New Delhi: Six of the nine northern states will become base load power surplus in another four years if all plants under execution are commissioned by the end of the 12th Plan Period, but peaking shortage will continue

The recent blackout in the northern power grid on 30 & 31 July highlights the dire situation on the power front in northern India. Coupled with a scanty monsoon this year, the situation only threatens to become worse if immediate steps are not taken to address the problem.

A CII report in May this year on the power situation in the North – titled Power Scenario in Northern India -- highlighted the significant gap between demand and supply in almost all the northern states. According to the report, UP had the highest quantum of deficit among the northern states. Along with UP, Haryana and J&K witnessed a rise in energy deficits, while Punjab, Rajasthan and Uttarakhand witnessed a fall for the year 2010-11 from the previous year (2009-10).

The report attempts to capture the impact that the reform process has had on the performance of the power sector in the northern region, the largest of the four geographical zones in India. It brought out some contradictions in the system which needed attention. Surprisingly, the outlook for the region appears positive in base load energy availability, with six of the states expected to become energy surplus in another four years. However, UP, J&K and Uttarakhand will continue to remain power-deficit even in 2016-17.  But there is a caveat for the power surplus scenario: if all plants under execution are commissioned by the end of the 12th Plan Period.

However, the big contradiction is that in terms of meeting peak power demand, most states will still continue to face shortage, with UP and J&K expected to have the largest deficits. Only Delhi and Rajasthan are expected to meet the peak power demand with a thin surplus margin. So, the system will lead to a situation when theoretically there could be energy surplus; but the load shedding and power rationing will continue in peak periods.

A mix of thermal and large hydro sources continued to dominate the installed capacity trends across states as on 2010-11.  However, the role of nuclear energy in the region is growing, with Rajasthan receiving the highest share of capacity addition (6.7%) as a percentage of the total in 2010-11. There is need to adopt a judicious mix of base load coal plants and nuclear plants with pumped storage hydro and decentralised quick start stop flexible gas based peaking plants along with accelerated exploitation of renewable energy such as solar & wind.

On Transmission & Distribution (T&D) losses, the report states that such losses have been falling in most states, with the state of Delhi, Chandigarh and Himachal registering the greatest fall from 43.6%, 39.06% and 38.64% in 2005-06 to 18.3%, 17.4% and 18.96% in 2010-11 respectively.  J&K is the only state to exhibit a rise in T&D losses from 45.5% in 2003-04 to 57.48% in 2010-11. Again, the aggregate technical and commercial (AT&C) losses in the state of J&K are the highest in the region at 72.7%. At the other end of the spectrum is Himachal and Chandigarh with the lowest AT&C losses of 17.42% and 17% in the region for 2010-11.  In terms of T&D density, Delhi has the highest and J&K the lowest.

Discoms ( Distribution Companies) must restructure

The report also mentions that all distribution companies in the northern states are making losses, with the sole exception of Delhi. In absolute terms, discoms in Punjab and Rajasthan make the highest losses.

Within the northern region, thermal continues to remain the dominant source of power -- with 60.4% of the total installed generation capacity in the region -- followed by hydro, contributing 29.9% of the total installed capacity, while nuclear and renewable energy are yet to make a significant mark. However, in terms of growth rates between 2009-10 and 2010-11, nuclear sources have seen the highest increase of 122%, while renewable sources have seen the greatest fall. This trend contradicts the Electricity Act 2003 mandate that aims to increase the use of renewable energy sources as a percentage of the total generation.

Among the northern states, Haryana, Rajasthan, Uttarakhand, Punjab and UP are primarily dependent on state-owned generation, while Himachal, Delhi, J&K and Chandigarh are pre-dominantly dependent on central allocations.  In terms of private sector participation, Himachal and Rajasthan have the largest IPP presence.  Of the total additional capacity created between 2005 and 2010, Uttarakhand leads with a 66% rise, while Punjab has seen just a 12% rise. The UT of Chandigarh has experienced a very marginal increase in capacity addition from 86 MW in 2005-06 to 99 MW in 2010-11.

Increased role of IPPs

One common trend across states is the increased participation by IPPs (Independent Power Producers) in power generation (with the exception of Chandigarh, Haryana and J&K). This shift is most prominent in UP, Uttarakhand, Delhi and Rajasthan, with a ten-fold increase. In addition, the private sector has also been participating in the power sector through Public-Private Partnership (PPP) route and most of the projects implemented through this route are concentrated in Haryana, UP and Uttarakhand. UP, Uttarakhand, Rajasthan and Himachal have been frontrunners in the power sector reform process.

There is a rise in private sector power generation as compared to state-owned generation in most states. In UP, state-owned generation as a percentage of the total generation came down from 56% in 2005-06 to 44.17% in 2010-11. This downtrend may be traced to the shutting down of some state-owned power plants due to technical snags.  Haryana and Himachal are the only states that have registered a significant rise in both state-owned and private generation. In J&K, state-owned installed capacity as a percentage of total generation has seen a significant rise.

On the sources of power, Delhi, Haryana, UP and Rajasthan are predominantly dependent on thermal sources, while J&K, Uttarakhand and Chandigarh continue to remain hydro dependent. Himachal -- the only exception to the rule -- has significantly diversified its fuel mix by investing heavily in renewable energy, with special emphasis on small hydro, solar and wind sources. About 45% of the total capacity additions in the state have been in the renewable energy sector.

States in the north have mostly increased capacity additions to meet their requirement. Despite these efforts, most states continue to be energy deficient. For example, states like J&K -- which have witnessed the highest growth in capacity additions -- also display very high deficits (almost 10 times from 325 MW in 2003-04 to 3,390 MW in 2010-11). Delhi is the only exception in the region, registering a significant fall in power deficits from 280 MW in 2003-04 to 77 MW in 2010-11, while Chandigarh has consistently managed to remain a power balanced state.

States’ Performance

A comparative analysis of the power situation in the northern states (on technical, financial and outlook parameters) reveals that Himachal Pradesh, Delhi and Rajasthan emerge as the best performers. In 2010-11, deficits in Himachal Pradesh were at a comparatively low level of 3.4%, thanks to the pro-activeness of the government in exploiting the state’s hydro potential and reducing T&D and AT&C losses.

Delhi has the lowest energy deficits among all the northern states at 0.3%. Peak deficits are also comparatively lower than other states. Further, Delhi has one of the best working T&D systems in the north. A remarkable improvement in all the parameters can be seen since Delhi privatised its distribution system in 2002.

Like Delhi, Rajasthan too has one of the lowest deficits -- both energy and peak deficits. The government of Rajasthan has been successful in anticipating the increase in power demand and has accordingly invested in increasing installed capacity. During the period 2005-06 to 2010-11, Rajasthan had one of the highest Compounded Annual Growth Rates (CAGRs) in terms of capacity additions, both in public as well as private sector. Rajasthan’s success in attracting private investment can be seen in the fact that the percentage of private sector in total installed capacity in the state is 16.4% -- higher than most other states. The state has also been successful in encouraging renewable energy.

A quick overview of the power sector reforms in the country shows that the history and evolution of the power sector in India has been a chequered one, marked by fragmented efforts to reduce structural deficiencies, enhance performance and strengthen institutions. The policy and legal structure that guides the power system in India today is a product of challenges perceived in the past and policy interventions that sought to overcome them.

In most northern states so far, the strategy followed to improve power availability has mainly concentrated on capacity additions, with emphasis on coal-based thermal plants. However, given the scarce coal resources in the country, a broader, more sustainable strategy needs to be adopted. Such a strategy should include supply side management, demand side management, improvement/modernisation of T&D network, load centre based flexible generation, tariff rationalisation and peaking power solution.

BLURBS:

One common trend across states is the increased participation by IPPs (Independent Power Producers) in power generation (with the exception of Chandigarh, Haryana and J&K). This shift is most prominent in UP, Uttarakhand, Delhi and Rajasthan, with a ten-fold increase. In addition, the private sector has also been participating in the power sector through Public-Private Partnership (PPP) route.

Delhi, Haryana, UP and Rajasthan are predominantly dependent on thermal sources, while J&K, Uttarakhand and Chandigarh continue to remain hydro dependent. Himachal has significantly diversified its fuel mix by investing heavily in renewable energy

In terms of meeting peak power demand, most states will still continue to face shortage, with UP and J&K expected to have the largest deficits. Only Delhi and Rajasthan are expected to meet the peak power demand with a thin surplus margin. So, the system will lead to a situation when theoretically there could be energy surplus; but the load shedding and power rationing will continue in peak periods.

There is need to adopt a judicious mix of base load coal plants and nuclear plants with pumped storage hydro and decentralised quick start stop flexible gas based peaking plants along with accelerated exploitation of renewable energy such as solar & wind.