cer‐fsr symposium future of utilities: international and ... · res total share of re 4. ......
TRANSCRIPT
Future of Utilities: Challenges and Solutions for the Indian Electricity SectorANOOP SINGH
CENTRE FOR ENERGY REGULATION & ENERGY ANALYTICS LAB
DEPARTMENT OF INDUSTRIAL AND MANAGEMENT ENGINEERING
I IT KANPUR
1
CER‐FSR Symposium
Future of Utilities: International and Indian Perspectives10‐11 Oct. 2018
Emerging Challenges for Electric Utilities in India – Regulatory and Policy•Open Access with gradual reduction in OA Surcharge•Rooftop Solar – lucrative for cross‐subsidising consumers
•RPO Compliance – Feed‐in Tariff & REC Market
•Excess PPAs with some state utilities
•Carriage and Content Separation – Retail Competition
•Impact of EVs
2
All India Generation Capacity (GW)(As on 31 Aug 2018)
3
Top 10 States ‐ Renewable Energy Capacity (2018)12
,439
11,1
65
8,57
9
7,29
5
6,77
4
6,72
6
4,02
0
3,66
0
2,67
7
1,28
2
26,6
97 29,9
03
43,0
74
30,7
94
21,0
25
23,0
52
20,3
22
15,0
87
25,0
11
14,2
65
46.6
37.3
19.9
23.7
32.229.2
19.8
24.3
10.79.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Shar
e of
RE
S (%
)
Gen
erat
ion
Cap
acity
(MW
)
RES
Total
Share of RE
4
Emergence of Competition and Impact on Electric Utilities
5
Indian Power Sector Reform Timeline1991‐ Opening up of Power Sector for IPPs (Private Power Policy & Mega Power Policy)
1995‐97 ‐ Unbundling, regulatory reforms beginning with Orissa, Haryana & AP + +
1998 – Electricity Reform Act; setting up of CERC & SERCs
2001 ‐ Electricity Bill Introduced
2002 ‐ Privatisation of DVB (Delhi)
2003 – Electricity Act 2003
2005 – National Electricity Policy and Amendments
2006 – National Tariff Policy and Amendments
2014 – Electricity (Amendment) Bill
2018 – Proposed Amendment to Electricity Act
6
Market Reforms – Quest for a Competitive Order
Tariff Based Bidding
Trading with Negotiated Contracts
Allocated Capacities with MoD
Evolving Market Reforms
Negotiated PPAs
ABT
PX - DAM
Ancillary Services - RRAS
Real Time Market
(Proposed)
Derivatives ?
7
Re‐emphasising Role of the Market
8
Demand & Gen. Curve for LT Realistic Growth Scenario – Uttar Pradesh
Solar
Existing Generators
Candidate Generators
Load Shed
0
5
10
15
20
25
30
1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19 1 7 13 19
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Power Procured in th
ousand
MW
Solar Existing Generators Candidate Generators Load Shed Demand
9
So: Study by IIT Kanpur
From a Darker Past to a ‘Bright’ Future
10
The Past of Indian Utilities…....Access and Availability
11
The Past of Indian Utilities…....Operational Performance
12
The Past of Indian Utilities…....Financial Performance
13
Financial Turnaround or turning around….
14
Financial Concerns in the Power Sector
Average revenue realization < average cost of production and supply.
•Accumulated losses: Rs. 3.8 trillion (As on March 2015).
•Outstanding debt: Rs. 4.3 trillion (As on March 2015).
15
UP Discoms in distress
Rs. 138.02 billion
• Revenue deficit during 2013‐14
Rs. 707.38 billion
• Accumulated losses at the end of September 2015.
Rs. 532.11 billion
• Outstanding debt level at the end of September 2015.
16
UDAY Scheme
Improving operational efficiencies of Discoms.
Reduction of cost of power.
Reduction in interest cost of Discoms.
Enforcing financial discipline on Discoms through alignment with state finances.
• UDAY‐ Ujwal Discom Assurance Yojana.• Launched in November 2015 by Ministry of Power to revive financially stressed
Discoms.
Four initiatives of UDAY scheme:
17
UP’s UDAY Scheme ‐ salient features
States shall take over 75% of DISCOM debt as on September 30, 2015 over two years:◦ 50% in 2015‐16.◦ 25% in 2016‐17.
GoI will not include this debt in calculating fiscal deficit of states.
States shall take over the future losses of DISCOM in a graded manner:
.
2016‐17 •5%
2017‐18 •10%
2018‐19 •25%
2019‐20
2020‐21
50%
18
UP Discoms vis‐à‐vis UDAY
As per MoU for UP, Discoms of UP shall fulfill RPO obligation 3 years after the DISCOMs reach break even ,i.e. the financial year 2019‐20.
Target distribution loss trajectory of MVVNL:
23.14%21.52%
19.16%
16.09%
11.80%
0%
5%
10%
15%
20%
25%
FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Distribution loss
Distribution loss
19
UDAY Vs Political Will – Required Tariff increase in Uttar Pradesh (MVVNL)
Profit/loss (in Rs. Crore) 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐208% tariff increase -1868 -2297 -2354 -2598 -2832 -293910% tariff increase -1770 -2070 -1956 -1989 -1935 -166212.1% tariff increase -1668 -1827 -1523 -1313 -919 -19112.36% tariff increase -1655 -1797 -1468 -1227 -788 0
‐2297‐2939
‐1668 ‐1827‐1523 ‐1313
‐919
‐191
‐3500
‐3000
‐2500
‐2000
‐1500
‐1000
‐500
02014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20
Profit/Losses (@8% tariff increase) Profit/Losses (@10% tariff increase) Profit/Losses (@12.1% tariff increase) Profit/Losses (@12.36% tariff increase)
Projected Loss with Distribution losses as per UDAY scheme, without state takeover of losses
Calculations by Utkarsh
20
UDAY Vs Political Will – Required Tariff increase in Uttar PradeshProfit/ loss prediction‐Annual tariff increase :12.36% at different levels of distribution losses, without state takeover of losses:
Profit/ Loss (in Rs. Crore) 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20Distribution loss as per UDAY -1655 -1797 -1468 -1227 -788 0Distribution loss @20% -1578 -1516 -1319 -1320 -1277 -1145Distribution loss @17% -1357 -1268 -1042 -996 -898 -699
‐1655 ‐1797
‐1468
‐788
0
‐1578 ‐1516‐1320 ‐1277
‐1145
‐1357‐1268
‐1042‐898
‐699
‐2000
‐1800
‐1600
‐1400
‐1200
‐1000
‐800
‐600
‐400
‐200
02014‐15 2015‐16 2016‐17 2017‐18 2018‐19 2019‐20
Profit/losses (Distribution loss as per UDAY) Profit/losses (Distribution loss @20%) Profit/losses (Distribution loss @17%)
21
Calculations by Utkarsh
UP (MVVNL) – Loss Trajectory with Rooftop PV Growth
Total losses including losses due to solar rooftop PV systems
Loss (in Rs. Crore) 2017‐18 2018‐19 2019‐20 2017‐18 2018‐19 2019‐20Distribution loss 19.16% (UDAY) 16.09% (UDAY) 11.8% (UDAY) 20% 19% 18%
Simulation Set (Type A) ‐1310.66 ‐947.83 ‐202.11 ‐1404.53 ‐1303.27 ‐976.79
Simulation Set (Type B) ‐1316.69 ‐962.85 ‐228.45 ‐1410.63 ‐1318.72 ‐1004.39
Simulation Set (Type C) ‐1322.73 ‐977.87 ‐254.80 ‐1416.73 ‐1334.16 ‐1031.99
Simulation Set (Type D) ‐1334.80 ‐1007.92 ‐307.49 ‐1428.92 ‐1365.05 ‐1087.20
22
Calculations by Utkarsh
Distribution Utilities –Resisting Open Access, but harnessing market for procurement
23
Open Access Energy Trade – Andhra Pradesh – Utility Vs Non‐Utility (MWh)
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So: Analysis by EAL, IIT Kanpur
Open Access Energy Trade – Maharashtra –Utility Vs Non‐Utility (MWh)
25
So: Analysis by EAL, IIT Kanpur
Open Access Energy Trade – Uttar Pradesh ‐ Utility Vs Non‐Utility (MWh)
26
So: Analysis by EAL, IIT Kanpur
Are mini‐grids a Challenge or part of the solution?
27
Mini‐grids ‐ Existing Business Model
28
Mini-grid Plant
YGrid Interactive
(Islanding)
Anchor Customers
Distribution Utility
C C CCC
X
SPV+ DG
Storage+
Mini‐grids as grid interactive RE plant
29
Distribution Ancillary Service Model?
30
Mini‐grids as Distribution Franchisee or ‘Peer‐to‐Peer’ Market?
31
Are EV’s Disruptive?
32
0.00100.00200.00300.00400.00500.00600.00700.00800.00900.00
1000.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Pow
er D
eman
d (M
W)
Time (hrs)
Daily Energy Consumption in Mod EV
2017 2018 2019 2020 2021 2022 2023
2024 2025 2026 2027 2028 2029 2030
0.00
200.00
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Pow
er D
eman
d (M
W)
Time (hrs)
Daily Energy Consumption in High EV
2017 2018 2019 2020 2021 2022 2023
2024 2025 2026 2027 2028 2029 2030
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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Pow
er D
eman
d (M
W)
Time (hrs)
Daily Energy Consumption in 100% EV
2017 2018 2019 2020 2021 2022 2023
2024 2025 2026 2027 2028 2029 2030
Electricity Demand for EV Charging – Case of Delhi
0.00
30.00
60.00
90.00
120.00
150.00
180.00
210.00
240.00
270.00
300.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Pow
er D
eman
d (M
W)
Time (hrs)
Daily Energy Consumption in BAU2017 2018 2019 2020 2021 2022 20232024 2025 2026 2027 2028 2029 2030
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Is RE Disruptive – seems to be
34
Emerging Duck Curve with growing RE
100
110
120
130
140
150
160
00:0
0 - 0
0:15
02:0
0 - 0
2:15
04:0
0 - 0
4:15
06:0
0 - 0
6:15
08:0
0 - 0
8:15
10:0
0 - 1
0:15
12:0
0 - 1
2:15
14:0
0 - 1
4:15
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0 - 1
6:15
18:0
0 - 1
8:15
20:0
0 - 2
0:15
22:0
0 - 2
2:15
GW
For Peak RE Generation Days
03 Nov 17 17 Dec 17 30 Jan 18 27 Feb 18 13 Mar 18 30 Apr 18 14 Jun 18 31 Jul 18 05 Aug 18 04 Sep 18
* Solar, wind, Small hydro and bio-mass has maximum generation load
35
Are Regulators and Policymakers Demanding?
36
Recent Developments•Amendments to the Tariff Policy
•Real Time Market
•(Fast Response Ancillary Services?)•Proposed Amendments to the Electricity Act 2003
37
Proposed Amendments to Electricity Act 2003 (2018)•Separation of Carriage and Content: Distribution and supply are defined explicitly and to be segregated [1]. Retail Competition
•Renewable Generation Obligation and Renewable Energy Service Company introduced, along with the existing Renewable Purchase Obligation[1].
•Distribution/supply licensees to be obligated to supply 24×7 power [42]•Mandatory metering of electricity consumption, and Direct Benefit Transfer (DBT) [45];
•Regulatory Scrutiny/control over Power Purchase [42, 49]
38
Proposed Amendments to Electricity Act 2003 ‐ Impact on Utilities
Proposed Amendments Impact How to AddressSeparation of Carriage and Content: Distribution and supply are defined explicitly and to be segregated [1].
- 'Legacy' Network losses?- Cherry Picking of Consumers
- Metering of all supplies, DTs/Feeders for energy accounting- Freedom to offer 'menu of tariffs'
Renewable Generation Obligation (RGO)
- RGO already present in some form (e.g. RE bundling by NTPC)
- Presence of RGO and RPO may have operational challenges- Strengthen REC Market for compliance
Distribution/supply licensees to be obligated to supply 24×7 power [42]
- How to ensure this with C & C separation?- Who would be penalised for 'network' issues rather than supply issue?
- Strengthening and automation of distribution system with effective monitoring- Should provide for Reliability based (curtailable) tariff
Mandatory metering of electricity consumption, and Direct Benefit Transfer (DBT) [45];
- Improved estimation of distribution loss
- Need to be further strengthened by mandating electricity supply only based on metered consumption
Closure Regulatory Scrutiny/control over Power Purchase [42, 49]
- Return of intrusive regulatory regime
- Better SoP Compliance mechanism with incentive/ disincentives
39
Full Retail Competition – Story of developed worldContext of retail competition‐ Private Utilities‐ Commercially operated‐ Strong metering infrastructure‐ Consumers aware supported with vibrant consumer organisations‐ Consumer end generation (PV) and storage yet to emergeNew realities‐ Significant inroads by Solar PV and Storage‐ Growth of Electric Vehicles‐ Distributed Microgrids
40
Full Retail Competition – The Emerging India StoryAccess of electricity to all yet to be achievedLarge consumption remains unmeteredHigh Distribution losses (theft)Lopsided tariffs – leading to cherry pickingSubsidy and Cross‐subsidySuccess of telecom
41
42
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