Opinion

Energy democracy needs more than laws

Anil Rawal | Updated on May 11, 2021

Powering access   -  istock.com/

By reforming the distribution framework and empowering the consumer, equitable access to energy can be ensured

The process of harnessing, transmitting and distributing energy has multilayered inefficiencies that add to the landed cost of energy to the consumer. These inefficiencies prevent equitable access to energy.

India took a noteworthy stride with the ground-breaking Electricity (Rights of Consumers) Rules issued by the Power Ministry, in December. However, the process of energy democracy and consumer empowerment needs more than legislation. It is about allowing the possibilities of making choices and also about both efficiency and empowerment for communities and consumers. It requires distributed energy resources, reliable smart grids, robust utilities, efficient power markets and enabling regulations.

While large grids and concentrated high-capacity generation units are ingredients of energy security for the country, energy democracy needs focus on distributed energy resources (DERs). The distributed energy resources are the small-scale power generation sources located close to where electricity is used, supplement or replace the need of large grid, provide higher energy efficiency at much lower per capita gird cost and empower communities to operate locally. Currently, DERs make less than 1 per cent of the country’s generation capacity. DERs are not only harbinger of equitable and inclusive source of energy access, but also are entrepreneurial in nature, generating livelihood and self-reliance for the communities.

Grid discipline and grid resilience are the other key enablers of energy democracy.

Solar roof top

This would need building the distributed and local solar generation as well as enabling the consumers to produce and infuse in the grid the excess power as prosumers. This would require the enabling regulations and a robust grid to handle variability of energy generation and capability of balancing the grids, when various distributed energy sources produce in tandem and happen to have large swings of peak and off peak production and consumption.

India’s power utilities have been facing systemic efficiency issues over last many years now. These continued inefficiencies have resulted in soaring debt build up. These unfathomable losses are impacting the health of other parts of power value chain. This state of sustained inefficiency has a lot to do with the continuity of monopolistic energy distribution markets in the country.

Moving away from monopolistic distribution markets and increasing billing and collection efficiencies are the critical ingredients to correct the trajectory. Smart metering program of government seeking utilities to install smart pre-paid meters based on Build, Own, Operate and Transfer (BOOT) model is poised to be the next big move towards consumer empowerment and building efficient utilities.

The power markets need be a lot more equitable in providing opportunity to consumers as buyers more power to influence the transactional interface between utilities and consumers. Till that happens the electricity market remain to be not only monopolistic but also skewed in favour of sellers.

Consumer rights form one of the key pillars in democratising energy. The energy systems of the future will be highly decentralised, decarbonised, democratised and flexible. It is imperative that the rights of consumers and necessary obligations of distribution licensees, easy release of new connections and modification in existing connections, metering arrangements, billing and payments, among others (as highlighted in the consumer rights regulation) are prioritised in the interest of the consumer and communities. The recent Consumer Rights regulation rightfully recognises that the consumer is a prosumer as well the regulations look to promote more decentralised generation of renewable energy, EVs, battery storage and the emergence of microgrids, amongst other trends.

India needs to ensure universal energy access whilst undoing the monopoly of Discoms. Technological innovations, particularly smart pre-paid metering offers the possibility of a more decentralized, democratic and participatory energy paradigm where renewable energy plants and storage systems are tied to a smart grid, enabling consumers to become energy producers and have a say in their electricity consumption and energy savings.

The success of democratised energy systems will require the convergence of technological innovations, conducive policy reforms and a shift in consumption patterns and behaviour. It is essential to continue investing in and technology to reduce costs, minimise carbon footprint and build efficient utilities. Strong policy and regulatory push will be required particularly in States to improve the quality of services and incentivise consumers.

The writer is MD & CEO, Intellismart India

Published on May 11, 2021

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