Sun, Oct

Challenges of tomorrow and evolution of energy infrastructure in India

Industry Insights

By Devavrat Kadam

A country with a population of over 1.25 billion and an ever increasing appetite for power. India’s massive and complex demographic distribution has made electrification an even bigger challenge in this terraneous nation.

In 1889, electricity was first introduced in the city of Kolkata in India by Calcutta Electric Supply Corporation (formerly known as Kilburn & Co.), just a few years after it was first introduced in Manhattan, NY.

In 2014, India successfully achieved the ‘One Nation, One Grid’ status which marked the complete integration and synchronization of the five regional grids that already existed. This 300 GW (installed capacity) network is owned, operated, planned and maintained by the Power Grid Corporation of India Limited (PGCIL), making it one of the largest operational synchronous grids in the world.

Structure of the grid

The transmission network in India is based on two levels — regional level and state level. Both these networks are managed and operated by the PGCIL. The transmission network within each state is managed by the state owned utilities. This is quite similar to the regional transmission organizations like PJM, ERCOT, NYISO etc. in the United States.

The regional transmission network is divided into five parts — Northern (NR), Southern (SR), Eastern (ER), Western (WR) and North Eastern (NER). Thirty-three state load dispatch centres which are responsible for the effective operation of the grid fall under these five regions.

To facilitate the smooth flow of power between the generation facilities and consumers, the interstate generating stations are connected to the interstate transmission system and the state owned generating stations are connected to the intrastate transmission network.

Operation of the grid

The Indian electricity market operates on the day ahead scheduling model. For convenience, each day is divided into 96 blocks of 15-minutes each. Each market day starts at 12.00 AM and ends at 11.45 PM. Vital parameters such as frequency, node voltages, transmission line loading, etc. are monitored round the clock. State level generation facilities are prompted to take corrective action in case a parameter surpasses any set bandwidth.

Renewable Energy Integration: Goals and Challenges

The Indian government aims to achieve 175 GW of renewable energy capacity by 2020rather than 2022. 100 GW of solar, 60 GW of wind, 10 GW of small hydro and 5 GW of geothermal. To achieve this target, India must add about 21.6 GW per year. If this is successfully implemented, India will have 22 percent of the world’s renewable energy capacity, excluding hydro electric projects .

If this is successfully implemented, India will have 22 percent of the world’s renewable energy  capacity.

India recently commissioned the largest solar PV plant in the world which boasts of 648 MW installed capacity in the southern state of Tamil Nadu. In addition to this mega project, India has four other 500 MW + projects planned to come up in the near future. Three of those are based in the state of Maharashtra and one in the state of Odisha. Based on this progress and quick network integration, one can argue that the 100 GW solar target is achievable. But there are various challenges that lie in the way which can potentially derail the rapid growth.

Financial challenges

The existing energy infrastructure is fragile. Because of fluctuations in frequency, the northern grid collapsed in July 2012 bringing the public transportation system to a halt in the capital city of New Delhi. In addition to this, transmission and distribution (T&D) losses were estimated to be 27%, the highest in the world. Inadequate investment in solid infrastructure still remains to be one of the key reasons for a weak network. A total investment of $92bn is needed by 2022 to meet its solar targets alone.

Inadequate investment in solid infrastructure still remains to be one of the key reasons for a weak network.

Solar energy still, is more expensive than coal, costing about Rs. 4.5 to Rs. 5.5 per kWh ($0.07 to $0.08) compared to Rs. 2.5 to Rs. 3.5 per kWh ($0.04 to $0.05) respectively, making it tougher for customers and early adopters to pay for their power needs. A pay-as-you-go payment model can be effective in rural areas where domestic consumers cannot afford to pay large bills at a time.

To fix this issue, the government has enabled 100% foreign direct investment(FDI) for renewable energy; a major source of non-debt financial resource for economic development. FDI is a big bonus since India has the highest cost of capital in the Asia-Pacific region.

FDI is a big bonus since India has the highest cost of capital in the Asia-Pacific region.

Japan’s Softbank has committed $20bn in the solar sector and French company  EDF has promised to invest $2bn in renewable energy projects in India because of its ‘fantastic’ potential of wind and solar radiation.

To make investment in renewable energy projects more attractive for investors, they can be promised a minimum buy, where the government promises to purchase a certain amount of power per year from that supplier. This can improve the ROI for the investor, potentially promising a faster payback.

On the domestic front, the cabinet has cleared $7bn reform package to boost state-owned utilities. This decision is a step to reduce load shedding instances, improve transmission and distribution network and eventually advance the Make in India scheme.

Other challenges

Another challenge that is yet to be clearly addressed is the intermittent nature of the renewable resources. Seasonal monsoons can potentially block sunlight for days at a stretch in some parts of the country. India still does not have the reserve capacity to substitute solar or wind in case of such natural causes. Adding grid-level storage equipment will only add to the energy costs of an already expensive power source.

India still does not have the reserve capacity to substitute solar or wind in case of natural causes.

Forecasting and analysing weather data to adjust the ramp rates of power plants is another way of anticipating power needs and reducing the chances of grid imbalance. Distributed location of generation facilities must be a priority to ensure minimum dependence on long-distance transmission — a major challenge in this big country which already has one of the highest T&D losses in the world.

In conclusion…

The Indian energy scenario has come a long way, especially in recent years with a positive change in policy and boost in business investment from foreign sources. The Modi government has set ambitious targets in hope that the market is able to adapt. As mentioned above, there are big challenges which need to be addressed to make sure the country’s energy infrastructure is adequate for this change. It will be nothing but a marvelous feat if India pulls this off; giving a boost to investor morale and stir positive sentiments in the common Indian citizen.


Devavrat is a graduate from Columbia University’s School of Engineering and Applied Science with a focus on energy systems.

Follow him on LinkedIn, Medium or tweet @devavratkadam for more content.





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