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National Electricity Plan on Generation – 12th & 13th Plan periods by

Shankar Sharma Power Policy Analyst

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National Electricity Plan on Generation – 12th & 13th Plan periods

--------------------------------------------------------------------Shankar Sharma Power Policy Analyst shankar.sharma2005@gmail.com ----------------------------------------------

Part I: Executive Summary --------------------------------1. Introduction

The task of generation plan has to be objectively viewed in the context of the relevant mandate to CEA under various Acts of the parliament and relevant policies of the Union government. Such a mandate includes the salient features such as efficiency, economy, responsible use of natural resources, consumer interest protection, reliable supply of electricity and protection of environment. When we look at the performance of the power sector since independence from the perspective of what the conventional power plants have achieved in the past, it is difficult to notice the true compliance of the letter and spirit of Indian Electricity Act 2003, and National Electricity Policy as far as salient features are concerned.

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When we view the huge inefficiency prevailing within the electric power sector with a correct perspective, the efficacy of plans for large addition to conventional power generating capacity in the country (and the consequences on our natural resources, environment and the vulnerable sections of society) become fundamentally questionable.

2. Past experience of Capacity addition

The past record of capacity addition in the previous 5 year plans, as also in 11th plan, is known to be much below the target. The constraints in achieving capacity addition target seem to be only increasing with each passing year if the recent past performances are any indication. The difficulties in ensuring adequate fuel; land acquisition issues; people’s opposition to large scale displacements; and the ever increasing levels of environmental awareness amongst the public will all pose obstacles in achieving high capacity addition targets. Hence, there is clearly a need to factor-in these constraints in CEA’s growth targets for the future plans.

3. Demand Projections for Electricity

A credible electricity demand projection for the next 10 to 20 years is a critical part of the electricity generation plan, and hence it should be linked to a realistic appraisal of needs of our society at all levels which then will in turn ensure responsible management of the power sector.

3.1 The critical need for a realistic demand projection The basic need for a realistic demand forecast is that it must objectively take into account the social, economic, and environmental issues such as the changing consumption pattern across different sectors of our economy; nature’s limit; Global Warming potential of energy consumption; and our obligations to the future generations. A carefully thought out strategy consisting of responsible de3 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 3

mand side management and sustainable energy supply options has become imminent for the long term welfare of our communities.

Instead of projecting future electricity demand with the GDP maximizing paradigm, the country must aim at determining the least amount of electricity required to eradicate poverty.

3.2 The issues with high demand projection The social, economic, environmental, and health impacts on our densely populated communities of huge addition in the form of conventional power plants will not be inconsiderable. It seems a large number of power plants are being proposed without due diligent studies about their true need, and without objectively considering the impacts on our densely populated communities.

The big question is: whether our society can afford a huge additional demand on the grid, because all of such additional demand may not contribute to the economic development or may not lead to true welfare of our masses. But the social, economic and environmental impacts of such a huge addition will certainly be enormous, and may even defeat the very purpose of high GDP growth, which is the all round welfare of all sections of our society. Hence there is a need to keep the overall power demand within manageable limits.

3.3 Need for reducing the effective grid electricity demand From the perspective of global warming there is clearly a need to reduce the GHG emissions from the sector, which is possible only if the generating capacity of the conventional power plants is kept minimum.

3.4 The scope for reducing the effective grid electricity demand 4 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 4

Despite phenomenal increases in generation capacity since independence, considerable sections of our population are still deprived of electricity connection, and various forms of electricity crises are continuing. Huge inefficiency prevailing in the power sector is rendering any amount of additional capacity inadequate as seen by the power cuts year after year. So, massive addition to generating capacity alone cannot be seen as the panacea for our power sector problems.

Keeping in view the huge potential in efficiency improvement measures and distributed electricity sources such as roof top solar systems and community based bio-mass plants etc. it is not inconceivable that through the existing techno-economically viable means it is feasible to drastically reduce the effective demand on the grid based electricity network.

3.5 A realistic demand forecast In view of the fact that that there is a steep decline in CAGR of electricity consumption from 6.87% in the 30-year period (between 1974-5 and 2004-05) to 4.30% in last 5-years (between 1999-2000 and 2004-05), and taking into account the huge potential with efficiency improvement measures to reduce demand, it can be credibly argued that not more than 4% of CAGR of electricity generation for next 20-25 years may be required. More importantly, it appears feasible to restrict the actual electricity demand growth to this level without compromising the welfare of our communities.

3.6 Credible electricity demand by 2021 A high level analysis of the power scenario in the country throws up an interesting picture, and may point towards a viable solution to the power sector woes.

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• Installed Generation Capacity (as on 31-3-12) was 199,877 MW with 175,377 MW of conventional power and 24,500 MW of renewable power.

• The peak power and annual energy demand for year 2011-12 was 130,250 MW and 936,568 GWH (as per CEA website). When this peak power demand is compared to the capacity available in the system, it allows a spare capacity of about 45,000 MW of conventional power capacity alone. Allowing for 10% outages and 10% reserve (a total of about 26,000 MW) the system seem to have surplus of about 19,000 MW installed generating capacity without taking into account the renewable power capacity.

• The actual/deemed peak demand on the grid of 130,250 MW during 2011-12, when viewed from the perspective of gross inefficiency prevailing in the sector means that in real term it is much less. CEA itself admits that there is a saving potential of 15% in the end use (as per Table 12.1). The T&D loss reduction of 10% is techno-economically feasible during the 12th and 13th plan periods if adequate emphasis is provided. Through DSM the actual peak demand on the grid can be brought down further.

• Even assuming the demand reduction potential of only 25% (15% from end uses PLUS 10% from T&D losses), the true demand on the grid as on 31.3.12 could have been only about 98,000 MW of peak power, and 702,426 GWH of annual energy during 2011-12.

• On the basis of these figures for peak power and annual energy demand as on 31.3.12, and at an assumed CAGR of 4% demand growth, the power demand in the country can be projected as 139,485 MW of peak hour demand and 999,771 GWH of annual energy by 2021.

• What this basically means is that the power sector may 6 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 6

not need a lot of additional capacity if the existing infrastructure is put to use optimally. But it requires concerted efforts not to allow the true demand on the grid to escalate without checks and to increase efficiency at all levels/segments of the power sector.

• As compared to the huge logistical and societal problems associated with the planned capacity addition of about 79,000 MW in each of the 12th and 13th plan periods (or about 700,000 MW of capacity which are reported to be in the pipeline), this approach brings huge benefits to the society while avoiding humongous costs.

• In view of the huge potential existing in the distributed type renewable energy sources such as roof top SPVs and community bio-energy plants, the additional annual energy requirements by 2021 and beyond should be met by them as far as possible, by shifting all smaller loads from the grid to these distributed power sources.

• The huge solar power potential should be made use of to meet the additional peak demand also in future by installing CSPs of 10 to 15 MW capacity at suitable locations (such as each taluka places) to feed to the grid.

CEA plan should consider this approach seriously starting from 12th plan period itself.

4. Global warming and environmental considerations Considering the huge contribution of the conventional power plants to GHG emissions, it is impossible to imagine how India’s total GHG emissions can be less in the future five year plans as compared to that in Y2011, unless definitive measures are taken with concerted efforts to reduce the GHG emissions form the power sector.

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Additionally, it should also be kept in mind that those activities in our society which will result in GHG emissions will also have impact on the pollution of land, water, and air; on accelerated depletion of natural resources such as forests and fresh water sources; on the food & agricultural products; on the access to natural resources for livelihood of vulnerable sections etc. Hence, the total GHG emissions of the country should be a huge concern from the all-round welfare perspective of our people even if we care less from the perspective of our international obligations.

Well known difference in magnitude of the order of 30 - 180 times in life cycle CO2 emissions between conventional power plants and renewable energy sources should clearly dictate the electricity generation planning strategy for India.

5. Credible generation Planning

In view of the critical role of the power sector on our society and the environment, while a credible projection of electricity demand for next 5, 10 or 25 years is essential in generation planning, the long term perspective of the society’s overall welfare, the sustainability of the technologies deployed, global warming impacts, the true cost & benefits to the society of these technologies, the concerns of the affected population are all even more important. Without such objective considerations, CEA’s generation plan has the risk being termed as irrelevant form the civil society’s perspective.

5.1 A holistic approach through Costs & Benefits Analysis (CBA) A common problem with the successive generation planning has 8 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 8

been the complete absence of calculating the true costs and benefits of the conventional technology to our communities; and objective consideration of all the available alternatives to bridge the gap between demand and supply.

Without determining the relative costs and benefits of a given technology and without comparing them with other alternatives, how can a given technology be considered as the most beneficial? The alternatives available in individual state or the region in the form of efficiency improvement measures or renewable energy sources may be able to provide equivalent amount of virtual capacity addition at much less overall costs and many more benefits. As a resource constrained and poor country the continued practice of proposing large size and costly power plants in different parts of the country with an objective CBA is a huge concern to the public.

5.2 Different paradigm for generation planning CEA should adopt least cost planning process in an objective sense by taking an integrated resource management approach. While doing so the total cost (both the direct and indirect costs) to the society should be the criteria instead of only the financial cost to the project developer.

5.2.1 For each additional MW of demand various alternatives available within the existing power infrastructure should be the priority 1; efficiency improvement measures such as T&D loss reduction, DSM, agricultural pumping loss reduction, PLF improvement, R&M of power plants etc.

5.2.2 A substantial portion of the proposed investments and efforts in generation sector should 9 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 9

be diverted to these measures.

5.2.3 Priority 2 could be to transfer as many loads as possible to roof top solar or community based hybrids such as solar/wind/bio-mass power systems.

5.2.4

Priority 3 could be to replace old and inefficient coal power plants with efficient super critical plants at the same site. Land available at an old coal power plant of 4 or 6 of 210 MW units may be adequate for 2 or 4 of 800 MW plants.

5.2.5

Priority 4 could be to utilize the large roof top surfaces available in schools, offices, factories, shops, warehouses etc. to install SPV systems. Additionally, the CSP systems of suitable size should be considered in smaller towns/cities to provide adequate power during the absence of sun shine hours.

5.2.6

This process should be employed to determine the order of costs and deploy most economical option to the society. It is important that CBA as a decision making tool is deployed objectively in every step/ project.

5.2.7

In this approach the conventional power plants should be the last resort: mini/micro hydro, gas power, coal power, and nuclear power in that order. It is not difficult to appreciate the fact that an objective consideration of all the technical, economic, social and environmental issues will reveal that nuclear power projects score the least.

5.3 Planning for peak coal power consumption IEP had indicated in 2006 that the total extractable coal reserves (including proven, indicated and inferred) in the country will run out in about 45 years. Since then a 10 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 10

large number of additional mines are being permitted to feed the huge number of coal power plants, and hence the coal reserve may not last beyond another 25 years. In this context there is clearly a need for the country to look beyond coal. It is therefore necessary to have a definitive plan to phase out coal power plants (so also other conventional power plants) in the next 25-30 years.

5.4 Role of renewable energy sources

On the basis of an objective consideration of many national and international reports, it appears safe to state that the energy future of our country depends on how effectively our society will be able to harness the huge renewable energy potential within the country. There has been a spate of international reports in recent years, including the one from IPCC, expressing credible confidence in and advocating for a definitive shift towards renewable energy sources.

An integrated energy resource management approach, with a carefully designed combination of centralized and decentralised renewable energy sources, is absolutely needed to avail energy security for our masses.

5.5 Huge relevance of roof top solar panels Of the 30 Crore households expected by 2032, 10 Crore houses can be assumed to be strong enough to support SPV systems. Assuming an average of 1,000 Sq. ft of roof surface area for each of these houses, the total potential for installing SPV systems on this surface can be about 1,000,000 MW @ 1 kW per 100 Sq. ft of roof surface.

If even 10% of roof top surfaces in each of the other categories of building are considered for this purpose, the potential is enormous; running to millions of MW. Such a policy can transform our power sector scenario.

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1.6 Low Carbon Growth Strategy for Indian Power sector for 12th & 13th Five Year Plans Various measures discussed in CEA’s plan, as a part of low carbon growth strategy for Indian power sector for 12th & 13th Five Year Plans, will be negated by the huge additional GHG emissions resulting from the large number of conventional power plants planned to be added. Hence a complete paradigm shift in the way we look at the power sector in future is needed.

6. Discussion on the salient points from the CEA plan:

Hence it is necessary that the national electricity plan (volume I) generation is prepared from such a perspective. But a quick reading of the draft generation plan indicates that the letter and spirit of these Acts, rules, policies, and international obligations cannot be complied with various projections/proposals in the plan. Since the sole objective of generating electricity is the overall welfare of our communities, the time has come to rationally consider the power sector as a whole from the true perspective of the societal development.

7. Recommended action plan A set of action plans is recommended in this regard.

a.

Because of the huge inefficiency prevailing in the country’s power sector, the highest priority is needed to take the overall efficiency to the international best practice levels; this is known to cost least amongst various options; it will 12 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 12

b.

c.

have the shortest gestation periods; and many associated benefits.

In view of the huge impact on our society, including the all important environment, the use of conventional energy sources, such as dam based hydro, coal, natural gas and nuclear, should be minimised in the short term, and discontinued at the earliest; their usage should peak early, and gradually eliminated latest by 2050.

In view of the inevitability of harnessing the renewable energy sources on a sustainable basis, all out efforts should be made to develop them early to meet our entire electricity needs before the middle of this century; this should include adequate focus on R&D, fiscal incentives if necessary, suitable policy interventions, necessary regulatory measures etc..

8. Conclusions The planning for 9,204 MW & 12,000 MW of hydro, and 2,800 MW and 18,000 MW of nuclear capacity respectively in 12th and 13th plans periods should be reviewed thoroughly from the social and environmental perspectives. Similarly, the plan to add 66,600 MW & 49,000 MW of coal power capacity respectively in 12th and 13th plans periods must be drastically reduced keeping in view various issues such as inadequate supply of coal to existing power plants, additional requirement of land and water, people’s displacement and environmental concerns. The legitimate demand for electricity should be projected based on ground realities, and all out efforts should be made to meet such a realistic demand by a combination of various measures such as efficiency improvement, DSM, energy conservation, and more of renewable power capacity than that envisaged in the draft plan.

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National Electricity Plan on Generation – 12th & 13th Plan periods -------------------------------------------------------------

Part II: Detailed Analysis ------------------------------1. Introduction

The generation plan prepared by CEA can be seen as crucial in the context of overall development of the power sector because the same is intended to be used by prospective generating companies, transmission utilities and transmission/ distribution licensees as a reference document. Since the omissions and commissions in the power sector have huge impact on the overall welfare of our thickly populated and poor communities, the generation plan by CEA must be seen as one relevant to all sections of our society.

1.1

The task of generation plan has to be objectively viewed in the context of the relevant mandate to CEA under various Acts of the parliament and relevant policies of the Union government. Such mandate include the salient features such as efficiency, economy, responsible use of natural resources, consumer interest protection, reliable supply of electricity and protection of environment.

1.2

When we look at the performance of the power sector 14 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 14

since independence from the perspective of what the conventional power plants have achieved in the past, it is difficult to notice the true compliance of the letter and spirit of Indian Electricity Act 2003, and National Electricity Policy as far as salient features are concerned.

1.3

In this context it becomes necessary to review the various Acts of the Parliament, rules and policies relevant to power sector.

Section 3(1) of IE Act 2003 says: “The Central Government shall, …., prepare the National Electricity Policy and tariff policy, in consultation with the State Governments and the Authority for development of the power system based on optimal utilisation of resources such as coal, natural gas, nuclear substances or materials, hydro and renewable sources of energy.

Section 3(4) says: “The Authority shall prepare a National Electricity Plan in accordance with the National Electricity Policy and notify such plan once in five years.

Section 73(a) says: “The Authority shall perform such functions and duties as the Central Government may prescribe or direct, and in particular to – (a)

advise the Central Government on the matters

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relating to the national electricity policy, formulate short-term and perspective plans for development of the electricity system and coordinate the activities of the planning agencies for the optimal utilisation of resources to sub serve the interests of the national economy and to provide reliable and affordable electricity for all consumers; “ (i)

collect and record the data concerning the generation, transmission, trading, distribution and utilisation of electricity and carry out studies relating to cost, efficiency, competitiveness and such like matters.

The National Electricity Policy aims at achieving the following objectives, among others: •

Supply of Reliable and Quality Power of specified standards in an efficient manner and at reasonable rates.

•

Minimum lifeline consumption of 1 unit/ household/day by year 2012.

•

Financial Turnaround and Commercial Viability of Electricity Sector.

•

Protection of consumers’ interests.

The National Electricity Policy also says: •

It would have to be clearly recognized that Power Sector will remain unviable until T&D losses are brought down significantly and rapidly. A large number of States have been reporting losses of over 40% in

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the recent years. By any standards, these are unsustainable and imply a steady decline of power sector operations. Continuation of the present level of losses would not only pose a threat to the power sector operations but also jeopardize the growth prospects of the economy as a whole. No reforms can succeed in the midst of such large pilferages on a continuing basis.

•

There is a significant potential of energy savings through energy efficiency and demand side management measures. In order to minimize the overall requirement, energy conservation and demand side management (DSM) is being accorded high priority.

•

The potential number of installations where demand side management and energy conservation measures are to be carried out is very large.

•

Non-conventional sources of energy being the most environment friendly there is an urgent need to promote generation of electricity based on such sources of energy.

As per The National Electricity Policy, the National Electricity Plan would include:

•

•

Suggested areas/locations for capacity additions in generation and transmission keeping in view the economics of generation and transmission, losses in the system, load centre requirements, grid stability, security of supply, quality of power including voltage profile, etc; and environmental considerations.

Fuel choices based on economy, energy

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security and environmental considerations.

Energy Conservation act 2001, mandates all the necessary measures for efficient use of energy and its conservation.

Environmental Protection Act, the Forest Conservation Act and the Wild Life Protection Act, all emphasizes the critical need to protect the natural resources, flora and fauna.

The National Forest Policy recommends that 33% of the land mass should be covered by forests and trees for a healthy environment.

The main objectives of National Action Plan on Climate Change (NAPCC): •

Protecting the poor and vulnerable sections of society through an inclusive and sustainable development strategy, sensitive to Climate Change.

•

Achieving the national growth objectives through a qualitative change in a direction that enhances the ecological sustainability, leading to further mitigation of greenhouse gas emissions.

•

Devising efficient and cost- effective strategies for end use Demand Side management.

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•

Deploying appropriate technologies for both adaptation and mitigation of green house gas emissions extensively as well as at an accelerated pace.

As per the sections 48 (a) and 51 (a) (g) of our Constitution it is the duty of the STATE and every citizen to make honest efforts to protect and improve our environment by protecting and improving rivers, lakes, forests and living beings.

1.4

When we look at the huge inefficiency prevailing within the electric power sector with a correct perspective, the efficacy of plans for large addition to conventional power generating capacity in the country (and the consequences on our natural resources, environment and the vulnerable sections of society) become fundamentally questionable.

1.5

India, being a responsible member of the international community, also has many international obligations which need to be kept in proper perspective while planning for additional electricity generation capacity. The threat of Global Warming and the associated need to drastically reduce the burning of fossil fuels should also be major considerations.

 Cocoyoc declaration of 1974 at Mexico, as part of UN Conference, has defined the sustainable ways of human development.

This definition has to be at the core of our developmental planning.  World Charter for Nature was adopted 19 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 19

by consensus by UN General Assembly in 1982, according to which it will be a wise policy to apply Precautionary Principle and take necessary action to conserve Bio-diversity before components of it are permanently lost.  Convention on Biological Diversity which was signed by 156 states in 1992, has the objectives of the conservation of various components of biological diversity, the sustainable use of its components, and the fair and equitable sharing of the benefits arising out of the utilisataion of genetic resources.  The Ramsar Convention on Wetlands seeks commitment from signatory countries to protect the wetlands due to their huge significance to aquatic bio-diversity.

1.6

 IV Assessment Report of Inter Governmental Panel on Climate Change (IPCC) has highlighted the critical need to protect our forests.

A decent understanding of the past and present practices in the electrical power sector may reveal that the letter and spirit of these Acts, rules, policies, and international obligations have not been largely complied with. Hence it becomes essential to view the national electricity plan (volume I) generation from such a perspective. Since the sole objective of generating electricity is the overall welfare of our communities, the time has come to rationally consider the power sector as a whole from the true perspective of 20 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 20

the societal development.

2. Review of Capacity addition in 11th Five Year Plan (200712)

The capacity addition target set for the 11th Plan was 78,700 MW, about quadruple of what could be actually achieved during the 10th Plan. Capacity addition likely during 11th plan as per Mid Term Appraisal (MTA) was fixed as 62,374 MW. The likely capacity addition during 11th plan is about 52,063 MW. This meant only about 66% of the target addition was achieved. The past record of capacity addition in the previous 5 year plans also is known to be much below the target. The constraints in achieving capacity addition target seem to be only increasing with each passing year if the recent past performances are any indication. The difficulties in ensuring adequate fuel; land acquisition issues; people’s opposition to large scale displacements; and the ever increasing levels of environmental awareness amongst the public will all pose obstacles in achieving high capacity addition targets.

There are also other technical and logistical constraints as listed in section 2.9 of the draft. Hence there is clearly a need to factor-in these constraints in CEA’s growth targets for the future plans.

3. Demand Projections for Electricity A credible electricity demand projection for the next 10 to 20 years is a critical part of the electricity generation plan, and hence it should be linked to a realistic appraisal of needs of our society at all levels which then will in turn ensure responsible management of the power sector. The projection by Integrated Energy Policy (IEP) 21 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 21

that the country’s electricity production capacity has to increase by five folds (from about 160,000 MW in 2006 to about 800,000 MW by 2032), seem to have been done without considering the associated social and environmental impacts. The GDP growth centred paradigm in the power sector has led to a situation wherein about 700,000 MW of coal based power capacity addition is reported to be in various stages of planning/approval/construction in the coming years (as per the report ‘THERMAL POWER PLANTS ON THE ANVIL: Implications and Need for Rationalisation ‘ by Prayas Energy Group, Pune, August 2011). This is in addition to about 60,000 MW of nuclear power and about 120,000 MW of hydel power capacity addition by 2031-32 as projected by IEP. When we also consider the National Solar Mission target of 20,000 MW of solar power capacity by 2022, and other initiatives to increase the renewable energy sources, the total power generating capacity may exceed 1,000,000 MW, which will be about 25% more than what IEP has projected for Y2031-32. It is hard to believe that the impacts of such a huge addition in next 20 years will be negligible/ acceptable to our densely populated communities. Hence there is a need to review the very basis of power demand projection adopted by various planning agencies in the country.

3.1

The critical need for a realistic demand projection CEA’s projection of 199,540 MW of peak load & 1,354,874 GWH of annual energy requirement for the year 2016-17; and 283,470 MW of peak load & 1,904,861 GWH annual energy requirement for the year 2021-22 must be considered objectively in this regard.

The planned capacity addition target of 79,690 MW (excluding renewables) for the 12th plan and 79,200 MW (excluding renewables) for the 13th plan must be reviewed objectively in this context.

The basic need for a realistic demand forecast is that it must 22 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 22

objectively take into account the social, economic, and environmental issues such as the changing consumption pattern across different sectors of our economy; nature’s limit; Global Warming potential of energy consumption; and our obligations to the future generations. A carefully thought out strategy consisting of responsible demand side management and sustainable energy supply options has become imminent for the long term welfare of our communities. In this context the electricity demand projection from the official agencies generally has been found to be exaggerated, because of which a large number of conventional power projects, without due diligence, are being proposed/implemented all over the country with hugely avoidable costs to the society. Keeping in view the limits of the nature in supporting unlimited electricity demand and its implications on our communities, all possible efforts must be made to contain it within manageable levels Instead of projecting future electricity demand with the GDP maximizing paradigm, the country must aim at determining the least amount of electricity required to eradicate poverty.

3.2

The issues with high demand projection When considered in the backdrop of the fact that the total power production capacity of about 180,000 MW (as at the end of 2011) was achieved in about 64 years, the enormity of project related issues to the society of adding about 600,000 MW in next 20 years (increase from 180,000 MW to about 780,000 MW by 2032 as per IEP) may become clear. The social, economic, environmental, and health impacts on our densely populated communities of such a huge addition will not be inconsiderable, to say the least.

Though there is no guarantee that all these proposed power plants may get built, even 50% of them if built, can have huge consequences. It seems this large number of power plants is being proposed without due diligent studies about their true need, and without objectively considering the 23 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 23

impacts on our densely populated communities.

Looking at the very large number of coal based power projects being proposed all over the country, it seems the private investors are rushing in to cash on the golden opportunity of profiting while there is a perceived need for lot of additional demand for electricity. Sadly, one cannot see much of diligent studies w.r.t the real need for such a base load power during the economic life of the project; the optimum size and location of the project; the assurance of reliable supply of coal and water; the social & environmental impacts of such a project etc. Encouraging such a rush are the actions by the state governments, which are providing many incentives such as large chunks of lands at throwaway prices; assurance of large quantities of fresh water even at the risk of denying the same to the local population; tax holidays; financial guarantees; police protection to acquire lands against the will of the people etc. In many cases such incentives are disproportionate to the real benefits to the state, and hence are viewed as undue political favors to private firms/individuals. Almost all such project proposals are being vehemently opposed by the locals, who view the largesse by the state governments as a form of serious corruption.

In the absence of a diligent study w.r.t the real need for such a large number of additional power projects, there are credible concerns that the huge costs incurred by the society, may not be commensurate with the benefits. In the worst case scenario we would have stranded assets and an economic meltdown similar to the 2008 realty sector fiasco in the US. Already the banking sector exposure to power sector has become a cause of concern. Additionally, the strain on our resources would be difficult to tackle.

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In order to avoid excess of production capacity, as is likely with the proposed number of plants in the country and which will result in massive burden on the society, a realistic demand projection is critical.

A high demand projection figure by IEP between 2006 and 2032 works to about 6.4% compounded annual growth rate (CAGR) w.r.t the base figure of 153,000 MW in 2006.

Such a growth rate in power production capacity will lead to very high coal consumption rate, and hence consequently will put tremendous pressure on the entire coal energy cycle, including the coal mining operations and the coal transportation infrastructure. It is difficult to imagine that the vulnerable sections of our society will not be adversely impacted by the infrastructural nightmares associated with the corresponding increase in mining, transportation and consumption activities. Forceful displacements; denial of access to natural resources; accelerated environmental degradation (through forest felling for additional mines) will all occur, and impact such sections.

The major concern with such a high electricity demand projection is that all the planning agencies of the Union government and state governments are likely to proceed with gusto to achieve that generation capacity target without the required due diligence process, as has already been noticed in the spurt in applications for additional power projects in recent years. The big question is: whether our society can afford such a huge additional demand on the grid, because all of such additional demand may not contribute to the economic development or may not lead to true welfare of our masses. But the social, economic and environmental impacts of such a huge addition to the in25 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 25

stalled capacity will certainly be enormous, and may even defeat the very purpose of high GDP growth, which is the all round welfare of all sections of our society. In view of the fact that the fossil fuels, such as coal, natural gas and diesel, are fast running out and there is an inherent limit to the amount of energy we can draw from the nature, the inevitability of limiting the true electricity demand becomes clear. Hence there is a need to keep the overall power demand within manageable limits.

3.3

The problem with GDP growth centred demand forecast IEP, in its discussions on future energy demand, acknowledges the falling elasticity of electricity consumption/generation in the 13 years period between 1990-91 and 200304 as compared to the 23 years period between 1980-81 and 2003-04. This observed drop in elasticity from 1.3 to 1.06 has been projected to continue to drop to 0.78 for the 10 year period from 2021-22 and 2031-32. IEP also clearly acknowledges that energy elasticity of GDP can be shaped by policy interventions, the relative price of fuels, changes in technology, changes in end use efficiency of equipment, the level of energy infrastructure and development priorities that affects the structure of economy. In this context instead of recommending effective action plans to reduce the effective demand for electricity, IEP seem to have taken a path of high demand growth on the basis that the population will increase and the purchasing capacity of the general population associated with 8% GDP growth will increase.

CEA’s demand projection also seems to have gone with this approach.

CEA, in Report on Seventeenth Electric Power Survey (EPS) of India had projected CAGR of electricity consumption at the rate of 10% up to 2012 and 9% up to 2022. The pro26 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 26

jected demand for peak load power is assumed to grow in same ratio. These two figures are very high and seem to have been arrived at through very conventional methods without factoring in the changes in the consumption factors. Dr. Bharat Jhunjhunwala, a development economist, has done a detailed study of the methodology used in CEA electricity projection (“Economics of Hydro power”, Bharat Jhunjhunwala, Kalpaz Publications).

Electricity prices are assumed by CEA to grow by two percent per year despite increasing role of private sector in electricity generation and distribution. While this assumption can be viewed as negation of the entire philosophy of liberalization and privatization, it would be appropriate to estimate lower demand for electricity due to higher price.

This is ignored by CEA. This is especially important for demand during peak load hours of the day. In this way CEA seem to be variously making excessive projections of electricity requirement.

Dr. Jhunjhunwala has concluded that the basis on which very high projection of electricity demand has been made is on certain wrong assumptions wherein previous 30-year growth rates are used to make forecast for future consumption of electricity instead of the latest 5 year growth rates. As per 17th Power Survey for the 30 year period (1974-75 to 2004-05) the Electricity Consumption CAGR% was 6.87 % as compared to GDP (93-94 prices) CAGR% of 5.4 %. But as compared to this for the 5 year period (199900 to 2004-05) the Electricity Consumption CAGR% was 4.3 % as compared to GDP (93-94 prices) CAGR% of 5.9 %. This data indicates that GDP growth in India has exceeded that of electricity consumption in the 5 year period of 2004-05 to 1999-00 by a good 1.6%. This clearly corroborates the view that because of the increased contribution of services 27 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 27

sector to the economy there will be continued delinking of growth in our economy from the electricity consumption.

Considering the increasing domestic consumption and continuous growth in commercial sector/ urbanization, and the increasing standard of living one would expect a lumpy load curve in the near future unless appropriate course corrections are taken. This aspect is very important when we look at the ideal generation mix to cater to the load curve.

The recent/present trend of building a large number of coal based power plants should be reviewed carefully in this context, because they are unlikely to fit into such a power scenario, and may result in stranded assets or generation assets with low percentage of utilisation. Such a situation may lead to a huge but avoidable burden on the society.

The share of service sector in our GDP is increasing rapidly as compared to that of agriculture and the industry.

This sector has taken off in a grand manner after the liberalization in 1990. It is well known that the services sector consumes electricity only in small quantities. In view of the unmistakable trend of increasing contribution of services sector to GDP but decreasing share in electricity consumption, we can say that the overall economy will not need huge additional electricity for growth in the near term future, as has been projected by IEP/CEA. On the other hand the change in consumption by domestic sector, as per CEA data, is large at 3.9% (between 2005-06 and 2011 -12: data from 17th EPS). This means that our society demands more electricity for consumption and raising the standards of living by the people. While this may be acceptable, this fact also gives an entirely different dimension to the increased generation of electricity. Generation of electricity for economic growth may be expected to provide trickle-down or secondary benefits while that for consumption does not 28 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 28

provide any secondary benefits. CEA fails to recognize this aspect and passes off the increased need for electricity as necessary for economic growth while in reality it is largely for consumption.

Dr. Jhunjhunwala concludes: “The unmistakable conclusion is that CEA has deliberately ignored its own latest 5-Year data and relied on the previous 30-Year data to make excessive forecasts of electricity consumption. These forecasts have then become the basis of India bending to make an agreement with the U.S. for nuclear power and the country destroying its rivers and land mass for generation of hydropower.”

Installed power capacity in the country has grown at 5.87% per annum over 25 years period previous to 2003 as per IEP. Despite such massive increase in installed power capacity during the previous 25 years, about 57% of the rural households and about 44% of the total households in the country did not have electricity in 2000 as per IEP. IEP recognizes that the energy intensity of our economy has been falling, and is half of what it used to be in the early 70s but there is significant room to improve.

IEP’s projected installed power capacity of 780,000 MW by 2031-32 appears to be unrealistic due to various factors: international efforts are accelerating to contain the Global Warming through measures such as energy efficiency improvement, energy conservation, demand side management (DSM); there are increased use of distributed type renewable energy sources which will reduce the demand on the integrated grid; international co-operative efforts are gaining momentum to reduce the use of fossil fuels; India has launched 8 national missions, including one on energy 29 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 29

efficiency, to combat Global Warming; the overall efficiency of the power sector is poor indicting the huge scope for improvements. All these measures, if undertaken earnestly, will reduce the effective grid demand for electricity by a considerable margin. Additionally, since this projection is on the assumption that the electricity demand will grow at 6.4% CAGR and linked to GDP growth rate target, even the decreasing elasticity of demand due to strong growth in services sector is wholly ignored. Hence it is realistic to say that IEP projection of 780,000 MW installed power capacity by 2031-32 is exaggerated, and hence should be a concern because on the basis of such projection massive power capacity addition can happen at huge but avoidable costs to the society.

Whereas the assumption that a high GDP growth rate of 8-9 % through 2031-32 will alleviate poverty in the country early due to trickle down effect is itself seriously questioned, it should be noted that the huge growth in the installed power capacity since independence has not been able to provide even the life line electricity to more than 40% of the households (Census 2001). Installed electricity generating capacity in the country has grown phenomenally from about 45,000 MW in 1985 to about 186,000 MW in December 2011; an increase of 4 times in 25 years. Annual electricity generation from all sources has increased from about 61,000 MU in 1970-71 to 724,000 MU in 2008-09 an increase of 12 times in 30 years. The national per capita consumption has gone up from 238 kWH in 1989-90 to about 780 kWH in 2011, an increase of more than 3.2 times in 21 years. Despite such phenomenal increases in generation capacity since independence, considerable sections of our population are still deprived of electricity connection, and various forms of electricity crises are continuing. So, massive addition to generating capacity alone cannot be seen as the panacea for our power sector problems.

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Hence additional power generating capacity through conventional power sources should be considered with extreme caution. A paradigm shift is needed in the way our society looks at the linkage between electricity and the all round welfare. The planned capacity addition target of 79,690 MW (excluding renewables) for the 12th plan and 79,200 MW (excluding renewables) for the 13th plan must be reviewed objectively in this context.

3.4 The past & present practice of exaggerated demand projections In the book “Silenced Rivers” Patrick McCully says that the over projection of electricity demand is a regular pattern adopted by most bureaucracies: “Electricity demand forecasts consistently overestimate future needs for electricity.

In more than 100 national demand forecasts used by the World Bank, actual demand seven years after the forecasts were made was on the average one-fifth lower than that had been projected. The deviation between projected and actual (demand) increased with the number of years from the date of forecast.” The demand projection and the actual during the last few years in the country seem to corroborate what Patrick McCully has said.

The Demand Forecast and Actuals for the country between 2004-2010 (as provide in the agenda for 18th EPS) indicates that the projected demand during each of these years was higher than the actual figures by as much as 10% for the peak hour demand during 2008-9.

Another example of over projection of electricity demand 31 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 31

is in the case of Karnataka state. For each year during the period between 2003 and 2011 the actual annual electrical energy requirement for the state was less than that projected by 17th EPS by a quantity which was as high as 9% in 2005-06 as shown in the table below.

Year 17th EPS State Actuals Variation 2003-04 23143 21367 -8% 2004-05 24781 23169 -7% 2005-06 26518 24112 -9% 2006-07 28747 28454 -1% 2007-08 31192 30073 -4% 2008-09 34059 32484 -5% 2009-10 37347 34978 -6% 2010-11 41050 38668 -6%

It is a common fact that working out energy and peak requirement of the country in a shortage scenario can become highly subjective. There seems to be a tendency on the part of states of our Union to project shortages on the higher side so as to get a larger share of Central assistance.

In view of the fact that that there is a steep decline in CAGR of electricity consumption from 6.87% in the 30-year period (between 1974-5 and 2004-05) to 4.30% in last 5-years (between 1999-2000 and 2004-05), and taking into account all the above mentioned factors, it can be argued that not more than 4% of CAGR of electricity generation/ consump32 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 32

tion for next 20-25 years seems reasonable. More importantly, it appears feasible to restrict the actual electricity demand growth to this level without compromising the welfare of our communities. On the basis of all these arguments the scenario emerges that the total installed capacity in the country by 2031-32 need not be much more than the range of 388,000 MW (for 4% CAGR) to 497,000 MW (5% CAGR). This is in stark contrast to the range of 778,000 MW (at 8% CAGR) to 960,000 MW (at 9% CAGR) as projected by IEP.

3.5.

Need for reducing the effective grid electricity demand In the context of the STATE strongly advocating the high GDP growth centered development, the society has to address a much more fundamental question as to whether we should aim at such a GDP growth rate for the next 20 years, as IEP seems to indicate for the period upto 2031-32.

Such a high GDP growth rate, year after year, will mean the manufacture of products and provision of services at an unprecedented pace leading to: setting up of large number of additional factories/manufacturing facilities; consumption of large quantities of raw materials; unsustainably increasing demand for natural resources such as water, minerals, timber etc.; acute pressure on the govt. to divert agricultural/forest lands for other purposes; huge demand for energy; clamor for more of airports, air lines, hotels, shopping malls, private vehicles, express highways etc. Vast increase in each of these activities, while increasing the total GHG emissions, will also reduce the ability of natural carbon sinks such as forests to absorb GHG emissions. These consequences will also result in depriving the weaker sections of the society even the basic access to natural resources, while driving the fragile environment to a point of no return.

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Does our society need such an eventuality? Is this what we want from Global Warming perspective? Can we see the overall welfare of the vulnerable sections of our society in this scenario? Hence, the present practice of electricity demand projection based on a high GDP growth rate needs to be viewed with much more objectivity. The primary objective should be to remove poverty of the masses. Human Development Index (HDI) improvement might be considered as the objective function rather than GDP growth.

Whereas Indian government’s stand in international Climate Change negotiations has been that it should have no obligation of targeted reduction of GHG emissions (because its per capita GHG emissions is much below the world average), the energy profligacy and inequitable energy consumption pattern within India should be of a major concern. Much of the population, which is in lower income group, have per capita CO2 emissions of about 335 kg, while a section of the population with the highest income group have per capita CO2 emissions of about 1,500 kg. This was the summary of a survey report by Greenpeace India under the title “Hiding Behind the Poor”. Because of close linkage of CO2 emission to energy usage, the societal impact of such inequitable energy consumption pattern is that the poorest will be the most affected by the Global Warming, while the energy profligacy of the rich is the main cause for Global Warming. By removing such huge inequities through reduction in the energy profligacy of the rich, the legitimate overall demand for electricity can be reduced while meeting the life-line electricity needs of the poor.

A December 2009 study report by title “Still Waiting” by Greenpeace India indicates that while most of the additional installed capacity during the last 10 years has gone on to meet the escalating demand for electricity in urban areas, 34 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 34

the rural communities continue to be denied with even the life line electricity. This report also highlights that whereas the state capitals are getting between 23- 24 hours of electricity supply on an average and larger towns and cities are getting between 21- 23 hours of supply, villages are not getting even 12 hours of assured supply. It should be a matter of grave concern to a welfare society that whereas the energy profligacy in urban areas is escalating unabated in the form of air conditioners, AC shopping malls, electronic gadgets, night time sports, vulgar use of lighting for commercial advertisements, unscientific use of electricity for streetlights etc. the villages are not getting even life line energy.

Whereas the STATE continues to say that large addition to installed electricity generating capacity is essential to provide electricity to 100% rural households, a blatant discrimination exists where cities are registering continuous increase in per capita consumption of electricity, and the rural areas are being denied of electricity even for the basic applications such as lighting and drinking water.

The total requirement of electricity for the 40,853,584 un-electrified households (as on April 2005) is estimated to be about 1.2 billion units per month @ 30 units per month per family; life line electricity. This is only 1.8 percent of the average generation/month already achieved in 201011. The clinching point in this regard is: if our society cannot dedicate 1.8% of the total electricity produced in the country to the 40% of the rural households even for life line electricity, how can we say that all the additional electricity being generated every year is for the sake of providing electricity to the un-electrified households? The reality is that almost all of the additional electricity produced in the country every year is going to cater to the increased de35 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 35

mand by those who already have access to electricity, while many sections of the population continues to be without access even to life-line electricity.

3.6 The scope for reducing the effective grid electricity demand If the energy profligacy in urban India and by the rich is contained to the manageable level, the saved energy is likely to be so huge that 100 percent household electrification in villages may be achieved, and the life line energy for every house hold can be assured even with the existing generating capacity. Keeping in view the huge potential in distributed electricity sources such as roof top solar systems and community based bio-mass plants etc. and the efficiency improvement measures it is not inconceivable that through the existing techno-economically viable means it is feasible to drastically reduce the effective demand on the grid based electricity network. A study of the Karnataka power system in 2008 by the author has indicated that the existing demand for electricity in the state can be effectively reduced by as much as 50% by these measures.

The average Plant Load Factor (PLF) of thermal power stations in the country is reported to be about 75%, while the best run power plants of National Thermal Power Corporation (NTPC) have PLF of above 90%. Some of the coal power plants in the eastern and north-eastern states are reported to be operating at less than 50% PLF. With about 93,000 MW of total installed thermal power capacity in the country, the increase in average PLF to 90% will save the need for about 11,000 MW of additional installed power capacity.

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It is techno-economically feasible to reduce the technical losses in transmission and distribution of electricity from the present level of about 25% to less than 10%, as has been demonstrated in certain pockets such as Bangalore city. This step alone can reduce the need for additional installed power capacity of about 15,000 – 20,000 MW at the national level.

The inefficiency in end use applications also is unacceptably high. As per a recent study report by Prayas Energy Group, Pune the usage of energy efficient models of common house hold appliances such as lamps, refrigerators, fans, TVs, radios etc. can result in about 30% energy savings in households annually by 2013. This may correspond to an avoided additional generating capacity of about 25,000 MW.

At the national level about 30% of all the electrical energy consumed is attributed to the agricultural sector in the form of irrigation pump (IP) sets. Improving the overall efficiency of these pump-sets from the suction end to the delivery end at the national level will save a huge quantity of electrical energy annually. Any amount of effective investment in this sector will be worthy of the cause, because not only the perpetual energy losses will be avoided, but it will also result in all-round economic benefits like higher agricultural and industrial production.

In the current scenario, the huge potential to reduce the electricity demand for agricultural pumping through effective rainwater harvesting has also escaped the attention of IEP and CEA. With the ground water table getting continuously lower and lower, the energy required to pump water will continue to increase unless remedial measures 37 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 37

are taken on a war footing. With effective and widespread rain water harvesting measures the electricity demand for water pumping for agricultural and domestic needs can be reduced considerably. The fact that agricultural pumping is accounting for about 30% of the total electricity consumed and that water is being lifted from depths more than 500 feet in certain parts of the country must force our society to consider the rain water harvesting to reduce agricultural pumping loads very seriously. So demand side management in power sector has a very strong link to rain water harvesting/ground water recharging in the Indian context.

CEA should highlight this issue prominently.

IEP itself has admitted that the potential of DSM to reduce the effective demand is about 25%; and CEA’s draft generation plan also has admitted the savings potential of 15% (table 12.1) excluding that from T&D loss reduction and few other DSM measures.

Such gross inefficiencies clearly indicate that in reality there is no need for the crippling power cuts we are experiencing year after year.

Going by our past record of actual annual growth in consumption, and the credible forecast that energy intensity of our economy will keep going down for decades, the projection of demand growth at CAGR of 3-5% may seem reasonable. However, honest efforts must be made continuously to limit our peak electricity demand so as not to exceed 85-90 % of the total installed capacity. On taking all these factors into objective consideration it seems reasonable to project an average CAGR of 4% in power demand in 12th and 13 th plans.

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In this context a high level analysis of the power scenario in the country throws up an interesting picture, and may point towards a viable solution to the power sector woes.

• Installed Generation Capacity (As on 313-12) was 199,877 MW with 175,377 MW of conventional power and 24,500 MW of renewable power.

• The peak power and annual energy demand for year 2011-12 was 130,250 MW and 936,568 GWH (as per CEA website).

When this peak power demand is compared to the capacity available in the system, it allows a spare capacity of about 45,000 MW of conventional power capacity alone. Allowing for 10% outages and 10% reserve (a total of about 26,000 MW) the system seem to have surplus of about 19,000 MW installed generating capacity without taking into account the renewable power capacity.

• The actual/deemed peak demand on the grid of 130,250 MW during 2011-12, when viewed from the perspective of gross inefficiency prevailing in the sector means that in real term it is much less. CEA itself admits that there is a saving potential of 15% in the end use (as per Table 12.1). The T&D loss reduction of 10% is techno-economically feasible during the 12th and 13th plan periods if adequate emphasis is provided.

Through DSM the actual peak demand on the grid can be brought down further.

39 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 39

• Even assuming the demand reduction potential of only 25% (15% from end uses PLUS 10% from T&D losses), the true demand on the grid as on 31.3.12 could have been only about 98,000 MW of peak power, and 702,426 GWH of annual energy during 2011-12.

• On the basis of these figures for the peak power and annual energy demand as on 31.3.12, and at an assumed CAGR of 4% demand growth, the power demand in the country can be projected as 139,485 MW of peak hour demand and 999,771 GWH of annual energy by 2021.

• What this basically means is that the power sector may not need a lot of additional capacity if the existing infrastructure is put to use optimally.

• But it requires concerted efforts not to allow the true demand on the grid to escalate without checks and to increase efficiency at all levels/segments of the power sector. Anyway, this approach has also been advocated in the CEA plan. There can be no doubt that our dense & hugely populated society cannot afford to permit unchecked demand growth. Fortunately, there are many credible methods of reducing the demand to manageable levels without having to compromise on community welfare activities.

• It appears credible that by increasing the operational efficiency of the existing power plants alone the projected demand on the grid by 2021 can be comfortably met.

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This requires taking the average PLF of coal power plants to about 85%.

• This should be done by replacing all the old and inefficient coal power plants (those units of capacity less than 250 MW and PLFs less than 70%) by supercritical coal power plants at the existing sites to reduce the need for additional land, water and other infrastructural facilities. This process should be planned to be continued in 14th and 15th plans also until the efficiency of every coal power unit in the country is of acceptable standards.

• As compared to the huge logistical and societal problems associated with the planned capacity addition of about 79,000 MW in each of the 12th and 13th plan periods (or about 700,000 MW of capacity which are reported to be in the MoEF pipeline), this approach brings huge benefits to the society while avoiding humongous costs.

• In view of the huge potential existing in the distributed type renewable energy sources such as roof top SPVs and community bio-energy plants, the additional annual energy requirements by 2021 and beyond should be met by them as far as possible, by shifting smaller loads from the grid to these distributed power sources.

• The huge solar power potential should be made use of to meet the additional peak demand also in future by installing CSPs of 10 to 15 MW capacity at suitable locations (such as each taluka places) to feed to the grid.

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CEA plan should consider this approach seriously starting from 12th plan period itself.

With adequate emphasis on transferring most of the smaller loads such as lighting in domestic, commercial and streetlights etc. and appliances such as TV, computers, small water pumps etc. on to distributed renewable energy sources such as roof top solar PV panels, roof top solar/ wind hybrids, community based bio-mass systems etc. the demand on the grid can be further reduced. But such a scenario demands concerted efforts at all levels of our society.

If we objectively consider the true potential of distributed renewable energy sources it is reasonable to project that most of the capacity addition from now onwards should come from renewable energy only, if we also take concerted actions to improve the efficiency of the existing infrastructure. Since India has huge potential in renewable energy sources, this concept should be seriously considered for implementation, as is being done to some extent through the Ministry of New & Renewable Energy (MNRE). It can also be deduced that the large number of conventional power plants in the pipeline must be reviewed in this context, and drastic action must be taken to minimize them.

In view of the huge deleterious impacts on our society of conventional technology energy sources such as coal based, dam based or nuclear based power projects all out efforts must be made to minimise the number of such power plants by containing the legitimate demand for electricity to a manageable level through all credible measures. Nature’s limit in providing energy from such sources and its ability to absorb the impacts of various activities associated with such sources should be of criti42 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 42

cal consideration.

For inexplicable reasons IEP has not taken such a holistic approach to curtail effective electricity demand on the grid.

Unfortunately, IEP has implicitly or explicitly adapted the GNP maximizing paradigm to estimate energy/electricity demand which may lead to potentially serious consequences to our communities.

CEA’s generation plan should not commit similar blunder. In view of the many serious implications of unlimited energy demand growth as discussed in this section, there is rather an inevitable requirement to estimate objectively what is the least amount of energy needed to wipe out poverty, and how best to meet it in a sustainable manner. There is no escaping the inevitability of the need to decouple our economic growth from increase in energy consumption.

3.7 What constitutes true electricity demand in India?

One way of projecting the electricity demand for the medium to long term future could be on the basis of per capita electricity consumption/production. Since improving the HDI of the poor people in the country is quoted as the objective of large number of additional power projects being planned all over the country, increasing the electricity availability to the domestic consumers in rural area (who are the most affected by poor performance of the power sector) must be of highest priority. Hence per capita electricity consumption/production can be a good basis for demand projection provided we take the necessary care.

Though the real objective of improving the HDI of the poor people in the country OR lifting the poor from the clutch43 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 43

es of the poverty is very noble, the continuing practice in our society has been to divert most of the additional generating capacity to increase the per capita consumption of the urban areas. The inequity of electricity supply to urban and rural areas is glaring, and it should be a matter of great concern to the planning bodies that there seem to be no indication of this inequity coming down, unless there is a paradigm shift in our approach.

It will not be an exaggeration to suggest that much better HDI of the rural and poor communities can be satisfactorily achieved by ensuring equitable distribution of the electricity already being produced in the country. But far from making attempts in this direction the electricity made available to urban and rich households is increasing vastly since decades, while millions in our villagers remain without access electricity, and even those villages which have access to electricity have deplorable quality of electricity supply. So the argument that additional power projects are required to provide electricity to the un-electrified houses is at best called a fallacy. There is so much of wastage and luxurious usage of electricity in urban areas, that even if a small portion of such saved electricity is made available to un-electrified houses, every house in the country maybe able to get a minimum life line electricity of 30 Units per month, which is also the target set by the Planning Commission in IEP.

A practical example can illustrate better the fact that the present national average of about 800 kWH per capita is not small in the Indian context. The author is living in a village of about 200 houses, and the monthly electricity consumption of his family of three at present from the grid is about 60 Units, which he finds to be of adequate level as demonstrated by the comfortable life style he has. This works 44 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 44

out to about 240 kWH per capita /annum. Most of the rural houses in India will need electricity only for lighting, charging the cell phones and few entertainment appliances such as TVs and radios. Most of the rural families also may not be economically strong/ willing to pay for higher electricity consumption. They are known to have monthly electricity consumption of only about 30 to 40 units. Assuming an average of 40 units/per month per family of 4 the annual per capita consumption of a rural household works out to 120 units. As of now it is difficult to imagine how a rural household will need much more than this level of electricity consumption for a decent life style and to improve its HDI. Even if we assume that some of the rural houses may have to use electric stoves for cooking and electric geysers for bathing purposes, and accounting for increased purchasing power, a per capita electricity usage from the grid of 240 kWH /annum should be more than adequate for an acceptable level of HDI during next few decades. The society can and must make concerted efforts to minimize grid electricity consumption in applications where bio-mass or solar energy is feasible, at least in rural areas.

As compared to this low electricity consumption in villages, the average monthly electricity consumption of a family in cities is known to be in the range of 160 to 200 Units.

If we look at the common appliances used in such urban houses one can say that these houses already have a high level of comfort and an acceptable level of HDI. The only issue in urban areas seems to be that the reliability of electricity supply is bad. Assuming on an average 4 people in a family this monthly consumption of 200 units works out to 600 kWH/annum of per capita for an average urban family. Let us remember that this is for only about 35% of the population which is living at present in urban areas. The projections are that by Year 2050 about 40 to 45% of our population may live in urban areas. Assuming that it will be about 50% by 2050 we should assess the minimum electric45 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 45

ity requirement at the national level. On this basis of 50% population in urban areas and 50% in rural areas it may be safe to assume that a per capita consumption of 420 kWH (= 0.5*600+0.5*240) at the national level for domestic usage can be expected to provide an acceptable level of HDI.

Having identified the electricity needs of domestic consumers, let us consider the electricity needs of other economic entities such as industries, agriculture, commercial establishments; common services like water pumping, street lighting, water pumping, sewerage treatment, railway traction, govt. offices, schools, colleges, public places, entertainment etc. as long we keep the wastages under check.

Of the present national average of 800 kWH/annum of per capita (during the year 2011 -12 as per CEA) the remaining 380 kWH per capita after accounting for domestic uses (800 - 420 kWH) should be able to meet a satisfactory level of common services requirement as being experienced now. We should bear in mind that even with a low per capita national figure of 800 kWH (as compared to the world average), India is already recognized as a major economy indicating that its impact through industrial and commercial development is not insignificant.

3.8 How much electricity is needed for non-domestic usage in India?

Since the primary objective of producing more electricity is stated to be the overall welfare of our communities, and since a per capita consumption of 420 kWH is argued to be adequate, the focus should be on the amount of electricity which may be needed for all other non-domestic applications.

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Even if we assume that these common service requirements (other than domestic consumption of electricity) have to increase by a considerable margin to provide acceptable level of economic growth and life style by 2050, the total electricity consumption at the national level per capita of about 1,000 kWH/annum may be adequate, keeping in view that our population is growing, and the electricity that can be made available for such common service requirements will also increase substantially between now and 2050 when the population is expected to increase from 1.2 Billion now to about 1.5 Billion. The huge inefficiency prevailing in all segments of the power sector clearly indicates that much higher amount of electricity can be made available for such common services even at the present per capita of 800 kWH. As clearly recognized in IEP there is a scope for reducing the electricity demand by about 25%.

High level estimation indicates that taking the efficiency of various segments of our power sector to levels of international best practice, the overall savings can be of the order of about 30%. This basically means that the present per capita of production of 800 kWH can become as effective as about 1,040 kWH.

Hence, the electricity that can be made available for non-domestic purposes in 2050 can be considered adequate if care is taken to minimize the losses and wasteful consumption. Considering the fact that we already have a considerable industrial and commercial base, and considering the fact that there is gross inefficiency and wastage in the end use applications it may not be unreasonable to project that 1,000 kWH of per capita consumption for 1.5 Billion population projected in 2050 will lead to adequate HDI. This increase from the average of 800 kWH per capita for a population base of 1.2 Billion at present to 1,000 kWH in 2050 for the population base of 1.5 Billion should be able to take care of all the additional energy required for the non-domestic uses of the nation. Anyway, the rural pop47 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 47

ulation will not need as much energy consumption as the urban population even for common service requirements.

If the focus in future (say by 2030 or 2050) is towards distributed type of renewable energy sources, as it should be, higher per capita electricity need not be such a major concern, because the net demand on the integrated grid can be controlled effectively.

The comparison of per capita consumption in our society with that of developed countries should not be an option at all, because it is already being felt that the energy consumption in the developed countries is not sustainable, as can be seen in the Global Warming debate. Hence even though 1,000 kWH/annum as average per capita consumption will appear much less as compared to that in developed nations, all out efforts should be made to reduce it even further keeping in view the nature’s limit to support high energy demand, and the impact on our society and the environment of setting up a large number of conventional power plants. The main focus must be to minimize the electricity consumption through high levels of efficiency, and by minimizing the wastages and luxury usages.

It would seem a necessary shift in the approach to base electricity demand projection for the medium and long terms on 1,000 kWH per capita production for the given population. Once the total electrical energy requirement of a year is projected on this basis, it will not be very difficult to project the peak power demand and hence the power generating capacity connected to the integrated power grid. Also, since more and more renewable power sources are expected to be deployed in distributed mode, the complexity of meeting the peak power demand will also be 48 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 48

reduced.

3.9 Electricity/energy demand and development paradigm for India In order to keep the power demand to a manageable level and also to ensure an inclusive growth our development paradigm has to be vastly different than what we have been witnessing during the last 64 years.

It is high time we also questioned the very fundamental concept of the need for ever increasing gross domestic product (GDP) to achieve the fantasy of development. This development concept requiring mindless consumption of unsustainable natural resources is the root cause for the current energy crisis, and hence must be thoroughly reviewed.

Unfortunately despite all the advantages – namely still a rural based economy, not yet addicted to much of commercial energy, potential to transit to knowledge economy from agricultural economy skipping industrial economy, and inheriting the values from more than 5,000 years old civilization - Indian political system is influenced more by the western belief of material wealth. As is in India, many developing countries are confronted with a crippling multi-dimensional energy crisis. Energy security has become a major factor stifling the economic growth, frequently igniting political crisis, governance problems and civil unrest.

Electricity supply in rural areas is a classical case of ‘L-IF-O’ (last-in-first-out); the last to get supply and first to get 49 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 49

disconnected in a shortage situation. So, the argument of needing additional power production capacity to provide electricity connection to rural India is simply not tenable.

UN Conference of 1974 had adopted “The Cocoyoc Declaration” which had said on the purpose of development: “Our first concern is to redefine the whole purpose of development. This should not be to develop things but to develop man. Human beings have basic needs: food, shelter, clothing, health, education. Any process of growth that does not lead to their fulfillment - or, even worse, disrupts them - is a travesty of the idea of development”. Nearly 4 decades later our society appears not to have appreciated the importance of this declaration, and is still focusing on GNP maximising paradigm.

It is also appropriate here to note that UN Secretary-General’s High-level Panel on Global Sustainability in its report “Resilient People, Resilient Planet: A Future Worth Choosing” launched on 30 January 2012 in Addis Ababa, has strongly advocated for such a path of sustainability, by stating that “Eradication of poverty and improving equity must remain priorities for the world community,”

Our society has no alternative but to take such tough decisions and measures to ensure true welfare of our communities while doing our best to contain the Global Warming.

In the background of all these glaring issues, it would tantamount to letting down the public if the STATE continues to spend billions of rupees of the state’s revenue and precious natural resources in establishing large number of additional conventional power plants without harnessing all the techno-economically benign alternatives first.

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Our society needs much more holistic approach than the conventional methods of demand projection in order to move towards a sustainable action plan for the welfare of all sections of our society. We can choose either a carefully thought out strategy of responsible demand side management and sustainable energy supply options, OR allow the things to drift by the unlimited energy demand, and face all the associated serious consequences through the continued use of fossil fuels and nuclear power.

4. Global warming and environmental considerations

The fourth assessment report of IPCC shows that the emissions of the greenhouse gases that contribute to global warming must fall by 2050 by 50-85% globally compared to the emissions of the year 2000, and that global emissions must peak well before the year 2020, with a substantial decline after that, in order to limit the growth in global average temperatures to 2 degrees Celsius above pre-industrial levels. In the near term, by 2020, emissions from industrialized countries need to be reduced by 25-40% below 1990 levels, while substantial deviations from the current trend in developing countries and emerging economies will also be required. In this context it is impossible to imagine how India’s total GHG emissions can be less in the future five year plans as compared to that in Y2011, let alone that in Y2000, unless definitive measures are taken with concerted efforts to reduce the GHG emissions form the power sector.

Additionally, it should also be kept in mind that those activities in our society which will result in GHG emissions will also have impact on the pollution of land, water, and air; on accelerated depletion of natural 51 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 51

resources such as forests and fresh water sources; on the food & agricultural products; on the access to natural resources for livelihood of vulnerable sections etc. Hence, the total GHG emissions of the country should be a huge concern from the all-round welfare perspective of our people even if we care less from the perspective of our international obligations.

4.1

GHG emission from power sector

CEA’s generation plan states that: “At the macro-economy scale, India is a low-intensity producer of CO2 emissions with per capita CO2 emissions being among the lowest in the world, ….. India also performs very well when compared to other economies in respect of CO2 intensity per capita GDP (tons of CO2 emissions per unit of GDP).” As a responsible nation India cannot hide behind the poor on the premise that the national per capita GHG emission is small. In the context of global warming phenomenon what is important is not the per capita GHG emission of our country, but the total GHG emission which will further deteriorate the global GHG emission scenario. With a huge population base, which is expected to grow for many more decades, we cannot afford even to consider a per capita GHG emission scenario, which remotely resembles that of the developed countries. India is already known to be a top GHG emitter, and is projected to be the third largest emitter very soon. As per latest report from the MoEF (Second National Communication to the UNFCCC) the energy sector emitted 67% of the total GHG emissions in the country during 2000. Within the energy sector the power sector is, as is well known, a major contributor to GHG. As per this report in year 2000 , CO2 constituted 92.9% of the total emissions from the energy sector. This report also says that the Electricity generation has the largest share in the primary energy consumption in India, with 40% of primary energy and 70% of coal use.

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Hence the power sector has a major obligation to reduce the GHG emissions.

The ‘expert group on low carbon strategies for inclusive growth’ (Planning Commission, 2011) refers to India’s announcement to reduce the emissions intensity of its GDP by 20-25 % over 2005 level by 2020 through pursuit of proactive policies. It is very relevant to note that his report also indicates that it is feasible to exceed the target of bringing down the emissions intensity of India’s GDP by 10 -13 % by 2020 through aggressive efforts.

CEA plan draft itself admits: “The Indian power sector has immense potential of reducing carbon dioxide emission by way of Renovation and Modernization schemes as some of the plants are old and are operating at a low efficiency.”

In a report released in 2010 (India: Greenhouse Gas Emissions 2007) MoEF has indicated that about 38% of all GHG emissions in our country is associated with electric power sector. Additionally, within the energy sector electricity alone accounts for 65.4 % of all GHG emissions.

While GHG emissions from coal power plants is highest amongst all conventional power plants, the CH4 emissions from the dam based power plants, and the GHG emissions associated with the life cycle of nuclear fuels are not inconsiderable. The campaign by the nuclear power lobbies, that it is environmentally friendly just because the GHG emissions from an operating nuclear reactor is tiny, has no credibility because the GHG emissions associated with a 53 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 53

nuclear power plant whether it is from mining, fuel processing, construction of nuclear reactors, the operation of the same, and the safe storage of spent fuel for hundreds of years can be huge.

In view of such large contribution of power sector to the total GHG emission of the country, there is an urgent need for reducing the emissions from the sector, which is possible only by minimising the number of large conventional power projects, and not by increasing them by a huge magnitude as recommended by IEP. CEA’s generation plan to add about 79,000 MW in each of the 12th and 13th plan periods (and about 700,000 MW of capacity which are reported to be in the pipeline) should be critically viewed from this perspective.

Additionally, the large size conventional power plants have other implications in the global warming context: they result in diversion of forest and agricultural lands for mines, power plants, transmission lines, dams, coal storage, and ash ponds etc.; they also consume large quantities of water.

CEA’s generation plan has put a lot of faith/emphasis in clean coal technologies, super critical and ultra critical technologies, and R&M of inefficient coal power plants in projecting a huge share of additional power capacity for 12th and 13th plans, and as an extension into future 5 year plans also. It should be noted that these measures may reduce the coal consumption and GHG emissions from each power generating unit marginally, but the huge increase in the number of coal power plants (as being projected) will undoubtedly increase the total GHG emissions from the sector by vast quantities, which should be a major concern.

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The issues are similar in the case of dam based hydro and nuclear power plants. Hence the huge increases proposed in these categories will, no doubt, defeat the true objective of NAPCC. 4.2

Inconsistency of power sector practices and the objectives of NAPCC The National Action Plan for Climate Change (NAPCC) has been touted as India’s positive action plan to combat the impacts of Global Warming. But the inconsistencies one can find in the continued policies of the past in power sector w.r.t these missions can clearly defeat the objectives of these missions. There is an urgent need to look at the power sector practices in the context of what is desired in NAPCC, and bring about the suitable corrections. It is very questionable as to how the high GDP centred growth strategy as pursued by the government will be able to ensure the harmony between the objectives NAPCC and the policies/practices within power sector.

One of the 8 missions declared under National Action Plan for Climate Change (NAPCC) is Green India Mission, under which the area for afforestation is proposed to be doubled in 10 years. It is difficult to visualize how the real objective behind this Mission can be realised, if a large number of additional coal mines are permitted to be opened, and huge tracts of natural forests are allowed to be drowned by dams for hydel power plants as has been the recommendation of IEP/CEA plan. Additional nuclear mines also will destroy natural forests. A large number of additional transmission lines will lead to felling of huge number of trees, and may lead to fragmentation of thick forests. These are all going to act against the interest of forests/green cover.

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Whereas few missions, including Green India Mission, have been launched in recent years at huge costs to the society with the avowed goal of increasing the green cover, many policies in the power sector can be seen as continuing to act against such missions. An announcement in 2010 by Environment Ministry (MoEF) has indicated that about 33% of all coal reserves in the country are below very thick forests, and hence will be ‘NO GO’ areas for mining. Through an order by Ministry of Coal the earlier proposal by MoEF to classify all potential coal mining areas as “GO” OR “NO GO” areas depending on the density of forest cover, has been rescinded obviously to allow more coal mining operations to start. In this context it should be noted with great concern that because of this decision while the thick forest cover in the earlier proposed NO GO areas, which are known to be very good sinks for CO2 will be destroyed, the mining of coal (and subsequent burning) will lead to massive additional GHG emissions. It is hard to understand how such decisions can be consistent with the overall objective of Green India Mission.

The cumulative impact of large number of coal based, dam based and nuclear based power plants, which are already commissioned and also planned to be commissioned in next 15 – 20 years on densely populated communities, ecologically sensitive areas, and already polluted regions will be massive. The social, economic and environmental impacts on our communities of such massive number of power plants will be huge, and will defeat the very purpose of producing electricity; which is the true welfare of our communities.

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In the context of Global Warming the life cycle CO2 emissions from different power generation sources should become a critical consideration. The life cycle CO2 emissions for solar PV systems operating in India are lower than elsewhere, which is estimated at ~30 grams of CO2 equivalent per kilowatt hour of generation (gCO2eq/kWh), because of its tropical location and weather. In comparison the coal power plants are estimated to result in emissions of the order of 800 to 1,000 gCO2eq/kWh, depending on whether they are subcritical or super critical. The life cycle assessments are reported to indicate that the carbon footprints of wind generation are between 4.8 and 5.5 gCO2eq/kWh for onshore/ offshore turbines. Hydro power plants of the run-off- river schemes or micro hydro schemes are reported to have low carbon footprints of the order of ~ 5gCO2eq/kWh).

Such difference in magnitude of the order of 30 - 180 times in life cycle CO2 emissions between conventional power plants and renewable energy sources should clearly dictate the electricity generation planning strategy for India.

While developing the generation plans CEA should, instead of considering only the technical, financial and logistical aspects (as done by IEP), consider all the related issues in an objective manner, and recommend a set of action plans which will, while providing adequate quantity and quality of electrical power, also minimise the deleterious impacts on our communities.

In particular very high emphasis should have been given to social and environmental issues arising out of gross inefficiency in the power sector. It is difficult to 57 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 57

see such an approach in the generation plan for 12th and 13th Five year periods.

5. Towards a rational Generation Planning

In view of the critical role of the power sector on our society and the environment, while a credible projection of electricity demand for next 5, 10 or 25 years is essential in generation planning, the long term perspective of the society’s overall welfare, the sustainability of the technologies deployed, global warming impacts, the true cost & benefits to the society of these technologies, the concerns of the affected population are all even more important. Without such objective considerations, CEA’s generation plan has the risk being termed as irrelevant from the civil society’s perspective.

5.1

Relevance of generation planning to the masses.

The large number of coal power plants in the pipeline (in various stages of approval, construction and commissioning stages) should be a matter of concern in this regard. As per a notification of the Ministry of Coal in February 2009, a total of 63 applications from State Electricity Boards, 234 applications from independent power producers (IPP), 180 applications from Captive Power Plants were pending as on 2nd February 2009 for coal linkages for power plants of various sizes. This amounts to many times more than that indicated in the CEA generation plan for 12th and 13th plan periods.

The fact that about 700,000 MW of additional thermal power capacity is in the MoEF pipeline (as per Prayas Pune, report) corroborates this scenario. Even if 50% of this planned addition get to fruition in next 10-15 years, it will become a mockery of CEA’s plan to add about 140,00 MW of coal power in the next 10 years.

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When looked at holistically it becomes clear that the generation planning in the country is not on a scientific basis, and the generation capacity is being planned/added without due diligence process. Hence CEA has a critical role to play in streamlining this process.

In the process of generation planning CEA should take into account our own experience since independence, various Acts of the Parliament, international experience/obligations, true costs and benefits to our society, constrains in the country, and the obligations to future generations. In this regard a summary of economic, social and environmental issues w.r.t the conventional technology power sources as in the table below should be a set of critical considerations. These are the issues of huge concern to civil society groups.

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Major issues with conventional technology power sources

Economic Issues

Social Issues

Fossil Fuels (coal, gas, diesel)

Dam Based Hydro

Huge pressure on natural resources such as land, water and minerals; reduced agricultural production; ever increasing capital and operating costs; fast depleting fossil fuels.

Demands large tracts of

Peoples’ displacement and

Peoples’ displace- Peoples’ displacement ment and and health; denial of Health; denial access to the poor to of access to the natural resources poor to natural resources

Health; denial of access to the poor to natural resources Global Warming; Envipollution of ronmental Land and water

Issues

and air; large quantity of ash; radiation from ash

forests and agricultural land; water logging

Methane emission, submersion and fragmentation of forests

Nuclear Power

Demands large tracts of forests and agricultural lands; Huge Capital costs; long term waste management costs

Mining related pollution; radiation emission; GHG emission in the overall life cycle

A recent report from US (a Reuters report of Feb. 16, 2011, quoting a study led by a Harvard University researcher) has revealed the hidden expenses not borne by miners or utilities, including health problems in coal mining communities and pollution around coal power plants. Those costs would effectively triple the actual price of electricity produced by coal-fired plants. Unfortunately, no such considerations 60 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 60

are given in India, where such costs are likely to be even more because of the laxity in enforcing the environmental regulations.

Ignoring such far reaching social & environmental consequences IEP says: “A massive effort is clearly required to expand domestic coal production”. Similarly is the case for hydro power and nuclear power. CEA’s plan generally goes along this path.

5.2.1 Coal power: In continuing to advocate a predominant role for coal power both IEP and CEA seem not have given adequate consideration to the following issues: fast depleting coal reserve and the ever increasing difficulties of ensuring reliable supply for the existing power plants; huge risks and costs associated with the import of coal as experienced in the case of UMPP at Mundra and Krishnapatnam; Global Warming potential of burning such huge quantities of coal; unsustainable levels of pressure on land and fresh water; increasing awareness on environmental issues; strong opposition seen all over the country for additional power plants/ mines; ever increasing capital and operating costs etc.

5.2.2 Hydro power: IEP’s projection that the hydro power capacity should go up from about 36,000 MW in 2006 to 150,000 MW at a much reduced load factor by 2031-32, and CEA’s plan to add hydro power capacity in 12th and 13th plan periods needs careful review. As in the case of a large number of coal power plants huge numbers of hydro power plants are being implemented in Himalayan state without due diligence processes and cumulative impact as61 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 61

sessment of multiple power projects on the same river basin. The state governments which are encouraging such projects and CEA which is entrusted with the responsibility of techno-economic clearances are being blamed for ignoring the following major issues: devastation of river ecology; drowning of agricultural lands and thick forests including some reserve forests; ignoring the local sentiments and forced displacements of large number of project affected families; Methane emission, which is much more potent that CO2 as a GHG; huge impacts on social and economic status of the locals, etc.

5.2.3 Nuclear power: Though the indigenous Uranium reserve is estimated to support only 10,000 MW (as per IEP), CEA/IEP seem to have simply accepted the tall claims by nuclear establishment to add more than 60,000 MW of nuclear capacity by 2032, and hence seem to plan accordingly for the 5 year plans. CEA should have objectively addressed all the related issues such as: energy security if most of the additional power capacity has to rely on imported fuel and technology; huge expectations on the far from ready Thorium based technology; health and safety concerns of the increasing number of people subsequent to Fukushima disasters; huge capital costs involved as compared to that of coal and hydro power plants; the eluding technology to satisfactorily safeguard the spent fuels; the absence of real costs & benefits of nuclear fuel cycle to our society etc.

Without an objective assessment of true costs & benefits to our society how can CEA, an apex body with the necessary technical know how and with the mandate of IE Act 2003, advocate large addition of coal power plants as well 62 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 62

as dam based hydro and nuclear power plants?

5.1

A holistic approach through Costs & Benefits Analysis (CBA) A common problem with the successive generation planning has been the complete absence of calculating the true costs and benefits of the conventional technology to our communities; and objective consideration of all the available alternatives to bridge the gap between demand and supply.

Without determining the relative costs and benefits of a given technology and without comparing them with other alternatives, how can that technology be considered as the most beneficial? For example, the 400 MW Gundia hydro power project proposal in Karnataka; or the 10,000 MW nuclear proposal in Jaitapura, Maharstra; or the 4,000 MW UMPP in Krishnapatnam in Andhra Pradesh, when subjected to an objective CBA can reveal the huge costs to the local communities as compared to the benefits. In each of these cases the alternatives available in individual state or the region in the form of efficiency improvement measures (T&D loss reduction, DSM, agricultural pumping loss reduction etc.) or renewable energy sources may be able to provide equivalent amount of the addition capacity of the individual project at much less overall costs and many more benefits. As a resource constrained and poor country the continued practice of proposing large size and costly power plants in different parts of the country without an objective CBA is a huge concern to the public.

It is amazing that huge sums of money are being invested in large size conventional power plants associated with huge 63 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 63

additional direct & indirect costs to the society without an effective CBA. In this scenario it is not clear how the power sector can claim that it is adopting least cost planning process.

5.2

Different paradigm for generation planning CEA should adopt least cost planning process in an objective sense by taking an integrated resource management approach. While doing so the total cost (both the direct and indirect costs) to the society should be the primary criteria instead of only the financial cost and benefits to the project developer.

5.2.1 For each MW of additional demand various alternatives available within the existing power infrastructure should be the priority 1: efficiency improvement measures such as T&D loss reduction, DSM, agricultural pumping loss reduction, PLF improvement, R&M of power plants etc.

5.2.2 The effective cost to our society of such low hanging fruits will be much less as compared to additional conventional power plants; the gestation period will be much less; and co-benefits will be enormous.

5.2.3 Energy Service Companies (ESCO), as envisaged in the IEP, should be the ideal implementing agencies in this context.

5.2.4 In the context that overall efficiency improvement of the existing power network can provide virtual additional power of 25-30%, and the fact that 13th Finance Commission has reported more than 120,000 Crores of annual loss to the ESCOMs every year this priority has 64 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 64

huge relevance to our society.

5.2.5 A substantial portion of the proposed investments and efforts in generation sector should be diverted to these measures. In view of the fact that various technical losses in the power sector have not come down to acceptable levels despite the knowledge of the same for decades, efforts on this priority should be dedicated on a war footing basis.

5.2.6 It should be inconceivable in a welfare society that such low cost options are being ignored in favor of hugely costly options for decades, while other priority sectors of our economy such as drinking water, poverty alleviation, health etc are starving of funds.

5.2.7 Priority 2 could be to transfer as many loads as possible to roof top solar or community based hybrids such as solar/wind/bio-mass power systems.

5.2.8 Priority 3 could be to replace old and inefficient coal power plants with efficient super critical plants at the same site. Land available at an old coal power plant of 4 or 6 of 210 MW units may be adequate for 2 or 4 of 800 MW plants. Such an approach will minimise the additional land requirement, and will make use of the existing infrastructure such as coal linkage, water supply, ash ponds and transmission system. Similarly, all possible avenues to increase the efficiency/ capacity of existing hydro power plants should be considered for R&M, and expansion before new plants are considered.

5.2.9 Priority 4 could be to utilize the large roof top surfaces available in schools, offices, factories, shops, warehouses etc. to install SPV systems. Additionally, the CSP systems of suitable size should be considered in smaller towns/cities to provide adequate 65 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 65

power during the absence of sun shine hours.

5.2.10 This process should be employed to determine the merit order of costs and to deploy the most economical option to the society. It is important that CBA as a decision making tool is deployed objectively in every step/project.

5.2.11 In this approach the conventional power plants should be the last resort: mini/micro hydro, gas power, coal power, and nuclear power in that order. It is not difficult to appreciate the fact that an objective consideration of all the technical, economic, social and environmental issues will reveal that nuclear power projects score the least.

5.3

Planning for peak coal power consumption The fourth assessment report of IPCC shows that global HGH emissions must peak well before the year 2020, with a substantial decline after that, in order to limit the growth in global average temperatures. A recent study by the Energy Watch Group of Germany predicts that global coal production will peak around 2025 and then decline. IEP itself had indicated in 2006 that the total extractable coal reserves (including proven, indicated and inferred) will run out in about 45 years. Since a large number of additional mines are being permitted to feed the huge number of coal power plants, the coal reserve in the country may not last beyond another 25 years.

In this context there is clearly a need for the country to look beyond coal. It is very unfortunate neither IEP nor CEA have discussed this crucial part of our energy planning at all.

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It is therefore, necessary to have a definitive plan to phase out coal power plants (and so also other conventional power plants) in the next 25-30 years. Unless we start considering this necessity now, it will be a very hard change over when such a necessity appears on our door step as against a smooth changeover, as being planned in many countries.

Keeping this necessity in proper perspective CEA should come up with definitive plan/ recommendation to reduce the dependence on coal power in the medium term, though it is highly desirable and in the interest of our communities to do so in the short term itself; say preferably by 2025. This is possible only if signals are sent out in the 12th plan period itself.

In this regard the different paradigm for generation planning as discussed in section 5.3 above can be a very good tool. In view of the huge issues being faced in the supply of adequate quality & quantity of coal, the costs to the society, global warming consideration etc. the coal power plants, as also the other conventional power plants, will result in much higher costs and miniscule benefits to our society as can be revealed through an objective CBA. Such an approach will also indicate that there are better alternatives than the large size conventional power plants.

It is also a matter of concern to the civil society that IEP and CEA have not considered the low overall efficiency associated with coal power. Whereas the thermal efficiency of coal fired boilers is in the range of 28-31% in India, the best technology available can take it to a maximum of about 40% as per IEP/CEA. With station 67 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 67

auxiliary consumption of about 10% for Indian coal power stations, transmission and distribution (T&D) loss of about 25%, and huge inefficiency in end use applications, the overall efficiency of using coal energy to economic/welfare purpose use may be less than 10% of the energy present in the coal. This is in stark contrast to 12 -15% efficiency of solar photo voltaic (SPV) panels already in commercial use in the country. As a resource constrained society we should not continue to build large number of coal power plants at huge costs to our communities when the overall efficiency of coal power plants is so low.

CEA, as mandated in IE Act of 2003, has an all important role to play in the development of power sector; hence it should have no hesitation to consider all the related issues in an objective manner, and make credible and concrete recommendations for the overall welfare of our communities.

5.4

Role of renewable energy sources

On the basis of an objective consideration of many national and international reports (IEA; Greenpeace report titled “en-

ergy {R}evolution, A SUSTAINABLE INDIA ENERGY OUTLOOK ; A path to Sustainable energy by 2030” in Scientific American in November 2009; The IPCC report ‘Special Report Renewable Energy Sources (SRREN)’, May 2011; “Plan B energy economy of 2020” by Earth Policy Institute, Washington etc.), it appears safe to state that

the energy future of our country depends on how effectively our society will be able to harness the huge renewable energy potential within the country. Many such international reports in recent years, including the one from IPCC, have expressed credible confidence in and advocating for a definitive shift towards renewable energy sources.

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An integrated energy resource management approach, with a carefully designed combination of centralized and decentralised renewable energy sources, is absolutely needed to avail energy security for our masses. The renewable energy sources in distributed mode alone can provide the energy security to our rural population, and not the dependence on external resources such as coal, petroleum and gas as recommended by IEP/CEA.

5.5.1 Huge potential in the country The total potential of solar PV and Solar Thermal in the country is estimated to be about 2,400 Million Tons of Oil Equivalent (Mtoe) per year as per IEP. This is in stark comparison to the estimated total primary commercial energy requirement of the country by 2031-32 of about 1,700 Mtoe. What it basically means is that if enough emphasis is given, solar power alone has enough potential to meet all our energy demands in the country for many decades to come. Whereas, as per IEP projection, the demand for electricity generation by 2031-32 is about 3,600 Billion kWH/year, solar energy potential in the country is estimated to be about 5,000 trillion kWH/year. The true potential of various modes of solar power is so great that even if we can harness about 0.1% of it, all the energy needs of the country can be met.

The wind power potential is also reported to be huge for the country. As per a recent study “Reassessing Wind Potential Estimates for India: Economic and Policy Implications� (by Lawrence Berkeley National Laboratory, Itron Inc and Black and Veatch, Sept 2011), the on-shore wind potential 69 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 69

in India at three different hub-heights and under two sensitivity scenarios – one with no farmland included, the other with all farmland included are estimated. Under the “no farmland included” case, the total wind potential in India with a minimum capacity factor of 20 percent ranges from 748 GW at 80m hub-height to 976 GW at 120m hub height.

This is in addition to the huge off-shore wind potential. Such huge potential in large MW size units and small kW size units should be seriously considered for early development for centralised and de-centralised generation.

Similarly, the potential with bio-mass, ocean power and geo-thermal power sources also is estimated to be considerable. Being an agrarian country the bio-mass power sources are highly suitable for our rural communities, and hence should be considered essentially as a part of rural electrification.

IEP and CEA have basically focused on the grid interactive potential of renewable energy sources.

These sources, especially solar energy, have very huge potential, if distributed type generation potential through small size roof top SPV or community based renewable energy plants, are considered.

Because of the huge losses involved in Transmission and Distribution of generated electricity, all the attendant problems such as theft, organizational issues, huge capital expenditure to the state, technical problems such as voltage stability etc. ,which are salient features of a grid interactive energy sources, distributed renewable energy sources are best suited for rural electrification and for small loads such as lighting, domestic appliances, 70 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 70

small pumping needs etc. The potential of the new & renewable energy sources may appear unlimited when they are effectively used as distributed energy sources. They also lead to accelerated rural development. The country cannot hope to have 100% electrification without effective deployment of such distributed energy sources.

1.1.2

Huge relevance of roof top solar panels The huge potential and true relevance of solar power to our resource constrained society can be illustrated by one estimation: Of the 30 Crore households expected by 2032, 10 Crore houses can be assumed to be strong enough to support SPV systems. Assuming an average of 1,000 Sq. ft of roof surface area for each of these houses, the total potential for installing SPV systems on this surface can be about 1,000,000 MW @ 1 kW per 100 Sq. ft of roof surface. If even 10% of roof top surfaces in other categories of building are considered for this purpose, the potential is enormous; running to millions of MW. Such a technology/policy can transform our power sector scenario.

While meeting most of the domestic loads, this technology/policy can bring down the peak hour demand on the grid drastically. The additional conventional power plants, which may be needed, also will be reduced to a miniscule number, while eliminating all the shortcomings of the large size conventional power plants. Even if 50% of such installations are connected to the grid through the feed-in-tariff mechanism it will have huge positive influence on the sector.

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All possible efforts are needed to make this technology popular.

1.1.3

Infrastructure for feed-in-tariff mechanism It is a matter of concern that the infrastructure needed for feed-in-tariff mechanism is not ready yet in the country. While this mechanism is reported to be working well in countries like Germany and USA, and while many people in our country may be ready to invest in this technology huge quantities of solar energy is going waste without being harnessed.

CEA should take the necessary initiative on a war footing to put in place all the norms, specifications, rules, incentives, and the necessary kits to make it easily implementable in every state by the end of 2012.

Instead of acquiring lands for installing MW size solar PV panels there should be huge emphasis to harness the large size roof tops available in schools, offices, colleges, industries etc. to make use of the benefits of distributed generation technology.

It becomes obvious as to why the nation has to accord very high priority in developing and harnessing the renewable energy sources. CEA should play a critical role in integrating these resources into the national power policy very effectively instead of considering it as a role for MNRE.

1.5

Optimisation of Land and Water Requirement for Thermal Power Plants 72 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 72

While the initiatives to optimize the requirement of land and water for Thermal Power Plants are laudable, the fact remains that these scarce natural resources are already under tremendous stress, and that they will soon reach a point of crises unless the total number of thermal power plants are reduced drastically.

Prayas Energy Group’s report has estimated that those power plants which already have Environmental Clearance from MoEF may demand about 4.6 billion cubic meters of fresh water per year. This much of water can provide irrigation to more than 900,000 hectares of land each year. The gravity of the situation becomes clear when we also realise that 4.6 billion cubic meters per year can meet the drinking water needs of about 7% of the population in India at present.

The proposed number of additional coal power plants along with all the proposed hydro power plants, nuclear power plants and associated transmission lines may need about 1,000,000 acres of additional land, which has to be diverted from either the forest or agricultural lands. Additionally forest lands of very high ecological value will have to be sacrificed to develop new coal mines. Can such a situation be acceptable from the food security and the social security of our communities?

CEA should take holistic view of such issues than satisfying itself with minor efficiency improvements.

1.6 Low Carbon Growth Strategy for Indian Power sector for 12th & 13th Five Year Plans Various measures discussed in CEA plan under the sec73 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 73

tion on low carbon growth strategy for Indian power sector will be negated by the huge additional GHG emissions resulting from the large number of conventional power plants and coal mines planned to be added.

Hence a complete paradigm shift in the way we look at the power sector in future is needed.

6. Discussion on the salient points from the CEA plan: Brief discussions on specific points of CEA plan are as follows. The statements/references in CEA draft are shown in italics: Section 4.2.2.” It is expected that during the 12th Plan, the total coal based capacity addition would be about 66,600 MW out of which 27,900 MW (42% ) is based on supercritical units. “

In view of the huge inefficiency and pollution related issues the percentage of supercritical units in the new additions should be much higher; of the order of 80-90%.

Section 4.2.3 “The Indian power sector has immense potential of reducing carbon dioxide emission by way of Renovation and Modernization schemes as some of the plants are old and are operating at a low efficiency. Benefits of CDM can be extended to overcome the fund constraints for the various R & M schemes, especially for energy efficiency improvements, as these schemes would mitigate carbon dioxide emissions and save fossil fuel.”

While CEA is admitting the huge inefficiency in the power sector, it is perplexing that instead of dedicating most of the investment in the generation sector for such efficiency improvement programmes, huge number of new power plants is being planned. A definitive programme to replace all the coal power units with PLF below 75% and CO2 emis74 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 74

sion above a specified level (say 800 gCO2eq/kWh) should be replaced by efficient units at the same site by say, 2025.

Table 4.5. R&M / LE programme & Achievement during 12th Plan; average size of the units included in the 12th plan programme is 208 MW and 224 MW for 13th plan.

In view of the earlier mentioned reasons planning should have been only for unit size 500 MW and above. Why cannot more hydel projects be taken up for R&M, LIFE EXTENSION & UPRATING PROGRAMME in 12th and 13th plans?

Section 4.2.5 Retirement of Old and Inefficient Thermal Plants During 12th and 13th Plans there should be more number of old units being retired and replaced by efficient new units as compared to green site units. This will reduce the overall cost to the society in the form of reduced need for additional land, and to make use of the existing infrastructure such as water inlets, ash ponds and transmission systems. The sites of the old coal power units should be the first priority for setting up any unavoidable new coal capacity instead of acquiring additional lands.

Section 4.2.6: “About 100 units below the size of 100MW with total capacity of 5,500 MW are very old. These units are running at low Plant load factor of about 50% on an average. “ Such inefficient units should be decommissioned and those sites should be used to install super critical units or for any other societal purposes. If this is not possible they should be simply decommissioned. Such units have negative benefits to the society; and hence in the overall context it appears criminal to allow them to continue to heap harm on 75 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 75

our society. Another option to be considered is the installation of CSP type of solar power units in the same site in order to make use of the entire existing infrastructure.

Section 4.2.7: Efficient Use of Resources While the advocacy for efficient use of resources is very laudable, there is a discernible lack of specific action programme in this regard. Most of the fresh investment in the power sector should be diverted for improving the efficiency of the existing infrastructure in generation, transmission and distribution.

Section 4.2.8: Distributed Generation While a number of benefits of distributed generation are listed in the section the emphasis in the two five year plans is mostly on large size centralised generation. The advocacy for distributed generation in the CEA plan seems to be just a rhetoric statement. Huge emphasis should be given to roof top SPV systems to begin with, preferably with feed-in tariff, because this technology involves reduced expenditure for the STATE, smaller gestation period, and involvement of the consumers; and provides huge benefits to the grid.

Section 4.3.1; “Today the capital cost of non-conventional energy is higher than that of conventional sources on per kW basis. However, their viability could be established if financial cost benefit analysis is replaced by economic cost benefit analysis.”

This is a significant statement. It is a deep concern that CEA as the apex body for the development of power has not sought the CBA to be made a part of the mandatory approval process for power projects. MNRE’s estimation of 76 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 76

RE potential in the country is wrongly restricted to 1,83,000 MW by 2032 (table 4.90) because only the grid interactive capacities seem to have been considered. Distributed generation sources of which many advantages are listed in section 4.2.8, when considered in proper perspective, have the potential to yield many times more than this potential.

Roof top SPV systems installed on about 30% of the houses by 2032 has the potential to add about 1,000,000 MW of solar power. Hence it is incorrect that the solar PV potential is restricted to 50,000 MW in table 4.9. Similarly the on shore wind power potential in the country has been estimated as in the range of 750,000 to 975,000 MW in a recent study (by Lawrence Berkeley National Laboratory, Itron Inc and Black and Veatch, Sept 2011).

Section 4.3.2: “Report on ‘Mitigation of Climate Change’ has observed that technologies are available for mitigating the climate change, however these require appropriate Policy and financial support. Thus the Electricity Act, National Electricity Policy and the Tariff Policy of Government of India mandate development of renewable resources ….. Due to its vast market potential for renewable energy projects, and a relatively well-developed industrial, financing and business infrastructure, India is perceived as an excellent country for Clean Development Mechanism (CDM) projects.”

This is another significant statement. It is a moot point whether CEA, as part of the MoP, which administers Electricity Act, National Electricity Policy and the Tariff Policy, has sought much more focused action plan to implement the necessary schemes. Who else can do it, if not the MoP? Why not adequate emphasis is given? What does CEA intends to do in this regard? In case of renewables CEA generation plan should go much beyond that envisaged under NAPCC.

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Section 4.4.13. Sites and Land for Solar Installation: Various government reports indicate the land availability as the constraint in developing solar PV capacity. While the conventional methods of utilizing the green sites for setting up the solar PV installations will demand huge tracts of additional lands to set up MW size SPVs, serious consideration of the large surfaces of roof tops available with industries, ware houses, educational institutions, large commercial/ office buildings, sports stadia, railway stations, bus-stations, airports etc. will eliminate the constraint of land availability. Such an approach of distributed generation will drastically reduce the need for additional lands, which are already under tremendous pressure, but will also reduce the T&D losses. Since the owners of these roof tops surfaces can also participate in the associated business model, financing the projects may become easier.

CEA should make concerted efforts to develop and implement a credible policy in this regard.

Section 4.4.16 Fund Requirement. “One of the major bottlenecks in the development of Solar Installations is the high Capital cost which results in high tariff as compared to power generated using Conventional Energy Resources. “ CEA should move away from this pre-conceived / stereo type statement. As a part of the Solar Mission lowest tariff in Batch I in 2010 was Rs 10.90/per unit, but the same has become Rs 7.49/per unit in Batch of 2011. The prices of solar panels are plunging all over the world.

As the apex body in the power sector it should not be hard for CEA to appreciate the fact that the true overall cost to our society of any conventional power plant is much higher than the prevailing power prices may indicate, because many externalities such as environmental costs and health costs are not being accounted for. Also the conventional 78 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 78

power technologies have enjoyed many kinds of subsidies for more than 100 years. If we consider all these costs objectively the cost of solar power, so also other renewable power sources, will be much less than that of any of the conventional power technologies. Additionally, whereas the cost of conventional power technologies is continuously increasing the cost of renewable technologies is plunging. Keeping all these factors in mind, CEA should make a very strong and concerted pitch for popularizing the deployment of decentralised renewables.

Section 5.1 “The resources for power generation in our country are limited and since Low Carbon Growth Strategy has to be followed, all generation options need to be harnessed in the most optimum manner.”

Section 5.2.1 “Sustainable Development of our country is our ultimate goal which encompasses economic development, maintaining environmental quality and social equity. This would also ensure that development takes place to fulfill our present needs without compromising the needs of our future generations. The importance and relevance of power development within the confines of Clean and Green Power is the most essential element.”

While there can be no argument on these statements, there is no discernible action plan either by various agencies of the government or by CEA. In view of the huge emphasis placed on adding conventional power plants in 12th and 13 the Plans, one wonders whether these statements are just empty rhetoric. Continuing to pour Trillions of Rupees to add conventional power technology sources at huge overall societal costs while the inefficiency in the power sector goes unabated cannot be seen either as going on a low carbon strategy OR a part of the sustainable development.

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There can be no social equity with the present scenario of grid based conventional power sources, nor will they contribute to maintaining environmental quality. A complete paradigm shift is required in the power sector in order to achieve these goals. International reports indicate that the conventional sources are of high cost to the local communities.

Sections 7.1 and 7.2: Optimisation of land and water for coal power plants While these two sections have listed the serious problems w.r.t the land and water requirements for coal power plants, and has recommended to optimize the same, the fact will remain that a large number of coal power plants and other conventional power plants being proposed will put unbearable pressure on these already stressed natural resources.

Section 8.6: Following are a few measures being considered to ensure low carbon growth during the 12th & 13th five year plans: (i) Promote Hydro Power Development; (vii) Adoption of Clean Coal Technology; (Viii) Nuclear Power Generation: Nuclear generation is also limited due to availability of natural uranium in the country; (ix) Reduction of T&D losses to be accorded high priority: All India T&D Losses are very high of the order of 29.24 %.

While dam based hydro power is associated with Methane emission (which is more potent than CO2), clean coal technology is a misnomer. There cannot be a clean coal technology at all. The GHG emissions, pollutants and ash cannot be eliminated fully but can only be reduced marginally. But the large number of such plants being planned will negate the marginal benefits from efficiency improvement measures.

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Due to limited availability of natural uranium in the country nuclear establishment is proposing to import the nuclear fuel, which will affect the energy security, should the country depend on nuclear power. Burdened with all other costs and risks to the society there is no reason as to why nuclear power should be pursued when there are much benign alternatives. The proposal to add 2,800 MW and 18,000 MW of nuclear power in 12th and 13th plans respectively cannot be termed as techno-economically viable, and hence may be termed as against the true interest of our society.

It is a sad commentary that we have not been able to reduce T&D losses to an acceptable level even after decades of recognising its importance. A substantial portion of the investment in power sector should go to reduce the T&D losses to international best practice levels. Do we have the necessary political will in this regard?

Section 8.9 (chart 8.7): “However, the total emission from power sector would increase considerably in 12th and 13th plan w.r.t 11th plan.”

The very claim about low carbon strategies gets negated with such increase in emissions. Better options available to the society should be fully utilized. This situation necessitates the target year for peak coal and peak gas.

Section 10.2: “The National Electricity Plan is prepared to serve as a road map towards optimum growth of the Power Sector. It is based on an approach of integrated resource planning so as to optimally utilize the resources including investments already made.”

The past and present practices in the power sector does not indicate that generation planning has been diligently based on an approach of integrated resource planning so as to optimally utilize the resources including investments al81 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 81

ready made. At least as on 2012 none of the large size conventional power plants being proposed can be proved to be more beneficial to our society when compared to so many other alternatives we have. An objective costs & benefits analysis (CBA) can validate this statement, and hence need to be a critical part of the mandatory approval process for every power generation project.

Section 11.1.6 Issues/constraints in making coal available to power stations: 12th plan is anticipated to have about 20 MT of coal shortfall. The same seem to be true with 13th plan. The experience since the middle of 2011 has been that the import of coal has been besotted with issues of reliability and price increases. CEA plan has not considered these issues objectively. Also looking at the loss of generation during the lat two years indicates that the coal supply problems are severe, and may only aggravate with so many additional power plants demanding coal. CEA should satisfactorily address these and water and pollution related issues before projecting high additional capacity.

Section 11.4 (iii) NATURAL GAS: Gas shortage and generation loss due to gas shortage have been highlighted for the period 20042012 and for the period 2000-2012 (table 7.9 & 7.10) respectively.

The fuel shortages are expected to continue. How will the problem be resolved if gas is to play a major role in power mix of the country? With reduced out put from KG basin, and due to which NTPC gas power stations are already suffering, CEA should address such issues credibly. Tough questions should be asked of the concerned authorities before large additions are planned.

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Section 11.5 “DAE envisages to add 2,800 MW in the 12th Plan based on domestic manufacturing capability and additional 18,000 MW during 13th Plan.”

Since domestic uranium resources are estimated to support only 10,000 MW as per IEPP, how will we meet the needs of 18,000 MW in 13th plan? Energy security in the case of import of fuel and technology will be a huge concern.

CEA seem to have simply accepted the tall claims made by the DAE without its own rigorous analysis. As the apex planning body it has the responsibility of taking all the relevant issues into objective consideration and then to make a concrete plan in the true overall interest of the society. Our own past experience, the experiences of Chernobyl and Fukushima, the decision by Germany and Japan to drastically reduce the reliance on nuclear power, the experience of Australia and New Zealand, which have said NO to nuclear power from the beginning, concerns of our own people, the miniscule role of nuclear power in our energy mix, the true costs and benefits to our society, our obligations to the future generations etc. should be the basis of any planning decision on nuclear power. Sadly such a holistic approach is not evident in the planning discussions.

Energy security will be seriously impacted if our dependence on import of coal, LNG and nuclear fuels increase, as it seems to be the case in CEA’s planning.

Section 12 .1 ENERGY CONSERVATION POTENTIAL: Table 12.1 lists many areas of power sector having huge potential for energy savings. This together with T&D loss reduction (from about 25% to 5%) and DSM may mean a net savings of more than 40%. This may mean virtual additional capacity of about 50,000 MW. While such saving 83 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 83

potentials were known for decades, it needs to be asked as to why CEA had not focused on these low hanging fruits all these years as the first option in bridging the gap between demand and supply. Is it not a great tragedy for our society and a clear let down of our people that the concerned agencies are pouring trillions of Rupees in a poor country on additional power generation capacities when the power sector has such gross inefficiency? As the Bureau of Energy Efficiency has estimated, at the prevailing cost of additional energy generation, it costs a unit of energy about one fourth the cost to save than to produce it with new capacity. What a waste of our scarce resources?

Hence there is an unquestionable need to divert all the moneys meant for additional generation projects to efficiency improvement measures.

Section 12.3.6 Agriculture Demand Side Management The section says the potential for savings in agriculture is about 20.7% of the total energy consumed in that segment.

Why there have been no adequate efforts in this direction all these years? Substantial amounts of money in the annual budgets of central generating agencies such as NTPC, NHPC, DVC, NPCL etc. should be invested in reducing the technical losses in agricultural pumping needs, basically because such reduction in losses amounts to virtual additional generation.

Whereas table 12.1 shows saving potential of 30.09% of agricultural pumping sector, section 12.3.6 says: “To tap the energy saving potential in the agriculture sector, which is estimated to be 20.75% (2007-08) of the total energy consumption, …”. This anomaly should be clarified. Looking at the way the agricultural pumping is being dome all over the country it appears that the savings potential in the sector is more likely to be about 20% of the total electricity con84 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 84

sumed in the country. Because of the huge consequences this point needs to be clarified.

Section 12.4.1 “A very large number of small size units of 100 MW or less capacity are in operation. The average PLF of most of these units is very low, even less than 50%. These units are of non-reheat type having very low design efficiency.”

All such inefficient units, if cannot be replaced by efficient units, must be decommissioned at the earliest, and the savings made in running such grossly inefficient units should be invested in renewable energy sources such as SPVs at those sites.

Section 12.4.4: “Transmission and Distribution (T&D) losses in the Indian system are amongst the highest in the world. Presently the all-India T&D losses are around 27%, out of which substantial portion is non-technical losses and theft.…”.

This statement needs to be clarified. The commercial losses and theft are accounted by the term AT&C losses. CEA in many other places and the states are reporting AT&C losses as about 35%. Section 8.6 (ix) says: “All India T&D Losses are very high of the order of 29.24 %.” Such inconsistencies in reporting the losses should be completely avoided to gain credibility.

Additionally, the technical losses in T&D themselves are being reported as about 25% in different reports. Hence there should be clarity. The actual technical losses in T&D could be above 25% considering the low voltage profile observed at the tail end of the distribution feeders, sub-optimal location of distribution transformers, and the way the power supply to the agricultural sector is left without effective supervision.

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Section 13.0 “The National Electricity Policy, 2005 aims at achieving the following objectives. · Access to Electricity – available for all households. · Availability of Power – demand to be fully met by 2012.

Energy and peaking shortages to be overcome and spinning reserve to be available. · Supply of reliable and quality power of specified standards in an efficient manner and at reasonable rates. · Financial turnaround and commercial viability of electricity sector. · Protection of consumers’ interests.

There is neither any indication of any of these milestones nearing achievement as of 2012, nor any clear action plan in the CEA generation plan to ensure these milestones even by the end of 13 the plan period. In this regard a thorough reshape of the thinking in power sector is essential.

Optimal utilisation of the existing assets, highly responsible approach in harnessing our scarce natural resources, commitment to full compliance of all the related Acts, rules and policies, and accountability to the public will be critical in order for the power sector to assist in overall welfare of our communities. CEA being the technical wing of the power ministry has the critical role in ensuring such a changeover.

A diligent generation plan will be the first step in this direction.

Section 13.4 . A chart (ALL INDIA PROJECTED LDC 2016 -17) indicates that the peak load expected during 2016-17 is 264,130 MW. 86 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 86

As compared to 115,847 MW peak demand met during 2011-12 (as per CEA website), this will be an increase of 112%. While such a steep increase in peak demand can neither be necessary nor desirable, it also appears impossible that this increased demand can be met without drastic measures. No such measures are evident form the generation plan. CEA plan seem to have taken a business as usual approach.

Section 13.7 ISSUES IN PEAKING PLANTS As discussed in the comments above on the peak demand, all out efforts must be made to reduce the peak demand on the grid to a manageable level. It must be reduced by shifting many applications to non-peak hours, and by an effective usage of renewables. Conventional peaking stations such as pumped storage plants, gas power plants can neither be economical nor environmentally friendly. Distributed renewable energy sources such as roof top SPVs will help to reduce the peak demand on the grid.

7. Recommended action plan

A set of action plans as below may please be considered for 12th and 13 the plan periods, and also for the future of the power sector in the country.

7.1

Overarching policy framework

7.1.1 Because of the huge inefficiency prevailing in the country’s power sector, the highest priority is needed to take the overall efficiency to the international best practice levels; this is known to cost least amongst various options; it will have the shortest gestation periods; and many associated benefits.

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In view of the huge impact on our society, including the all important environment, the use of conventional energy sources, such as dam based hydro, coal, natural gas and nuclear, should be minimised in the short term, and discontinued at the earliest; their usage should peak early, and gradually eliminated latest by 2050.

1.1.3 In view of the inevitability of harnessing the renewable energy sources on a sustainable basis, all out efforts should be made to develop them early to meet our entire electricity needs before the middle of this century; this should include adequate focus on R&D, fiscal incentives if necessary, suitable policy interventions, necessary regulatory measures etc..

1.1.2

1.1 Electricity demand projection and DSM 7.2.1 Electricity demand on the grid should not be allowed to escalate unmanageably; its consumption should lead to real developmental/welfare activities, and not for wasteful and luxurious consumption; a clear distinction between electricity needs, wants and luxury should be arrived at by the society; 1.1.1

All feasible options, including the tariff restructuring and financial incentives, available to minimize the variation in electricity demand curve in each state should be deployed, and the difference between maximum demand and average demand should be reduced to, say, 10% by 2015 in all the states; no new peak load power stations, such as pumped storage plants, should be permitted with immediate effect; Time of Day (TOD) metering with suitable tariff regime to differentiate between peak hour tariff and lean hour tariff should become compulsory for all loads above, say 25 kW by 2015.

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As per the mandate of IE Act 2003 there shall be no supply to any consumer without accurate metering beyond 2015.

1.1.3 The usage of CFL/LEDs should be fully implemented by 2015; availability of incandescent lamps in the market should be banned at the same time.

1.1.4 Energy auditing should be made compulsory for all electricity consumers with a connected load of more than 25 kW by 2020 and those with a connected load of more than 10 kW by 2025.

1.1.5 Rain water harvesting in every revenue sub-division should be implemented as a major initiative in managing the demand for electricity and also for water security.

1.1.2

1.2 Efficiency

7.3.1 International best practice level efficiencies must be adopted in all segments of power sector; AT&C losses should be brought down below 10% in each revenue district of the country by 2020; the PLF of each coal / nuclear power project should be improved to a minimum of 90% by 2025; efficiency of end use applications, including agricultural pump sets should be comparable with the international best practices by 2020.

1.2.1 By 2017 every coal power plant in the country with average PLF less than 80% during the previous 3 years, and/ or older than 20 years should be either be undergoing complete renovation or complete replacement by power plants with highest efficiency possible.

1.2.2 All feasible options available for increasing the capacity or to improve the efficiency of each of the existing generating stations should be explored and implemented before any new generation project proposal by any power generating company in any state is con89 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 89

sidered by the approval authority. In this regard CEA should look at each of the existing power stations in every state, consult the original equipment manufacturers or experts to determine any such opportunity available. In all such situations, the actual cost of such improvement process, however high, will turn out to be far less than the cost of building new power stations.

1.2.3 CEA should undertake comparative studies in detail of the electricity industry performance in our country with those in developed countries; publish the Key Performance Indicators (personnel per MW handled, overall efficiency, project implementation time etc.) in those countries, and set realistic but stiff annual targets for our own industry, to be achieved by 2020 to attain a comparable level of industry efficiency; 1.3 Investment, CBA and project management 7.4.1 The Central power utilities such as NTPC, NHPC, PGCIL, NPC etc. should be mandated to invest about 25% of their annual budget in modernizing the transmission and distribution system in states so as to reduce the AT&C losses below 10% by 2020; adequate return on such investments should be ensured;

The Central generating agencies such as NTPC, NHPC and DVC should be encouraged to invest about 25% of their annual budget in the modernization or replacement of old and inefficient power plants in state sector, either by acquiring such assets or as an investment on easy terms; 1.3.2 Without an effective Costs and Benefits Analysis (CBA), along with a societal perspective, no new power plant proposal should be considered; 1.3.3 The sites of existing old/ inefficient power plants 1.3.1

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should be the primary consideration for the newly permitted coal power plants.

1.3.4 The proposed ultra mega power projects of capacity 4,000 MW each in green sites are not in the overall interest of our society, and hence should not be considered further. Instead the more sensible option of considering the existing sites of older and low PLF thermal power stations should be used.

1.5 Renewable Energy 1.5.1 By 2015 an effective feed-in-tariff mechanism for roof-top SPV systems and community based renewable energy systems should be in place throughout the country to encourage massive amounts of local level electricity generation; 1.5.2 By 2020 at least 25% of industries /commercial establishments /hospital establishments /hostels & hotels with heating requirements should be encouraged/ mandated to install solar water heaters; 7.5.3

By 2025 atleast 25% of domestic consumers of electricity should have roof top solar or roof top hybrids for electricity generation, or should be participating effectively in community based RE power plants;

1.1.4 By 2025 atleast 25% of industrial or commercial consumers should be encouraged/ mandated to install roof-top solar PV systems to meet their illumination needs; 1.1.5 By 2025 atleast 20% of educational institutions and govt. buildings should be encouraged/mandated to install roof-top solar PV systems to meet the electricity demand of lighting fixtures and other lighter loads; 1.1.6 By 2025 atleast 20% of the villages in the country should have their own electricity supply system based on solar / wind / bio-mass sources of adequate ca91 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 91

pacity to meet most of their domestic requirements, either in isolated mode or in grid interactive mode; the longer term target should be to have not less than 75% of rural electricity requirements to be met by RE sources, say by 2040.

1.1.7 By 2025 at least 20% of the agricultural pump-sets in the country should be shifted from the grid based electricity dependence to either dedicated RE sources or to community based RE sources; the longer term target should be to have 100% of agricultural pumpsets in the country to be powered by RE sources, say by 2040.

1.5 Enabling institutional mechanism and other issues 7.6.1

The role of CEA should be objectively reviewed and necessary changes should be brought about to make it’s role more people oriented and objective. It should pro-actively interact with electricity companies and the public very frequently on all the related issues; conduct state-wise/ region-wise seminars to keep itself up to date with the ground realities; be more sensitive to the environmental and social issues in site selection process etc. In essence it should be a true authority in all aspects of the electricity industry correctly reflecting the needs of the people and bringing the world best practices to India. Instead of being a Delhi based theoretical organization it should become down to earth, people oriented and practical organization.

Its staff should be encouraged to gain work experience in generating stations, transmission and distribution systems, and to freely express their opinion on technical and economic issues related to all aspects of power sector.

1.1.2 A national fund should invest adequately to reduce the agricultural pump set losses from the present level of about 50 % to below 10 % by 2025; newly created ESCOs may be entrusted with such responsibility; 92 Feedback on National Electricity Plan on Generation – 12th & 13th Plan periods/Page 92

7

Conclusions and Recommendations

CEA’s generation plan for 12th and 13th plan periods is a very good opportunity to herald a new era in the power sector. Business-asusual approach should be shunned and a revolutionary approach should be adopted to make the power sector highly efficient, sensitive to people’ expectations, and completely responsible to the society.

The planning for 9,204 MW & 12,000 MW of hydro, and 2,800 MW and 18,000 MW of nuclear capacity respectively in 12th and 13th plans periods should be reviewed thoroughly from the social and environmental perspectives. Similarly, the plan to add 66,600 MW & 49,000 MW of coal power capacity respectively in 12th and 13th plans periods must be drastically reduced keeping in view various issues such as looming crises in coal supply, additional requirement of land and water, people’s displacement and environmental concerns. The legitimate demand for electricity should be projected based on ground realities, and all out efforts should be made to meet such a realistic demand by a combination of various measures such as efficiency improvement, DSM, energy conservation, and more of renewable power capacity than through a large number of additional conventional power plants as envisaged in the draft plan.

CEA, having been entrusted with the development of electricity in the country, and being in a position to understand various issues in the sector much more than any other agency of the government, should make clear, concrete and firm recommendations including those on policy. It should desist from using advisory/vague terms such: “following issues may be addressed”; “It is proposed “; “it is suggested” etc. Instead it should get into a position soon to confidently set policy framework through MoP, and not remain just an advisory body.

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