Forecasting electricity demand more realistically

Recently the 18th Electric Power Survey Committee (EPSC) was set up under the leadership of the Central Electricity Authority (CEA) to deliberate and project electricity demand for the country for the next 10 years. Though an accurate load forecasting in a continuously changing economy as India is a very difficult task, the EPSC has the onerous responsibility to make the forecast as realistic as possible.

The major concern with a high demand projection is that all the planning agencies of the Union and state governments are likely to proceed with gusto to achieve that generation capacity target without much analysis of the prevailing conditions.

The big question is: whether the country can afford such a huge additional demand, even though it may not contribute to economic development or may not lead to true welfare of the people. The social, economic and environmental impact of such huge addition to the installed capacity will be enormous, and can defeat the very purpose of high GDP growth.

Hence, there is the inevitability of limiting demand which would keep the corresponding total installed power capacity within manageable limits.

Additionally, the increasing contribution of the services sector (such as IT and BT) to the growth in our economy as compared to the decreasing contribution of industries and agriculture has not been factored in properly.

Since the services sector consumes less electricity as compared to industries and agriculture, the total demand for electricity would be less than that in the past. This issue has been sadly omitted from many demand projection exercises.

In view of the huge reliance placed by various planning agencies on EPSC’s power demand projection, a crucial responsibility lies with the 18th EPSC to make all efforts to take an objective view of social and environmental implications of large capacity addition as a consequence of over-projection of demand.

Electricity demand projection has huge relevance to our resource constrained and densely populated country because on such a premise a large number of power projects based on conventional technology are being proposed/implemented without due diligence to the suitability of the technology used or the need for such power plants.

Since many agencies are undertaking demand projection exercises, it is a disturbing trend that no single agency seems to be making any concerted effort to analyse how such a demand can be met.

While the Integrated Energy Policy (IEP) was supposed to have undertaken such an effort, it has done so mostly from the technical, financial and logistical perspectives while ignoring social and environmental concerns. Without such a holistic approach, the IEP can be seen as not having fulfiled its obligations.

The issue here is that with the liberalisation of the power sector there is no single agency which is considering what costs the country will have to pay for setting up large power plants.

The state governments are approving setting up a large number of coal power plants in Orissa, Andhra Pradesh, Tamil Nadu, Karnataka, Maharastra, Madhya Pradesh and Chattisgarh without any objective simulation studies of the needs of the states or the regional power grids. Karnataka and Kerala, which have no fossil fuel reserves and which are already water stressed, are also on an overdrive to set up coal power plants.

Costs vs tariff

The costs that these power plants entail are not being built into the project costs. Consequently, they are not being fully reflected in the tariff. Such a reflection in the power tariff over the years would have resulted in much lower demand that it is at present being projected.

The agenda for the 18th EPSC has not indicated how it will take the following factors into objective consideration while projecting demand: (i) commitment to the international community to reduce the energy intensity of GDP growth by 20-25 per cent by 2020; (ii) impact of various measures under the National Action Plan on Climate Change, especially the solar mission and National Mission for Enhanced Energy Efficiency; and (iii) how growing international pressure to reduce fossil fuel burning will impact our power capacity target.

There is an added responsibility on the EPSC to strongly recommend various measures on demand side management so that the legitimate requirement of all sections of the society is met on an equitable basis.

There can be no escaping the fact that the power sector’s efficiency must improve by a large measure. If adequate emphasis is given to this aspect, the effective demand at the bus-bars of power plants connected to the integrated network can be reduced by a considerable margin — by as much as 25-40 per cent, according to some estimates.

There is no guarantee that huge increase in the installed capacity alone will lead to satisfactory electricity supply. Despite a 110-time increase in the installed capacity since 1948, and despite the fact that per capita consumption in urban areas has increased manifold during the last few decades, more than 40 per cent households do not have access to electricity even after 63 years of Independence.

A substantial portion of the additional installed capacity in successive plans has gone to meet the unabated demand of the urban population, while the rural populations are forced to make sacrifices when power plants are set up. This is giving rise to disharmony among people as witnessed by the strong opposition to large-size power plants.

The huge scope available to reduce the effective demand on the grid by widespread use of distributed-type renewable energy sources such as roof top solar/wind turbines, community based bio-mass power plants, isolated micro/mini hydel plants must be objectively considered.