Distributed generation may help in offering power at lower tariff

India’s rapidly emerging economy has led to the rise in per capita consumption of energy, which has resulted in increasing demand.

There is a severe imbalance between demand and supply of power in the country, creating a risk of energy crisis in the future. Even today, 40 per cent of our households are denied electricity, and the other 60 per cent do not have reliable access to electricity.

As of now, India suffers a 10 per cent gap in average demand and supply over the year and approximately 15 per cent on peak load demand. India has a grid penetration of only 65 per cent and even many grid connected urban areas face acute power shortage. Electricity supplied is also very irregular and unreliable. Today the need of the hour is sustainable power supply which will help address the need for increased demand.

For a large and dispersed country like India, with its unique geography and current state of economy, innovative means of producing energy needs to be looked at to reduce its dependence on oil and coal as a primary source of energy. The Gokak committee had recommended the need for decentralised generation to meet the energy demand.

Decentralised distributed generation can be from conventional or renewable sources where grid connectivity is either not feasible or not cost effective. Distributed generation technologies include, turbines, micro turbines, wind turbines, biomass and gasification of biomass, solar photovoltaic and hybrid systems. However, most of the decentralised plants are based on wind power, hydel power and biomass and biomass gasification.

In order to cater to the requirement of group of consumers in a well-defined geographical region, distributed power generation also offers the possibility of creating micro-grids (within the utility’s overall framework). So far as the 18,000 villages in remote and inaccessible areas are concerned, the extension of grid power is not going to be economical. Decentralised plants based on renewable energy source are the appropriate solution for rural India.

Approximately one lakh of India’s 6 lakh inhabited rural villages are off the country’s electricity grid. Of these 100,000 off-grid villages, 20,000 are located in remote areas that cannot be reached by extending the traditional grid. The Electricity Act, 2003 has given a thrust to distributed generation particularly in the context of rural electrification. The Act, in addition to grid extension as a model for rural electrification, specifies distributed generation and supply through stand-alone conventional and renewableenergy systems.

It also includes the distribution of electricity through NGOs, local government units, community groups, and franchisees of distribution utility as alternate modes for rural electrification. Further, the Act indicates that persons setting up new projects and/or extendingexisting infrastructure for composite schemes of generation and distribution are exempt from licensing and licensee related obligations.

Advantages

The distributed renewable energy sources have many advantages as compared to the present grid based system of large conventional power plants:

*Using DDG will reduce the need for fossil fuel based power. DDG will greatly reduce the effective demand on the grid based power supply system, thus reducing the T&D losses.

*It will help the government attain its target of rural electrification due to shorter gestation period of individual projects and will lead to increase in rural employment opportunities, and hence assists in minimising urban migration.

* DDG’s based on renewables will have minimal impact on the environment. Requirement of resources such as land and water is also miniscule as compared to big power plants.It will provide a sustainable and environmental friendly energy supply model and will reduce the GHG emissions and other pollutants.

* DDGs will avoid costs of recurring fuel expenditure and of peak load power stations
But there are challenges galore. One of the major difficulties is high capital costs per KW installed power compared to large central plants. The bi-directional power flows and complex relative power management can lead to voltage fluctuation. Short circuits and overloads are supplied by multiple sources, each independently not detecting the irregularity.

Inherent intermittent nature of renewable energy sources leading to relatively lower capacity utilization factors; Users in rural areas need to be adequately mobilized for payment of users charges- NGOs and Local Bodies can be involved. Establishment of sustainable fuel linkages - developing business model for Fuel Services Agreements. Lack of operation and management services providers -- Need to develop sustainable revenue/ business models.

In the long run, distributed generation will help consumers to get power at lower tariff as power will be available at lower per unit cost. More employment opportunities both at plant management level and in the manufacturing sector for related machinery will improve living standards of the people. Availability of power at low cost will attract more investments, which would be more evenly distributed throughout the country rather than being limited to cities alone.

Going forward, concerted efforts by the Union and state governments, financial institutions, academic and research institutes, non-governmental organizations, as well as multilateral and bilateral agencies is required. A distributed generation matrix for India is recommended for lighting the lives of those for whom lighting a bulb still remains a distant dream!

(The writer is managing director, Tata Power)