Towards a sustainable power policy in Karnataka

Introduction

Electricity being a crucial part of fundamental infrastructure of the modern society, the importance of an efficient, reliable and innovative power sector requires no special emphasis for the sustainable development of all sections of our society.  In order to make the power sector adoptable to the changing times, an objective review of its past performance has to be carried out, future requirements have to be recognized and suitable policy decisions have to be developed and implemented. A paradigm shift is needed in the way we look at the overall needs of the society.

For Karnataka’s power sector it has been a case of many firsts and a brief surplus, but mostly crises of power cuts.  The continuous growth in the demand for electricity has resulted in multi dimensional crises for the state: economic slowdown, huge letdown for those who depend on it, fast depletion of ground water table, environmental concerns etc.

Whereas the recent philosophy all over the world has been to maximize the efficiency of operation of the existing electricity infrastructure, Karnataka continues to think that addition of generating capacity will solve the problem even though this policy has failed since many decades. The recent report of Inter Governmental Panel on Climate Change (IPCC) has provided enough indications that such a policy is not suitable for a sustainable lifestyle.  Hence there is a need for thorough review of the power sector in the future.

Recent past history

The state of Karnataka can proudly be considered a pioneer in the development of many areas of Electricity not only in India but also many parts of Asia.  The decade of 1970s was a strange mix of surplus and heavy deficit.  Whereas, there was huge surplus of electricity in early 70s, ever since 1973 Karnataka has been facing power shortage continuously.  While, the state is seeking massive private investment in manufacturing and services sector, the lack of adequate infrastructure, including electricity, is being quoted by the private investors and financial institutions as the main hurdle in such an investment.

Starting from a meager generating capacity of 720 KW at Shivanasamudram in 1902, its own generating capacity has increased to 11,384  MW in 2010.

Table 1: Available power capacity in Karnataka as on 31.8.2010 (MW)

(Source: CEA website)

 Some of the other salient features of the Karnataka power sector are:

• Per capita electricity consumption has increased from about 148 kWH/person/annum in 1980-81 to about 600 kWH/person/annum at present.
• Easy access to electricity for agriculture since mid 70s has been attributed to be one of the main reasons for self sufficiency in food production even in times of drought like situations.
• For the same reason there has been a steep growth in industries also.
• The access to electricity has also been associated with the improved health and literacy.
• However, except for a short duration in early 1970s, there has been continuous shortage of electricity with a 100% cut for industries for brief periods during 1980s.

Power Supply Scenario in the state

Since 80s, there has been an addition of more than 5,300 MW of generating capacity within the state and an increase of more than 1,200 MW of Karnataka’s share in Central Sector Power generation.  But the load growth, due to the onset of industrialization, pumped irrigation method and All Electric Homes, has been more than the additional availability of power in Karnataka since 1973.

Each year the demand and supply situation is generally manageable during the monsoon months, but is resulting in chaotic scenes during summer months. Since 1970s it has been a story of shortages, power cuts, scheduled and unscheduled load shedding, refusal of power supply connections to some category of consumers, protests from rural consumers, reduction in agricultural and industrial output, threat of moving industries to other states etc.

Table 2 : Electricity Demand, supply and shortage in Karnataka:

(April 2010- July 2010)

(Source: CEA Website)

 The composition of load in the state between domestic, agricultural, industrial and commercial are generally as indicated in the table 3 for the year 2004-05.  Agriculture represents approximately 37% of the total energy sold.  In recent years while the share of the industrial load is known to be coming down in recent years, that of agriculture, domestic and commercial is increasing.

Table 3: Consumer profile in Karnataka (For the year 2004-05)

(Source: KERC Tariff order 2005)

Table 4: Net power availability in Karnataka  (MW)

(Source: CEA website as on  1.10.2010: excludes RE Sources)

 Table 5: Growth of Installed Power Generating Capacity in Karnataka

(Approximate figures in some years)

 (Reference: “Belakaayitu Karnataka’  by Dr. Gajanana Sharma)

 Table 6: Available Power capacity (MW) in Karnataka ason 31.8.2010

(Source: CEA Website)

 Between 1999 – 2009 the total energy consumption in the state went beyond  95%;  per capita consumption  beyond 76%

but about 2,500 villages remain unelectrified;  huge power cuts throughout the year reported along with poor quality of supply.  Multiple crises are continuing.

 Year 2009

Per capita consumption in state = 720 Units

per capita consumption in Bangalore  = 2,674 Units

But per capita consumption in villages  = about 200 Units

 Load Growth and Generation Potential

 The load growth forecast for Karnataka is expected to be a CAGR figure of about 5% for the next ten years.

 Table 7: Load forecast for Karnataka

(Source: 16^th Annual Power Survey, CEA)   

•  Hydro: Against assessed potential of 6,602 MW (almost all of which is in Western Ghats), 3,600 MW has been utilized so far. The rest of the hydro potential will be difficult to harness due to huge impact on the environment and stiff opposition from the public.
• Fossil Fuels: No known reserves in Karnataka;
• To establish  power stations based on coal, gas or diesel is fraught with uncertainty of fuels;
• Kaiga Nuclear Power plant is in operation (3* 210 MWe); difficulty in getting adequate supply of Uranium;

 Constraints in ensuring the security of electricity supply

Some of the major constraints in bridging the gap between supply and demand in the future could be:

• Planning Commission has projected that the domestic sources of fossil fuels identified can last not more than few decades;
• Conventional technology electricity is heavily subsidised, and the negative environmental impacts of its production are not objectively reflected in the cost to end-users;
• The electricity supply companies have been running under loss for very many years; on an average about 35% of the cost of supply is not recovered.
• The untargeted and unscientifically based subsidies will continue to thwart all improvement efforts.
• The inefficiency in usage in all sectors including agriculture, industry& commerce, domestic etc, has resulted in artificial shortages;
• Huge AT&C losses, and the wastage in utilization will force us to plan for about 40% more installed capacity than we really require;
• The actual T&D loss for FY 09-10 was reported as 25%;
• In view of the huge inefficiency prevailing in the existing infrastructure, there has been large scale opposition to every power plant based on conventional technology sources.
• There has been popular opposition to dam based hydro stations in Western Ghats or coal fired thermal power stations in coastal areas.

Efficiency of the electricity industry

The efficiency of the electricity industry in the state has left a lot more to be desired.

• Aggregate Technical & Commercial losses of the electricity network are about 30%

• IP sets are known to consume about 40 to 45% more energy than that is really required.
• Only about 25 % of IP sets are reported to be metered.
• A large no. of domestic, commercial and Street Light installations have incandescent lamps, which are highly inefficient;
• A sizeable percentage of motors, pumps, welding sets etc. are of low efficiency;
• The cycle efficiency of coal conversion to electricity is only about 31%, and can be increased to only about 39%; but the state plans to construct many coal power plants;
• The state is known to be incurring annual loss of about Rs. 2,000 crores because of the inefficiency in the sector.

Impact of inefficient electricity sector on industries & commerce

The direct result of the inefficiency of the electricity industry is the crippling power cuts every year with huge impact on all sections of the society.  As indicated in table 4, whereas the gross power availability in the state was about 9,000 MW in 2010, the net power availability after accounting for auxiliary consumption and unplanned outages should have been about 8,100 MW. But the maximum demand the state could meet was only 6,600 MW.

This indicates the sub-optimal use of the existing capacity, which if used well at the international best practice levels, will be enough to meet not only the peak demand but also the annual energy.

• This inefficiency in managing the existing capacity in the state is the prime reason for the power cuts each year.
• IP sets were supplied about 37% of the total energy in the state at very low rate OR almost free of charges;
• Industries, which were supplied with about 25% of the total energy sold in the state, paid @ about 14 times that of the IP set consumers.
• Commercial consumers, who were supplied with about 4% of the total energy, paid about 3 times that of the domestic consumers, who consumed about 9% of the total energy.
• Whereas the contribution by all segments of the economy is important, some have been burdened more than the others; this has resulted in sub-optimal utilization/ distribution of state’s resources.

Environmental and social impacts

The societal impact of inefficiency in electricity industry is huge.  Unless managed responsibly, the electricity industry has the potential to be the biggest polluter of our environment.  It will also lead to fast depletion of natural resources like forests, water resources, coal, diesel, cement, steel etc.

The inefficiency of the electricity industry has forced the authorities to opt for more of inefficient coal fired stations in Karnataka, even though there are no known reserves of fossil fuels in the state.

• Huge amount of high ash content domestic coal is being burnt to produce electricity at low level of efficiency; resulting in the fast depletion of fossil fuels;
• Increased emission of Green House Gases(GHGs); potential for brown clouds, and acid rains;
• The environmental scientists are seriously concerned that large size coal fired stations like the one proposed at many places in North Krnataka including the Bijapur district (4,000 MW), and the one at Nandikur in Udupi district.
• More and more forest/agricultural lands are being acquired for this purpose;
• Large quantity of fresh water is required for the coal fired power stations; additional stress on fresh water resources of Karnataka, which is considered the driest state in the country; result will be acute water scarcity in the affected areas.
• Bio-diversity rich Western Ghats have already lost huge areas of thick forests due to a number of hydro-electric projects on river Sharavathy, Kali, Varahi etc.
• Free power or very low tariff power to agricultural sector has resulted in highly wasteful exploitation of fresh water resulting in fast depletion of surface and ground water. Unsustainable level of ground water exploitation will result in water salinity.
• The inefficiency/ unreliability of grid quality power has also resulted in mushrooming up of a large number of diesel pump sets for agricultural/ commercial/ industrial uses.  These are known to be very inefficient and highly polluting.

What our society is doing at present is to supply inefficiently derived electrical energy from limited conventional sources at subsidized rates for highly inefficient and /wasteful end uses, for which the real subsidy cost will be debited to the account of future generations.

Road ahead to meet the electricity requirements

Without effective and urgent measures to eliminate the need for power cuts the contribution of the industries, commerce and agriculture to the state may deteriorate steeply; the viability of some of them may even be threatened.  As per Planning Commission (integrated energy policy document): “India’s conventional energy reserves are limited and we must develop all available and economic alternatives. … Clearly over the next 25 years energy efficiency and conservation are the most important virtual energy supply sources that India possesses.” Planning Commission also estimates that CO2 generated from energy use can be reduced by 35% through effective deployment of efficiency, DSM measures and renewables. Planning Commission’s main action recommendation for energy security is: “… relentlessly pursue energy efficiency and energy conservation as the most important virtual source of domestic energy”.

Some urgent and suitable measures should be:

• Huge emphasis on all-round efficiency improvement and energy conservation measures.
• Effective Demand Side Management (DSM).
• Widespread use of new & renewable energy sources.
• Integrated Resource Management Planning with a holistic approach to the society’s overall needs.
• Strict adherence to commercial viability of every power project, when viewed with objective analysis of various societal costs.
• All-round innovativeness, accountability and professionalism.
• Suitable regulatory measures, tariff policies and effective public participation.
• Adoption of international best practices.

Efficiency improvement and energy conservation measures

Whereas the need for high overall efficiency of the industry has been appreciated and implemented in the developed countries, the same has not been appreciated to the desired extent generally in our country and particularly in our state.  Some of the efficiency improvement measures are:

• International norm for T&D losses is less than 10%; MoP is targeting 15%. If we could reduce the T&D losses to 10%, it will release about 15% of the total energy / power available for economic and productive use; this hidden energy can be obtained at a cost much less than that of the additional generation capacity;
• IP sets are known to consume about 40 to 45% more energy than that is really required; wastage can be reduced to less than 10% by spending Rs. 2,000 to 4,000 per IP set.
• A quick estimate indicates that the loss reduction techniques can reduce the existing loss level in IP sets with a savings of about 5,000 MU of energy each year and an avoided new generation capacity of about 1,500 MW in Karnataka alone.
• Both Planning Commission and the National Productivity Council believe that upto 25% of the energy in industries and commerce can be saved;
• There is considerable scope for energy conservation in houses, offices, street lights and other public places; replacing the incandescent lamps and florescent lamps by energy efficient CFL alone has the potential to save 5  to 10% of total energy;

As the Bureau of Energy Efficiency has estimated, at the prevailing cost of additional energy generation, it costs a unit of energy about one fourth the cost to save than to produce it with new capacity.

Demand Side Management (DSM)

There is considerable scope for electricity demand reduction (both peak hour demand & annual energy) in almost all applications.  Adequate management of peak load will assist in substantial reduction of system network costs.  All feasible options available to flatten the demand curve in the state should be deployed, and the difference between max. demand and the average demand should be reduced as low as techno-economically feasible.

The use of energy efficient Compact Fluorescent Lamps (CFL) instead of inefficient incandescent lamps is the quickest, surest, and cheapest way of reducing the peak demand and also the annual energy consumption.  The benefit to both an individual user and the system becomes obvious, with the potential to reduce the lighting load of the system by more than 70%, and the total cost of lighting to a consumer coming down by about 66%.

• A reduction of 10% in the peak load of a system can result in saving additional network system cost by more than 10%.
• The future need for peak load stations and any need for pumped storage plant can be avoided by reducing the variation between peak load and off-peak load.
• Effective energy audit of all major consumers of electricity will assist in reducing the demand.
• Industries within Bangalore and across the state should try and diversify the peak load hours to reduce the state peak demand.
• Time of day (TOD) metering of the majority of installations along with suitable tariff differentiation will reduce the peak hour requirements on the system.
• Better design of buildings and street lighting systems will reduce the demand.
• Wasteful and unnecessary illumination of commercial buildings, and night time sports should be curtailed.
• Compulsory use of photo sensitive switches in all street lighting systems will reduce the wastage to the minimum level.
• Effective rain water harvesting techniques all over the state will reduce the water pumping loads by a considerable margin.             

New & renewable energy sources

 There is an ever increasing conviction that the new & renewable energy sources could be the solution to our future energy security problems.  With the fast depletion of our fossil fuels, global warming and the issues associated with the dam based hydel projects, all over the world attempts are seriously on to develop suitable technologies to harness the ever lasting non-conventional & renewable energy sources.

• Karnataka has a huge potential in renewable energy sources, including ocean tidal energy, as in table 6 below.
• Even if 75% of the AEH consumers, and 25% of the houses/offices/schools/street lights etc. can be encouraged to install solar panels for water heating and for lighting, a conservatively estimated 1,500 MW of morning peak demand, about 800 MW of evening peak demand and about 1,000 MU of energy per year could be saved in Karnataka.
• There is considerable scope for commercial and industrial establishments also to reduce their grid quality electrical energy requirements by harnessing solar power.
• All these measures will result in many direct /indirect benefits like massive reduction of T&D losses, energy theft, and recurring expenditure on fossil fuels, environmental protection, reduced human displacements etc.

Table 8:  NCE potential in Karnataka

(Source: Ministry of Non-conventional Energy Sources, Govt. of India)

Integrated resource management approach for sustainable development

Integrated Resource Management basically refers to a management system, which aims at optimizing the utilization of various energy sources available to meet the energy requirements of all sections of the society on a sustainable basis at the lowest overall societal cost. Effectively implemented Integrated Resource Management is essential for ensuring energy security on a sustainable basis.

There is a huge potential available for Karnataka through improvements in the existing facilities, and by deploying the benign and renewable energy sources of wind, biomass and solar power etc.  The potential for solar energy use is immense and most of the smaller existing and additional loads can be fed by solar power systems.

The inference that can be drawn from the Integrated Resource Management approach is that there are many beneficial ways of meeting the growing electricity demand of the Karnataka Electricity Grid than through power capacity addition based on conventional technologies like fossil fuel based or large dam based power stations.

Compared to the option of additional generation capacity, measures under Integrated Resource Management approach can provide a large number of additional benefits to the society such as:

• greatly reduced AT&C losses,
• avoided cost of network expansion,
• improved operational parameters,
• much lower gestation periods,
• much reduced growth in demand (CAGR) for grid electricity,
• reduced need for land acquisition for lines and substations,
• avoided costs of recurring fuel expenditure,
• reduced complexity in system operation,
• avoided costs of peak load power stations,
• absence of the need for people’s displacement,
• advancement of local employment opportunities,
• reduced urban migration,
• much higher success in rural electrification etc.

Costs and benefits Analysis (CBA)

The costs of forest destruction and that of R&R of the Project Affected Families, which have not been included in the cost estimate, themselves may push the overall cost of many large projects to a high level. An objective analysis of the real costs (both direct/indirect) to the society such as environmental, social and health costs, and the projected benefits of large size conventional power projects may establish that they are not in the best interest of the society. Hence there is an urgent need for including an effective CBA as a part of mandatory approval process.

Conclusions

The much needed security of a reliable and quality electricity supply to all sections of the society has not been achieved even after 6 decades of independence.  Such a failure on part of the electricity sector has major impact on social, environmental and economical aspects of the state’s development efforts.  The crippling power cut is a disgrace on the state’s avowed goal of a welfare society. Through suitable policies and initiatives, this situation must be arrested and improved if we are to aim at the all-round development of not just the present generations, but also of the future generations.  Growing population, ever increasing demand, and vastly unmet energy requirements are demanding serious measures immediately, without which our society will face grave future. A paradigm shift is needed in the way we look at the overall needs of the society.

Unless the efficiency of the overall electricity industry is improved to international standards, no amount of additional generation capacity will be able to bridge the gap between demand and supply; it will only put tremendous pressure on the limited resources of the state. Sustainability of the energy resources with strong emphasis on social and environmental impacts should be a key factor in our policies.

Highly objective consideration of the electricity scenario in the state will reveal that in reality there is no shortage of the electricity generating capacity if we can achieve international standards in the performance of the assets in generation, transmission, distribution and utilization.  Hence, efficiency improvement, energy conservation, DSM, and optimum deployment of distributed renewable energy sources will not only enable us to eliminate the deficits, but also will reduce the need for large additional power generating capacities.  There is huge potential for this approach to ensure much improved status of social, environmental and economical aspects of our state.

The fact that our state has no known reserve of fossil fuel of any kind, and the real economic viability of planning for power plants based on these fuels should be another major consideration in our decisions. The multi-dimensional issues associated with coal from distant places, imported diesel / petrol, and the uncertainty of the supply of natural gas should be objectively factored in while making decisions on additional generating capacity. Though there appears to be huge potential for additional hydro capacity in the state, the unquestioned need to protect the ecologically sensitive Western Ghats, where most of such potential is available, must not be compromised at all.  The Western Ghats, which are already devastated to a considerable extent by many developmental projects, should be considered as the life line for our state and protected with all the seriousness it deserves.

In formulating policies for the energy security the findings and recommendations of IPCC should be the focus of our attention.  Integrated Resource Management Planning based on lowest overall societal cost, along with a holistic approach to the societal needs, should be the critical business process.

International best practices and bench marking shall be adhered to in all business processes.  In planning to meet the additional electricity demand, all the techno-economically viable options must be considered objectively without relying on large power projects only.

The companies engaged in electricity generation, transmission and distribution business should be managed by industry professionals similar to that in a successful private enterprise with adequate levels of autonomy and societal responsibilities. The articles of association of these companies should be modified, if necessary, to reflect the changing needs of the society.

Suitable tariff policies without cross subsidies, which will encourage economical & productive use of electricity, and which will directly discourage the wastages should be implemented with a sense of total commitment.

Performance yardsticks for the electricity companies should be developed in consultation with all the stakeholders and effectively implemented.

A state level coordinating body to consider all the relevant issues in meeting the additional demand for electricity at the lowest overall societal cost is an urgent necessity.