All of us consumers get our electricity from our Discoms (Distribution Companies), from whom we expect round-the-clock reliable power supply. Some Discoms are meeting this test, while many others have been making progress, some more and others less. They have been doing this primarily by entering into long-term contracts for buying power from thermal power projects. The key challenge for Discoms has been their losses; restoring financial health by achieving efficiency gains and getting cost-reflective tariffs.
Disruptive transitions are gathering momentum. These demand that Discoms reengineer themselves. With the rising share of cheap solar power, the Discoms needed to arrange for storage capacities to ensure that there was no curtailment in the generation of solar power to maintain grid stability. They did not do this. Curtailment is the loss of free electricity from solar panels. Over 8.1 gigawatt hours of curtailment of solar power has taken place this year; an avoidable loss of over 20 billion rupees. This will keep rising unless Discoms wake up and begin inviting bids for storage to ensure that there is no more curtailment of solar power.
In the recent bid for RTC (Round the Clock) supply of renewable energy with storage, the successful bidder offered the price of Rs 5.25 per unit. This is lower than the price in the market for new thermal power. This price would not rise for 25 years, and adjusting for inflation, the real rate becomes around Rs 3.7 per unit. This was earlier inconceivable. Discoms should therefore stop contracting for new thermal power as electricity from them is more expensive. The Discoms and the State Electricity Commissions need to act according to the new reality of prices in the market. Our right to use our cheap coal becomes irrelevant when a cheaper option for supplying electricity is available.
Apprehensions and misleading arguments usually emerge in favour of the status quo and against a fundamental transformation. There are some obvious ones. Do we have the solar power potential to meet all additional demand? Yes, we do. The government has raised its estimate to over 3,000 GW, whereas our total installed capacity is now reaching 600 GW. A TERI estimate has placed the potential at over 10,000 GW. Is it at all feasible to create all the storage we need? Yes, it is. Battery storage prices have been declining. They take about a year to install. Development of Pump Storage has begun. The potential on rivers is over 100GW. For off-river sites, the potential is likely to be many times more. This should be estimated and sites identified using satellite imagery. The potential for CSP (Concentrated Solar Thermal) with storage is of a similar order as the solar potential for large solar projects, as both need solar radiation.
Then there is the concern about days when it is cloudy and solar generation falls. We have an integrated all-India grid and therefore a shortfall in one area can be made up by drawing power from another. Extra capacity as a cushion would be needed as the share of solar power rises to, say, over 50% from the present level of over 10%. Further, the variation in demand within a day and across seasons is increasing. A day’s variation can be handled by creating additional storage. The optimal solution for seasonal variation is to have thermal power capacity that generates only in the months of higher demand for air conditioning in the summer. These plants can, going forward, be designed and built to run on renewable bioenergy: biogas from cow dung, biofuel from molasses, and briquettes from crop residues. These options would become cheaper with volume and scale after the initial pilot plants begin operating. Biowaste is, after all, a free renewable source of energy. Discoms need to invite bids for the supply of electricity from plants using biowaste to provide peaking power. The cost of collecting and preparing biowaste is low, but the cost of transporting it is high. Hence, small, decentralised plants may turn out to be cheaper. Prices tend to decline in competitive markets. This market has to be created by Discoms. To procure peaking power efficiently Discoms need to continuously assess future demand, ideally on an hourly basis for every month, and invite bids for giving reliable supply. Time-of-day prices for the purchase of peaking power for Discoms would emerge.
Time-of-day pricing for supply to consumers, reflecting actual costs of generation and storage, would be the next logical step. This would enable consumers to reduce their electricity bills by shifting some of their demand to the time when prices are low. In this digital age, with smart meters, this is becoming easier by the day. Freezers, refrigerators and air conditioners can, for instance, let temperatures rise by two degrees when prices are high and lower them by two degrees when prices are low without this making any difference at all. Geysers and washing machines can be programmed to run when prices are the lowest.
In this new emerging world, business as usual would not do for the Discoms. They need to change with the times, lest the quality of their supply declines and we, consumers, have to pay more than we should.
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