Goa Power Ministers Conference June 2016 - Most critical issues addressed and its implication on the Power Sector in India - Feedback

Thanks to the open and transparent governance standards, now most government actions are on the open source for common citizens to directly hear and know what is happening in the corridors of power.  I had the opportunity to watch the complete press conference of the Power Ministers Conference in Goa and here are below my takes on the same and its implication on the Power Sector and firms in India.

The 4th such conference since this Government has come up in May 2014, seems to be a critical one and which has found most states participating with full vigour and interest. A sign of co-operative and competitive federalism at play.

I scanned the papers and news reports today for their take on this event today and found some of them mentioning only a few major headlines of – “All Villages to be electrified by May 2017, All Households to be electrified by Dec 2017/May 2018 and Power For All by March 2019”. While, these are a few tangible end results to measure and may look good on paper, they hardly speak on the efforts that are made to reach here and the host of other initiatives that are crucial for meeting this goal. Since, I heard this in real time, I could say that there was a lot more effort in elaborating and detailing than what is captured as of now. They were quite patient in explaining all this. Let me try and capture some of them and its implications.

Disclaimer – These are purely based on what I heard in the press conference and make no claim if any of these issues were actually discussed or not.

  • UDAY Implementation: – As expected, in this conference, there was a lot of discussion amongst States/Center to understand the complexities and success stories in UDAY implementation and the learnings so far. Many practical issues, which the states faced were bought out and discussed and it seems that many of them are being sorted out. The exact nature of these issues and their settlement details are yet to be known and will be seen only when the actual minutes or the discussion points are made public. There seems to be an overwhelming acceptance of UDAY and it may now gain traction.
    • Impact
      1. We may now see more states get in the UDAY bandwagon and a much faster implementation of the roll out of these bonds and the activities that are supposed to be included under UDAY for each state.
      2. The revival of DISCOM’s seems to be happening and by the end of this financial year, we can the impact of these measures on DISCOM’s financials.
      3. We may now see DISCOM’s buying more power and the overall power availability and supply to citizens improving and the per capita power consumption rising over the next year or so – in many states, these were artificially kept down as DISCOMs were unable to buy more power and supply more power.
      4. Close to INR 125,000 Crs of UDAY bonds will come up this year and this will have its own impact points in the Bond markets and financial circles – am not getting into them.
  • 11kV Feeder reporting: – One of the big problems related to the Power Sector is the lack of accurate last mile reporting and capture of Power Data. All the Macro data related to power consumption depends on data feed by each states to the CEA and the reliability of this reporting is not known. Hence, all assumptions that are made on this not-so-reliable data is used as a base to make policies some of which do not have an impact or make no sense in practical terms. There have been efforts made to improve this aspect, but this Conference seems to have a major contribution here. They have made it mandatory and states have accepted to share live the 11kV Feeder line data. That means the last level of Transmission line could now be measured on a real time basis when implemented throughout the country.
    • Impact:
      1. Live feed of the power consumption data could result in better mapping of the Power consumption at a National / State level / District / Circle / Substation / Line level. This level of data accumulation could lead to better planning, R&M and improvement of power supply apart from the actual impact of Power data analytics.
      2. Improvement in reduction of ATC losses could be better
  • Smart Meters: – Networking all the components in a power value chain and especially in the last mile consumer connection is a big step in making a digital power network and thereby a connected and a measurable network. Smart Meters are at the heart of this implementation. The high cost of Smart meters around Rs. 8000 – 9000/- per unit was a big hindrance in its adaption. The improvements in Technology and more adaption has already bought its current prices to Rs 3000/- levels. Now, in this conference most States have agreed to go for Smart Meters implementation. A much wider acceptance and its consumption will surely drive prices down and it will be more affordable to meet the Power Minister’s vision of a smart meter @ INR 999!
    • Impact:
      1. Market for Smart Meters in India will soon get a much desired fillip and prices will fall further with bulk procurement.
      2. More International brands will now see a huge market in India in an otherwise stagnant global markets.
      3. Like in LED, more national firms will now see value in getting in this business and will soon see a lot of “Make in India” Smart Meters
      4. There will be an increased thrust in innovation to localise it to Indian conditions and price levels.
      5. India could be the next sourcing destination of India designed and manufactured Smart Meters
  • All Census towns to be included under RAPDRP and IT implementation: – The erstwhile, RAPDRP programmes covered about 1400 Towns, now the State Power Ministers and the Central Government have agreed to include all Census towns (around 2400 of them) in this programme.
    • Impact:
      1. The IPDS (Integrated Power Development Scheme for Urban Areas) and DDUVGY (Deen Dayal Upadhyay Vidyut Grameen Yojana for Agri Feeder Segregation) schemes will get a fillip with more towns included and specific funds allocated for their development of power infrastructure.
      2. IT integration at a substation level in these towns will lead to better Power data consolidation, improvement in ATC losses recovery and better maintenance of Power distribution facilities.
      3. There could be uptick in Power Distribution Equipment (Transformers, Capacitors, Relays, Switchgear, Power IT etc) market with the actual buying happening soon.
    • Power Demand: – I have never heard of Indian Power Ministers or Power bureaucracy ever talk of Power demand seriously. Being a perineal power deficit country, it was always assumed that the Demand for Power in a country like India will always be there and need not be a topic to worry about. The last 2 years efforts in improving the Generation glitches, the low economic/industrial activity of the last 5-6 years, improved Transmission network and poor DISCOMs health has led to a situation of surplus power availability with low demand. This conference seems to be first such instance where – “How to improve Power Demand” was discussed seriously. This seems to be still a WIP activity but some signals were given, such as:
      • With UDAY, the DISCOMs are better expected to buy more power
      • To study, assess and target the Diesel usage areas of Power consumers – Industrial, Agriculture and Commercial as an immediate target
      • To integrate and brand “Low Priced Grid Power” as a critical input for “Make in India” program
  • Impact:
    1. In the mid-term of 3-5 years, the wide spread DG usage in Indian Industrial and Commercial areas could be impacted.
    2. The Back-up power inverter and UPS market could be also be impacted downwards.
    3. The Diesel Agri Pumps could be impacted downwards in the next 5 years of so impacting the host of small manufacturers in Agra and Rajkot apart from the leading brands in this area. Most large brands are already looking at the Solar Pumps business aggressively.
    4. There could be a lot of spends in the media and branding related activities on the improving reliability of the Grid Power.
  • Efficiency improvement: – The success story of LED distribution has also let to other Products like Fans and Pumps in the Scheme and all States have agreed to be a part of this process.
    • Impact – We could see large scale bulk procurement of these products in India leading to a steep fall in end prices and overall saving in power consumption.
  • Hydro: – The Hydro sector which was one of the sectors largely ignored so far have been taken on priority for this year along with Wind and the first priority will be to take up the implementation of Stalled Projects in this sector including Small Hydro Projects. A comprehensive Hydro Policy which may include the merging of Small Hydro and Large Hydro into one is in the making.
    • Impact:
      1. In the long term, Hydro Power will be one of key strengths in managing peak power and they will be now in the focus.
      2. In the immediate run, we could see a host of Hydro Projects coming up for execution, thereby leading to a new demand for Hydro equipment in this sector
  • Wind: – There seems to be an acknowledgement that there are issues impacting this sector and a special committee under Mr. Manish Gupta, WB Power Minister, has been set up to look at these issues and come with a report to address the problems of this sector. There was a special mention of looking at the aspect of moving the Wind Sector projects to a competitive bidding mechanism and to also address the issue of Squatters who have taken up the sites and no projects have come up.
    • Impact:
      1. As this is still WIP and clear policy guidelines and action points are yet to be announced in this sector, it will be difficult to set out the actual impact. But the fact that the issues for the sector are recognised and some actions are taken is a positive step
  • Peaking Power/Grid Interactive: – With the RE power being taken up in a serious note over the last 2 years, the discussion on Grid interaction and Stability of RE is a positive step. This was also discussed and a Special Committee under Mr. Manish Gupta, WB Power Minister, has been constituted and they are likely to look at all possible technologies and their issues including Storage, Hydro and Gas Solutions as possible Grid Stabilisation solutions for India.
    • Impact

No near term impact on the sector now. But this is an important element for the future of our RE program and most technology firms need to now seriously look at this opportunity and make sure their technology finds a view in this committee and an ideal solution for future of our RE integration into our Grid needs to be set out.

About A. M. Devendranath

Vice President, Head - Energy Practice Feedback Business Consulting Services Private Limited dev@feedbackconsulting.com I www.feedbackconsulting.com

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