Power sector gears up to tackle post lockdown challenges

The Coronavirus pandemic has turned the world upside down within a very short time. Business processes have undergone a paradigm shift from their traditional mould. Various sectors have begun to contemplate work-from-home options in order to create a safe environment. However, the power sector is significantly different from other industries. It cannot afford such operational changes and has to carry on in the same vein as before. However, certain remarkable developments have been taking place in the power sector and in this article, we will take a look at a couple of such events.

Several power organisations are working towards being sustainable while also maintaining profitability, in part by integrating and applying artificial intelligence (AI) and machine learning into operations. Industry 4.0 is one of most searched terms on industrial digitization, according to Google Trends.

Industry at large, and manufacturing factories, in particular, use a humungous amount of electricity, a major part of which comes from fossil fuels. One of the reasons for this is that factories are operated on alternating current (AC). In the changed scenario, scientists at the Fraunhofer Institutes for Manufacturing Engineering and Automation IPA and for Integrated Systems and Device Technology IISB are now working on shifting the power supply of industrial manufacturing factories to direct current (DC) for the long term. The transition from AC to DC voltage has also led to gains in efficiency of between five and ten per cent. This is significantly due to the fact that “it is easy to use surplus braking energy from speed-controlled actuators via a DC voltage network.”

In an effort to usher in a new paradigm, energy regulator CERC launched the real time market to make the power market dynamic by enabling trade in electricity through half-hourly auctions, Indian Energy Exchange (IEX) stated in a regulatory filing.

Energy trading platform Indian Energy Exchange recently launched the real-time electricity market (RTM) on its platform, a move that will help utilities buy and sell power just an hour before the requirement. The RTM is aimed at helping consumers, including distribution companies (discoms) and captive users, buy power on exchanges just an hour before delivery.

The real time market is a CERC endeavour to make the power market dynamic by enabling trade in electricity through half-hourly auctions, Indian Energy Exchange (IEX) said.

The filing went on to add that there will be 48 auction sessions during the day with delivery of power within an hour of closure of the bid session, the filing added.

The CEO and Managing Director of IEX Ltd Rajiv Srivastava said, “With the launch of RTM, the Indian energy markets are expected to move towards global standards of electricity trading and establishing a new energy order in the country. It is also expected to support the utilities in cutting down dependence on grid deviation framework, to the tune of 20 BU in the current fiscal year.”

Srivastava further added that the primary purpose of the real-time market is to allow utilities to manage their power demand dynamically, save on huge deviation related penalties and integrate renewables in an effective way.

“The new market segment is expected to generate greater flexibility, competition as well as efficiency in the power sector and address the emerging needs of the time,” Srivastav said.

In the face of fast-paced changes towards renewable energy, the real-time electricity market will facilitate the distribution utilities to manage the challenge of intermittency associated with renewables, the filing added.

Meanwhile, the Covid-19 pandemic has set in motion the biggest drop in global energy investment in history, with spending expected to further plunge in every major sector this year – the International Energy Agency (IEA) has said in its report titled “World Energy Investment 2020”. Here are the 10 key takeaways from the report:

1. Investment in coal supply was around $ 90 billion in 2019, a 15 per cent increase compared to 2018. China was by far the largest driver of growth in global coal investment in 2019, reflecting the increasing concentration of global coal demand in Asia and contrasting sharply with the dramatic reductions seen in some other parts of the world.
2. Low electricity demand in 2020 reduces the need for firm power, piling pressure on older less efficient coal plants, but there are still fewer retirements than newly commissioned capacity. The net additions of coal-fired plants in 2019 rose for the first time in five years, driven by an uptick in newly commissioned plants in China and in India.
3. In China low-carbon investments have not kept pace with electricity consumption growth, while weaker demand in India was surpassed by low-carbon investments for the first time in 2020.
4. Power demand growth was around 30 per cent lower in China, while India saw no growth for the first time in ten years. According to IEA, there are considerable downside risks to electricity demand in 2020 given the Covid-19 pandemic and it estimates a drop in global electricity demand of 5 per cent in 2020.
5. The global power investment is set to fall to its lowest level in over a decade in 2020. Overall power investment around the world is set to decline in 2020 by an estimated 10 per cent as a result of the Covid-19 pandemic.
6. Shrinking coal demand, lower coal prices, environmental pressures and disruptions to supply chains and operations are set to bring a 24 per cent decline in coal supply investments in 2020.
7. A combination of falling demand, lower prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by well over $1 trillion in 2020. Energy investment is set to fall by one-fifth due to Covid-19 pandemic..
8. Global investment in electricity networks fell by seven per cent in 2019 due to decreased spending of China in Asia
9. Nuclear power sector would likewise see increased investment, particularly in China, with additional annual spending of $ 10 billion and India with an additional $ 5 billion.
10. According to IEA, reversing expectations of an uptick in spending in technology all parts of the power sector are set to be affected by mobility restrictions, delays in project development and lower power demand.

The Prime Minister stressed on the need to increase consumer satisfaction, while enhancing operational efficiency and improving financial sustainability of the power sector.

Modi advised the Power Ministry to ensure that the DISCOMs (distribution companies) publish their performance parameters periodically so that the people know how their provider fares in comparison to the peers.

Regarding New and Renewable Energy, the prime minister emphasised on the need for a holistic approach for entire supply chain of the agriculture sector, ranging from solar water pumps to decentralised solar cold storages.

Modi further pitched for innovative models for rooftop solar energy. He suggested that every state should have at least one city (either the capital city or one of the renowned tourist destinations) which should be fully solar powered using rooftop devices.

Artice by —
Arijit Nag is a freelance journalist who writes on various aspects of the economy and current affairs.
Articles of Arijit Nag