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ENERGY CONCLAVE 2017

ENERGY CONCLAVE 2017

  Emerging Power Sector Context and Priorities for Odisha

2 February 2017: Mayfair Convention (Crystal Hall), Bhubaneswar

Background Note

Odisha has been a pioneer among the Indian states to embark on a comprehensive reform for electricity sector in the state. The primary aim of all such reforms has been towards development of the state power sector and improvement in the performance of utilities.With early reforms like vertical unbundling, corporatization and independent regulation introduced in the state of Odisha, the state brought functional focus and commercial orientation in the operation of power utilities and paved way for selective private sector participation. These reforms have also provided valuable learnings and insights to other reforming states in the country.Over the years, the Government of Odisha initiated various other schemes/programmes, like Odisha Distribution System Strengthening Project (ODSSP), State Capital Region Improvement of Power System (SCRIPS), Biju Gram Jyoti Yojana (BGJY), Odisha Dedicated Agriculture & Fishery Feeder Project (ODAFF), Biju Saharanchala Vidyutikaran Yojana (BSVY), etc. to create/strengthen the distribution network for supply of adequate and quality power to the consumers of the State.Several recent initiatives include the Odisha Renewable Energy Policy and a joint initiative of Government of India and Government of Odisha for ‘24×7 Power for All’ in Odisha. These policies aim to further enhance the satisfaction levels of consumers and improve the quality of life of people through rapid economic development of the state. As the state moves towards implementing the above agenda, there are several considerations that will need to be kept in mind. These are elaborated below across three dimensions of the power sector – viability, sustainability and modernisation. These are discussed below:

Viability

Improving of the performance of the power distribution segment has been a critical priority both of the National level as well at the state level. Specific to Odisha the following priorities emerge:

  • Loss reduction and discipline in energy accounting – A good quality and reliable data and energy accounting system is at the core of utility transformation. The process entails consumer indexing, metering (Consumer, Distribution Transformer and Feeder level), and use of reliable and automated systems for collection of accurate base line data and measurement of sales, billing, collections, and hence, AT&C losses. The AT&C losses for Odisha DISCOMs has reduced from 57% in FY 1999 to 38% in FY 2014-15, which is an overall reduction of 19%. The number of consumers during the same period increased from 13 lakh in FY 1999 to 58 lakh in FY 2015. The losses are still high compared to the all India average, which stands at 24.62% as on FY 2014-15 (Source: PFC). Further for technical loss reduction substantial investment in infrastructure would be needed. For commercial loss reduction focused power theft control program will have to be carried out for each transformer. Discoms are taking actions in this regard and have also appointed some franchisees in this regard.
  • Co-existing of grid power along with rural distribution models – Even though grid is able to reach these households, mechanisms to serve the consumers will need to be evolved. This is critical as serving the rural households may have limited commercial incentive for the distribution companies. Models that include use of solar home systems, mini and micro grids based models, innovative business models, new subsidy delivery mechanisms, etc. that will have to be assessed for co-existence along with the utility based supply. This will require a much stronger energy planning framework that looks at both urban and rural areas in a collective manner.

Sustainability

The key areas that require attention include:

  • Managing large influx of renewable energy (emerging role of Distribution System Operators (DSOs)) – Keeping in view the growth and benefits of renewable sources of energy in the world as well as other parts of the country, the Government of Odisha has formulated the “Odisha Renewable Energy Policy, 2016” covering the prospective renewable energy sources available in Odisha like Solar, Small-Hydro, Wind, Bio-Mass and Waste-to-Energy along with de-centralized applications. This policy is envisaged to achieve around 2750 MW of renewable energy in the State by 2022. With increased adoption of renewable energy, discoms will need to manage supply and demand on a more dynamic basis. This expanded role will be over and above their traditional role of operating, maintaining and developing the distribution system. This change in role will require upgradation of capabilities and revamping of the traditional Area Load Dispatch Centres (ALDCs) into more vibrant and modernised Distribution System Operators (DSOs). This will also be critical to roll out retail-level reforms in the following years.
  • Energy Efficiency in Industries: Odisha is one of the most mineral rich states in India and a hub for Iron and Steel Industries. This makes the state exposed to emissions and industrial wastes. It is, therefore, important to bring in energy efficiency practices at the industrial level. In 2008, the Government of India had introduced an innovative, market-based trading scheme called Perform Achieve Trade (PAT) which aims to improve energy efficiency in industries by trading in energy efficiency certificates. PAT cycle – I has completed and the Bureau of Energy Efficiency (BEE) has already commenced the second phase of PAT w.e.f April, 2016. While BEE has undertaken extensive outreach to disseminate PAT specific guidelines, normalization factors, and other compliance processes; still vast level of awareness is found to be lacking among all the stakeholders in Odisha. It is therefore important to promote awareness and impart better understanding of PAT mechanism and facilitate adoption of energy-efficient technologies.

Modernization

The key areas that require attention include:

  • Obligation To Serve (OTS) – Government of Odisha has embarked on the universal ‘Power for All’ programme to ensure that all citizens of the state have access to reliable electricity. The state is currently estimated to have 81.44 lakh rural households with 47% electrification as on March 2015. This leaves approximately 42 lakh households in rural area for electrification (Source: DDUGJY). In addition, the state has also been witnessing power cuts across several regions due to fall in hydro power generation and lack of affordability of utilities to procure power from other sources on account of high losses. It seems utilities have not been able to fully leverage the low prices at power exchanges to serve its customers during such scenarios. Reliability and quality of supply should therefore be brought to the forefront. In order to achieve this modern forecasting methodologies will have to be adopted corresponding to which power will have to be purchased or sold for each fifteen minute block at optimal prices. All such obligations to serve initiatives should be embedded in the utility filings, with transparent and timely disclosures with an aim to eventually reach zero load shed status.
  • Digital enablement – Digitisation is one of the most potent tools for driving accountability and efficiency in utilities. Global utilities have evolved to become more smart and agile, responding to consumer needs and imbibing technological advancements. Such developments have also led utilities to innovate and develop customer-centric products and services such as demand response solutions, advanced energy management and visualisation, mobile applications for 24 hour monitoring and control, workforce management for advanced outage detection and restoration, etc. Recognizing the importance, the state government has also set out special schemes under smart grid, covering AMI, GIS, OPGW and SCADA. The total project estimate is INR 250 crore and is expected to be covered across FY 2015-16 to FY 2017-18 (Source: Power-for-All, Odisha). Such projects around smart grid and digitization needs to be widely adopted by power utilities in Odisha.

Keeping in view the above-mentioned aspects, CII Odisha State Council is organising an “Energy Conclave 2017” on 2nd February 2017 at Mayfair Lagoon (Orchid Hall), Bhubaneswar for deliberations and finding a way forward.

Some of the discussion points for the conclave are as follows:

  1. How can electricity service levels in Odisha be improved? What kind of technical, technological, commercial and regulatory interventions are necessary?
  2. How can Distributed Renewable Energy and Grid based power supply be harmonized to meet the long-term energy and sustainability goals in the State?
  1. Will there be a challenge in grid management in Odisha if there is a proliferation of renewable energy?
  1. How can investment in infrastructure be incentivized such that it balances the interests of consumers as well as the investors?
  1. How can implementation of PAT be made effective? How can it benefit the industry?

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