The Hindu Business Line : To avoid load-shedding

An industry initiative involving units with captive power plants has ensured that the Pune urban circle does not face any load-shedding. This model can be replicated by other cities that are sure to face power shortages in summer but requires the participation of industry, electricity utilities, regulatory agencies and the cross-section of users. Load-shedding is surely not an efficient way to manage the grid, says N. RAMAKRISHNAN.

CAN OTHER States too see the summer through without such power shortages? — A. Roy Chowdhury

Pune may well be one of the few cities in the country that will see this summer through without any power cuts. This is mainly due to an initiative by the manufacturing companies based in Pune, and endorsed by Maharashtra's power sector regulator. It could well be a model for other cities, especially those with a concentration of industries that have captive power generation plants and where minimal power is lost during transmission.

Other towns in Maharashtra, such as Nagpur and Kolhapur, are trying to replicate the Pune model and some from other States too are seeing whether they too can see the summer through without power outages. States are facing crippling power shortages and their utilities resort to load-shedding — switching off power for certain time to match supply with demand — both announced and unannounced to tide over the crisis.

Once reputed for its efficient power sector, Maharashtra is today faced with a shortage of almost 5,500 MW. Mumbai and its suburbs may escape without any load-shedding going by what the power utilities serving the teeming megapolis say. But other parts of the State may not be as lucky. Except, of course, Pune.

CII initiative

So, what then is the Pune model all about? Pune, about 160 south-east of Mumbai, is home to a number of manufacturing companies such as Tata Motors, Bajaj Auto, Bharat Forge, Kinetic Engineering and DaimlerChrysler India. Most of these companies have captive power plants.

The Pune urban circle faced a power shortage of about 90 MW, which would have resulted in the distribution utility, Maharashtra State Electricity Distribution Co Ltd, switching off power for about three hours daily. But this has been avoided thanks to an initiative of the local chapter of the Confederation of Indian Industry.

Mr Pradeep Bhargava, who headed the Pune zonal council of the CII and is the moving force behind the initiative to make Pune load-shedding free, says about the initiative: "We were not going to blame anybody and we wanted to sort it out ourselves." According to him, Pune's load is about 700 MW with a shortfall of about 100 MW, during the three hours of peak consumption in the morning and evening. The idea was to reduce consumption by about 100 MW during the peak period, so that the load is taken off the grid thereby doing away with the need to switch off supply.

Mr Bhargava, who is Managing Director of Newage Electrical India Ltd, a Cummins group company, says the CII contacted the companies in Pune with captive power plants or standby generating sets and found that this capacity totalled about 100 MW.

All these plants were fired by liquid fuel; the high fuel price made it uneconomical for the companies to operate them. If these companies ran their captive power plants during the peak consumption hours it would definitely ease the strain on the grid and the distribution utility. But the high cost of running the plants offered the companies no reason to do so unless they were compensated. Then began the process of consultations, involving as many of the players as possible. Discussions were held with the distribution utility, the power sector regulator — the Maharashtra Electricity Regulatory Commission — public representatives and others to see if the high cost of power could be overcome.

The Commission held public hearings when views from a wide cross-section of users as also that of the Maharashtra State Electricity Distribution Company were heard.

The Tariff Load

The average tariff for high-tension industrial users was Rs 4.04 a kWh (a unit) while the electricity generated by the captive plants would cost Rs 10.18 a unit — a difference of Rs 6.14 a unit. The companies would have to be compensated for the difference, at least the variable cost of running the captive plants. This would have meant an additional charge for all consumers.

It was decided to exempt those consuming up to 300 units a month from this surcharge and recover the increase only from those using up more than this quantum. Of the eight lakh consumers in the Pune urban circle, only two lakh used more than 300 units a month and they would be charged an extra 42 paise a unit — a levy that would ensure that they do not suffer from power cuts during summer. The money collected would be passed on to the companies using their captive power plants during the peak periods.

The Maharashtra Electricity Regulatory Commission, on a petition on load-shedding by the State's distribution utility, said in an order (available on its web site): "The Pune model for utilising surplus captive generation capacity should be explored in other regions (of Maharashtra) where industry has surplus captive capacity in order to mitigate the situation."

However, tapping surplus captive capacity is possible only in places where there is a large industrial base and where the transmission and distribution network is efficient. It will not be possible to adapt this model in a system with a higher than average line loss as the cost of power is enormous.

Captive Capacity

In 2005, the Central Electricity Authority, the Central Government agency responsible for overall power sector strategy, undertook an exercise to assess the captive power capacity in the country and whether the grid could tap surplus captive capacity.

It found that there was 18,740 MW of captive power plant capacity in the country (of plants with capacity of 1 MW and above) as on March 31, 2004. It also learnt from power equipment manufacturers that they had sold between 1990 and 2004, nearly 23,000 MW of capacity (of plants less than 1 MW in capacity), which also included standby generators that would be operated only when grid power was not available.

The data collected by the Authority itself is three years old and during this time, the captive power plant capacity in the country would have only increased for various reasons. One, small-size (of even 18 MW capacity) coal-fired plants are now available in the market, which means the facilities do not have to rely only on liquid fuel. Two, an increasing number of power-intensive manufacturing companies realise that it is more economical to invest in captive power and de-link completely (if the electricity boards permit them to do so, that is) from the grid as it helps them keep a tight control on power costs.

Apart from ensuring that there is no load shedding, the Pune experiment has its spin-off benefits. It will ensure that the noise and emission from the standby generators are avoided.

Also, those who consumed marginally more than 300 units a month would try their best to bring down their consumption below the 300-units mark so that they will then not have to pay the 42 paise a unit surcharge.

Replicating this model in other places requires participation from all — industries, electricity utilities, regulatory agencies and the cross-section of users.

More important, there should be the realisation that load-shedding is not an efficient way to manage the grid. But the Pune model can take time to implement; Pune put this in place in June 2006 after over two years of effort.