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CEA versus CEA

In IE February issue energy expert, Dr. Bhamy V Shenoy commented on the Draft National Electricity Plan (DNEP):  “it is so rosy, Can’t be true?”  He wondered how, during the next ten years, India will be surplus in power and that there will be no need to construct coal-based power plants. 

The plan pointed to the capacity addition of power plants exceeding the target set for the first time during the 12th plan (in the earlier plans, for 20 years, there had been hefty shortfalls that ranged from 52.5 per cent to 30 per cent). More interesting was the expectation on phasing out coal and lignite as feedstock for power production. The DNEP points to new coal-fired power stations dropping from a capacity addition of 86,250 MW in 2012-17 to 50,025 MW in the next five years 2017-22 and nil from 2022. Lignite-based power capacity would grind to zero during the current plan itself. 

Predominant supplies are expected to come from renewables, most significantly, solar. The target for renewables has been fixed at 115,326 MW for the five years 2017-22 and 100,000 MW for 2022-27. 

Dr. Shenoy had expressed misgivings over these optimistic targets projected by the Central Electricity Authority. These are no doubt desirable but there are serious issues on their feasibility. 

Another CEA, (Chief Economic Adviser), Arvind Subramanian (AS), has voiced serious concern over the plan to move so speedily away from coal. Delivering the Darbari Seth Memorial Lecture organised by The Energy and Resources Institute (TERI), he pointed to the low tariff assumed for the renewable sector, not including several implicit costs that are subsidised. This CEA raised concern over the redundancies planned in the use of natural assets like coal. He pointed to huge costs of moving away employment in coal mines and in coal handling, the impact on the economies of states dependant on royalties from coal, the fall in the plant load factor of coal plants (that are already low at a 62 per cent) by an estimated 16 per cent) for 2016-17 and consequently on the finances of utilities. 

For six decades now the country has been focusing on building capacity for power equipment to fire coal and lignite boilers. BHEL, among the prized public sector units, alone has the capacity to add 30,000 MW per annum. Think of the impact on phasing out coal!

Surprisingly, why such concern of the vital finance ministry has not been impacted on the Central Energy Authority or the NITI Aayog?

The unseenly rush to launch half-baked schemes...

IE has been pointing to lack of attention on planning to detail and doing solid ground-work before rushing with innovative initiatives. I remember the excitement caused by the Manmohan Singh government’s announcement on ultra-mega power projects soon after its assuming power in 2004. These, each with 4000 MW capacity, promised handsome additions in quick time. The planners thought of a low fixed tariff of less than Rs 1.50 per kwh for 20 years. Bids were won on the promise of such low tariffs guaranteed by such large companies like Tata Power and Reliance Power. Within months, coal prices shot up and of the nine projects cleared, only the Tatas implemented the project. Tariffs were allowed to be adjusted upwards on coal costs. 13 years later only Tatas’ 4000 MW was in operation.  The second one by Reliance Power at Sasan is just getting ready. 

The country doesn’t seem to have learnt the lessons of such sloppy plans. 

For quite a few years there has been such a hype on harnessing solar power. The policies have not been crystallised even five full years after the initial promises of subsidies, buy-back of excess power…

Our own experience points to the vast gap between promise and delivery: we were among the earliest in the state to opt for a 25 KW roof top solar with German modules supplied by Saint Gobain. No subsidy; for over three years the promised reversible metre was not provided till mid 2016. In the bargain, we lost close to 50 per cent of the power generation potential.

A couple of years ago the TN government again came out with attractive schemes for promoting roof top solar power for the residential sector. Reeling under hefty losses due to heavy subsidies on domestic consumption, TANGEDCO would not take more losses and the plan has made a mockery of the promised subsidy: mushrooming operators breezily inflated the cost to provide for speed money and deliver poor quality modules. The result: very poor additions. TANGEDCO recently revised the terms that offer not an automatic credit for the power generated by the roof top systems but a low price of just Rs 2.40 per kwh. There is also the delay in getting the reversible metres. The result: the scheme that raised a lot of hopes and promise suffers sluggish growth.

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