The Indian electricity grid has been able to maintain robust and reliable operations despite the fall in power demand due to the outbreak of Covid-19 and the subsequent lockdown. While thermal power generation has been greatly impacted in the current circumstances, with flexibility of operations and a vibrant power market, reliable and quality power supply could be maintained. At a recent conference, S.K. Soonee, adviser, Power System Operation Corporation Limited (POSOCO), shared the lessons for the Indian power sector learnt from the Covid-19 pandemic, and the key challenges and opportunity areas in the sector going forward. Excerpts…
Lessons for the power sector from the Covid-19 pandemic
There are lots of lessons for the Indian power sector from the Covid-19 pandemic. The electric grids have remained secure and safe everywhere in the world and the credit for this goes to the years of work that have gone into making the system more resilient. The situation is a test for us in a number of ways. Although electricity demand fell by 25-30 per cent, the value of electricity went up. The last load going through the ventilator is considered the most precious unit. Literally, electricity is going through the ventilator and we cannot afford any interruptions.
Initially, electricity demand fell by 25-30 per cent, but it has gradually recovered and is lagging by only 5 per cent. The impact has not been uniform throughout the country. Some states did not witness a significant fall in demand. In fact, states such as Uttar Pradesh and Bihar witnessed an increase in demand. As per Prayas (Energy Group), the residential load increased by 25-30 per cent.
Overall, the load mix and the shape of the load curve are changing. The behavioural aspect is really playing out, and the load curve has shifted towards the right. Therefore, all past knowledge needs to be revisited, and the standard formula of load forecasting and extrapolating past experiences will not work now.
With Covid-19, the load factor has fallen very fast. The load factor is important for capacity utilisation and planning. The PLF has fallen to the sub-50 per cent level in the past month. The double contingencies of cyclones Amphan and Nisarga have added to the challenges.
In the generation segment, Covid has primarily impacted thermal power generation. Wind and solar power plants continued operations because of their must-run status and zero marginal costs. Thermal power generation has taken a hit, especially costly thermal power plants. This could be managed because of our large and robust grid. Now, there is flexibility, any state can buy from anywhere across the country and the average price of power at the power exchanges has gone down.
The need for reliability and resilience has gone up. Globally, everybody is realising that not only adequacy, but reliability and resilience are also equally valuable. We have adequacy in our country, so now we have to go for reliability. Regarding backups, although we have the concept of n-1, n-1-1 and n-2 for critical corridors, as well as backup of control centres, that is not enough. Another concern is that if anything inside the control room goes wrong then the entire control room will be shut down. Therefore, internationally, people are thinking of interim control centres.
International experience suggests that construction activity has slowed down, and its impact will be seen in some time. Further, there are issues in the movement of spares. Operations and maintenance (O&M), which requires a lot of manpower, is also stressed. Therefore, the use of robotics across the power value chain is being discussed. Furthermore, the culture of teleworking is emerging and people have quickly adjusted to it. However, cybersecurity threats have increased. With a large workforce now working from home, the chances of finding cracks is easier. Therefore, more redundancy in communication is required.
We expect the load to increase, but not necessarily industrial load. Domestic load will increase and change its characteristics as more gadgets get connected. Some countries are also expecting that data centre loads will increase, and more data centres will come up.
Next steps in the evolution of the Indian power system
The past experience of load forecasting has to be revisited both in terms of the shape of the load curve and the load growth rate. India has to take load forecasting more seriously. For decades, there were chronic shortages, and there was a tendency to overproject as the projection was never tested. However, now load forecasting has to be done more frequently and in a more granular manner. Also, every state must not only do peak load and energy planning, but also plan the entire load duration curve and visit it frequently. Besides, portfolio balancing is the key as far as financial viability is concerned. The idea of only long-term PPAs would not be correct, particularly now that there are many more market products.
Another area of concern is the power distribution segment. There is need for a lot of investment in the segment and since people will now be working from home they would need electricity. There is also a need for change in governance structures. Besides, the intra-state transmission network needs to be augmented. With the power demand going down and a much more vibrant power market emerging, competition will be fiercer. Every 15 minutes, prices are getting discovered. Moreover, prices are coming down. This means that many plants will remain closed for a longer duration and inefficient plants will have to retire. Further, the upstream expansion of the cross-border network must be given priority and the government is doing so. The concept of One Sun One World One Grid is being discussed. We should build connectivity with the neighbours so that power plants can be constructed optimally in the region. The grid code was designed when there was power shortage, no renewable energy and no power market. Now, the entire grid code will have to be changed. There is already an expert committee for the same and very extensive discussions have taken place. The report will be released soon and a new grid code will be introduced in the country.
Optimal energy mix
Regarding the optimal energy mix, particularly with decarbonisation and renewable energy penetration, there is an excellent report by the Central Electricity Authority on optimal energy mix. Among other things, it suggests that the PLF would be around 60 per cent in the future. We are unlikely to see PLFs returning to their historical levels. Another important aspect pertains to energy storage, not just the quantum but also the kind of energy storage required. Meanwhile, with a focus on the use of gas, better utilisation is expected.
Although there are many challenges, the financial viability of the sector is one of the biggest challenges, and making the distribution segment financially viable is the solution. We also need to move away from the capex-oriented mentality and see how existing assets can be better utilised. Some assets that are inefficient and older can be retired if required. There are two choices: either build a generation plant, or set up a transmission network and draw power from elsewhere. Therefore, there is always a competition between the transmission and generation segments.
As far as opportunities for vendors are concerned, a lot of demand is expected to come up for retrofitting, uprating and upgrading of networks including the replacement of conductors to better utilise the existing right of way, and change from air-insulated switchgear to gas-insulated switchgear substations, among other things. Some demand will also be created by incremental improvements in the transmission network, particularly at the intra-state level.
Going forward, in order to maintain a robust and stable grid, there is need for a greater focus on load forecasting. The projections need to be precise and granular in nature. Besides, strengthening of the distribution segment and expansion of the intra-state transmission network are required for the overall well-being of the power sector.