricity from one point to another, i.e. basically wheeling power from one area to another. It is expected that high capacity transmission corridors may become highly under-utilized in the next 30 to 40 years. Therefore, foresight of this scenario is very important for future planning of power systems. If renewable energy is used for generating electricity through large wind farms and solar PV parks, then that would be the only large sources in future which would use the transmission system to transmit their electricity to the load centres. I see a big role for integrators, which would facilitate aggregating generation and demand, and smart grid companies along with integrators, which would optimize generation, transmission and distribution systems, in their attempt for reliable and affordable supply, through better utilization of existing assets.

Empowering electricity, water, and food security

Basic necessities of life, like Air, Water, Food and Electricity has been guiding policies of all Governments and would continue to do so in future, for human survival.

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