Category Name - Leaders Speak26 Dec 2018Back

Smart ideas found a berth in 2018

By Dr. Praveer Sinha, CEO and MD

Smart ideas found a berth in 2018

2018 was the year when new and good ideas in the Indian power sector started to crystallise and defined the shape of things to come


By Praveer Sinha, Tata Power

26th December, 2018


As the year draws to a close, it would be safe to say that 2018 was the year when new and good ideas in the Indian power sector started to crystallise and defined the shape of things to come.

The progress we made in household electrification is perhaps the headline for the year. According to the government data, the Saubhagya scheme (Pradhan Mantri Sahaj Bijli Har Ghar Yojana) has already covered 21 crore households or around 97% of the target set at the start of the scheme a little over a year ago. Electricity is not a luxury but an essential part of everyday life.When we are talking about digital divide and financial inclusion or even about deployment of Internet of Things to smarten up our homes, we cannot afford to have a large chunk of our population, mainly in rural parts, living without electricity. Achieving 100% electrification of all households (by March 2019) in the country will be one of our big achievements as a country.

With the massive expansion in power connections, peak demand in October 2018 breached the 180 GW (giga watt) mark or around 9.8% higher than the same period in 2017. This is a new record in the Indian power sector. Further, the increase in industrial demand, along with a considerable reduction in transmission and distribution (T&D) losses also contributed in expanding the overall demand.As a result of this, private power sector producers also stood a chance to gain with better utilisation of their installed generating capacities.

During the year, there was a considerable progress made in the area of renewable energy. Solar rooftops expanded showing some promising growth, though nowhere close to its real potential. Upto the 12 months leading to September this year, roughly 1,550 MW of solar rooftops were added leading to an expansion by around 75%. While a good part of this demand came from the industrial and commercial users (70%), there is a strong push that needs to be made for a bigger share of this demand to come from residential users (9%).

Renewables also got a further push with new policies in the electric mobility sector, announced by the centre and a few states like Delhi (NCR) for promoting electric vehicles (EV).The government’s target of increasing the EVs contribution to 15% of all new vehicle sales in the next five years will open up new opportunities and challenges for Indian utilities.

Utilities also saw fresh opportunities emerging from some old challenges like T&D losses and inefficient utilisation.Today, there are a lot of retail solutions available for deploying IoT in the power sector and they seem to look very promising for consumers.Digital technology has started to make significant difference in demand side management with many ready-to-deploy solutions available that can offer better control to consumers over their energy consumption. Even, energy service companies (ESCOs) are going to play a vital role in improving energy efficiency by acting as a link between technology and consumers.While this new line of business is quite popular in the West with large players like Duke Energy, NextEra Energy, Enel, EDF etc., it has started gaining momentum in India with some existing players setting their foot into this business.

The discoms (a big part of the utilities business) are leveraging on the same digital technology to reduce their T&D losses, which has seen consistent drop over the last year or so to around 22% now. Micro-grids, one of the areas that is witnessing huge interest, promises immense potential for improving energy access to the areas either underserved or unserved.Industry estimates suggest that India’s micro-grid capacity is estimated to reach 90 MW by 2019 with an investment of about $250 million.


Considering the encouraging signs of long-term and consistent parity between conventional and new sources of energy at a unit cost level, the cleaner energy sources- wind and solar are going to witness a wider adoption as a preferred source at the consumers level. The government has also recently revised their target for the renewable capacity addition from 175 GW to 227 GW by 2022 (when India turns 75).

The fundamental shifts in the power sector will gain momentum in 2019 and the traditional utility business is expected to evolve from power supply to energy service-based revenue streams.What we are seeing now are structural changes in terms of demand and supply, consumption patterns, deployment of digital technology and the emergence of cleaner energy sources as a viable and reliable option. We believe that the primary mover here is the consumer, while it is being supported or met by government policies and utilities. We are also seeing a new breed of consumers -the Reflex Generation who are raising their expectations from services providers. These are the consumers motivated by non-economic factors like sustainability from an environment point of view.This trend will only expand in the coming years and utilities will need to evolve alongside and accommodate these emerging trends in their business plans.

Over the last few years, Ultra Mega Power Projects (UMPPs) have become a challenge for utilities due to external factors like rising coal prices and insufficient tariff to remain viable.The recent government and court interventions, both from coal supplies point of view and the proposition of a revised power purchase agreement, offer some hope for overcoming this big challenge.

In other words, the power industry in the coming year is expected to witness a lot of transformation in their traditional models from generation to behind-the-meter which will definitely unfold new opportunities for the utilities to explore.


Article Source: – 27th December, 2018