With day temperatures shooting past 42 degrees, power supply managers and consumers are anxious about interruptions in supply. As India develops, the use of air conditioners at places of work and in homes is becoming increasingly normal in urban areas.
Air conditioners are electricity guzzlers. The consequence of increased usage of ACs is that the growth rate of summer peak demand is high. It is higher than the growth rate of overall electricity demand. Peak demand has already crossed a record 256 GW and could go up to 270 GW. Peak demand has crossed a record 270 GW up by 30 GW from the March peak of around 238 GW.
How does a distribution company (discom) efficiently — and at the least cost — ensure reliable supply? Its first challenge is to increase the carrying capacity of its distribution network to deliver more electricity to run more air conditioners. This needs investment on a continuing basis to keep carrying capacity ahead of demand. But such investment does not happen in most states. Discoms can undertake these only if they meet the costs from their revenues, which come from the tariffs set by the State Electricity Regulatory Commissions (SERCs). For historical reasons, the SERCs have tended to give affordability greater priority than reliability.
India has changed. Those who are using air conditioners would prefer to pay what it takes to get reliable supply rather than face disruptions and rely on diesel generators for back up. Free, nearly free, or subsidised electricity for low-income households is the norm across the country. So, the regulators need to now ensure that prudent expenditure for augmenting carrying capacity takes place. Consumer groups as well as the political class should demand this.
Then, there is the question of procuring to meet the rising summer peak power demand in a reliable manner and at the lowest cost. The traditional practice has been to anticipate electricity demand and enter into long-term power purchase agreements (PPAs) with thermal power plants. Given the demand curve is not flat, the capacity utilisation of the thermal plant is lower than the contracted capacity. The increasing share of renewable solar power is creating challenges.
Renewables have rightfully been given “must despatch” status as there is no fuel cost and the generation is free. As thermal plants cannot bring their generation below a minimum level, solar generation has to be curtailed to maintain grid stability. This becomes necessary when demand is lower than the minimum technically feasible thermal generation and total solar power supply.
Storage of electricity is the solution. Storage technologies have matured and become cost effective. All forms of storage — battery, pump storage and concentrated solar thermal — need to be developed simultaneously and as fast as possible. Solar with storage is now cheaper than new thermal.
However, these storage technologies provide only daily storage. The rising seasonal peak demand now needs generation only in the months of peak demand.
A beginning was made by using the stranded generation assets of gas-based plants for meeting peak demand. These assets became stranded as the electricity produced from imported gas was far too expensive in comparison to thermal power from domestic coal. In the coming years, however, these gas-based plants will not suffice.
What would be the best way to create generating capacities that can be used only for a few months to meet seasonal demand peaks? One unorthodox idea would kill two birds with one stone. Buy the rice crop stubble of North India at a remunerative price and then give these to private entrepreneurs to convert these into briquettes/pellets in small dispersed locations near the purchase points. This would keep transport and processing costs to the minimum. These can be used in lieu of coal for generating thermal power. Small plants can be designed for generation from briquettes. These could be run for the months when power demand peaks. The cost of this power would be lower than that generated from imported gas. The air pollution from the burning of crop residue in the fields would end as well.
Ajay Shankar is distinguished fellow, The Energy and Resources Institute (TERI), and author of Rising Ambition-Carving New Pathways-India’s Energy Transition. The views expressed are personal
