Use of 150 BU/ Year of surplus Electricity in Electric Vehicles can reduce India’s oil import by 40 MT/Yr ( US$ 15.6 Billion/Yr)

Electricity is the energy fueling modern world.   While electricity was used mainly for lights initially, it is now used for powering virtually everything from lights, domestic appliances, industries to communication. Electricity makes possible and integrates the real time networks of communications, finance, and trade that shape the world economy.

Electricity may be all-pervasive. But it is also mostly taken for granted. People think about power only when the monthly bill comes or when the lights go off.  Electricity consumption in India has gone up from 411 Billion Units ( BU ) in 2005-06 to 1107 BU in 2015-16 ( 2.7 times ) . The installed power generation capacity has gone up from 124 GW on 31st Mar 2006 to 298 GW on 31st March 2016 ( 2.4 times). This increase of 174,000 MW in the last 10 years  has come at a huge cost of about Rs 870,000 Crores ( @ Rs 5 Cr/MW)  of public money. It is therefore in the interest of the public to see that the power generation assets thus created are put to optimal use.

Elaborate exercise is carried out by CEA in estimating the Peak Demand and Energy requirement vis-à-vis Peak demand and energy that can be met and they arrive at a surplus or deficit. These are brought out in CEA’s annual Load Generation Balance Report ( LGBR ).  The figures for 2016-17 are given below:

( LGBR report)

ELECTRICITY CANNOT BE STORED

LGBR predicts a 1.1% surplus energy and 2.2% surplus in peak demand met in 2016-17.

The key focus of  the energy planners have always been to assess the peak demand and the power generation capacity needed to meet the same.

Electricity is flexible not only in what it can be used for but also in terms of how it can be made. Electricity is versatile and can be made from Coal, Oil, Gas, Hydro, bio-mass, Nuclear, wind, solar and even garbage.

For all it’s virtuosity, electricity has a major flaw i.e. it cannot be stored.  Whatever electricity is generated has to be consumed instantly.  Thus constantly the electricity demand and supply have to be balanced.

The electricity consumption( demand) is dependent on a large number of factors such as whether it is a week-day or a holiday,  day or night, summer or winter, festival day or a National Holiday, peak or off peak etc.  There is a significant variation in power generated during these times.

A typical All India load profile for the month of March 2016 as brought out by National Load Despatch Centre  is given below:

( NLDC report)

As can be seen, the peak load of 140 GW is required only for less than 1% of the time which is less than 15 minutes. 50% of the time, the demand is less than 125 GW. In order to match this demand, all power plants reduce their power generation in accordance to the despatch schedule from the National / Regional Load Despatch centre.  This is referred to as backing down.

This is a normal phenomenon with electricity supply globally.  In Tokyo the power demand varies from 60,000 MW during daytime to 6000 MW during night time.  All their gas turbine plants are shut down at 10 pm and restart in the morning. Similarly the UK summer demand is only 6000 MW while the winter demand is 60,000 MW. In Delhi the winter demand is almost half that of summer demand and the night time load in winter is half of the day time load.

While we go on increasing the installed capacity to meet the peak demand requirement, we would also be increasing the backing down capacity of power plants. Since we have increased our power generation capacity by 2.4 times in the last ten years, the logical question is how much is the annual generation loss on account of the backing down of power generation during the night time, during monsoon, during winter etc.

Annual Loss of Generation of NTPC’s Coal  plants due to backing down:

A simple way to assess this  surplus is to estimate the difference between the Declared Capacity of the power plant and the actual PLF achieved by the plants.  Since the required data of the Declared capacity on a annualized basis was not available on an All India basis, this has been estimated for the NTPC plants for which the data is available on their web site.  As per the data given on the web site the Declared Capacity of the NTPC  Coal plants in 2015-16 was 92.29% and the corresponding PLF was 78.61%.  The installed capacity of NTPC’s coal plant till 31st March 2016 was  33492 MW.  Thus with an annual Declared capacity of 92.29% the NTPC’s coal plants had the capability to generate 270 Billion Units whereas actual generation was only 230 Billion Units.  Thus the loss of generation on account of backing down of the NTPC’s Coal  plant alone is 40 Billion Units.

Annual Loss of Generation due to backing down for rest of India’s coal plants

All India Coal Plant capacity as on 31st March 2016 was 1,85,172 MW.  If we take out the NTPC coal plant capacity, the rest of the coal plant installed capacity works out to 1,51,680 MW.  Since NLDC would ask all plants to back down to the same extent,  we can safely assume that the rest of the plant would have been asked to back down by at least 10%.  Assuming 30% of the plants to be not available and the declared capacity of the balance plant at 80% the rest of the coal plant could have the capability to generate 744 BU.  Assuming 10% backing down, the generation loss on account of backing down works out to 74 BU.

Annual Loss of Generation of Gas Plants due to gas non availability.

The total energy loss for the nation on account of coal plant backing down works out to 114 BU. In addition, there are large number of gas turbine plants which are idling or running at low PLF due to inadequate gas. The loss of generation on account of the stranded/ low PLF  gas turbine plant will easily be about 40 BU.

ALL INDIA SURPLUS GENERATION( COAL + GAS) = 154 BU say 150 BU.

Impact on Discoms due to backing down of 150 BU

Most of the Coal & Gas based power plants are structured on a two part tariff i.e. there is a fixed cost and a variable cost. The fixed cost is payable based on the Power  Plant Availability and the variable cost on the basis of energy generated.

Whenever a power plant is asked to back down because of low demand, the discoms have to compensate the owner for the fixed cost component for the quantum of energy that he has been asked to back down even though the power generator does not supply that power.

The fixed cost components varies from plant to plant depending on the project capital cost at the time of commercial operation. Typical cost is about Rs 1.50 / KWhr.

The amount paid by the discoms on account of the fixed cost payable to the generator due to backing down of 150 BU works out to approximately  Rs 22,500 Crores  ( USD 3.3 Billion ).  This amount ultimately gets passed on to the consumers thru higher tariff.

Energy cost of 150 BU of electricity

The fixed cost component for both Coal Plant & the gas plant is already being borne by the discoms / consumers and the variable cost component  for this power on account of coal or the present RLNG spot price is  likely to be about Rs 2.50 / KWhr. Therefore 150 Billion Units of power is available at about Rs2.50/ KWhr which translates to  a total of Rs 37,500 Cr ( USS$ 5.5 Billion ).

Comparative cost of the surplus power vis-à-vis Renewable Power

Availability of surplus power at variable cost of generation  raises two important questions.  First question is whether it is better for discoms  to purchase this surplus power at Rs 2.50/KWhr which will enable higher utilization of an existing asset wherein investments have already been made or should  the discoms  be made obligatory to procure  the intermittent  renewable power at a higher cost of Rs 4.50/KWhr and for which an additional investment of Rs 5-6 Cr/MW of public money would be required.  Annual Impact for a discom which has to buy 1000 MW of renewable power is Rs. 720 Cr( 1600 MU @ Rs 4.50/unit ) when the same quantum of power with better quality is available at  Rs 400 cr.  As mentioned earlier, the discoms / consumers  would have to bear the fixed cost for the power that they do not take.  For the 1600 Million Units of  renewable power  which causes back down of the conventional power,  the amount payable on account of  the fixed cost is Rs 240 Cr.  Discom/consumers will effectively be paying Rs 960 Cr for the renewable power whereas it would have cost only Rs 400 Cr for the surplus power drawn from the existing power assets.   This may well have been justifiable if it were possible to use the renewable power for meeting the peak demand. Unfortunately, the peak demand occurs in the morning and evening and there is no way either wind or solar could cater to that without storage.

Alternate option for use of Surplus Power

The second question is : “ Is there anyway this surplus energy can be utilized ? ” The answer to this is a clear “YES”.  The energy storage technology using battery is available today, however, the delivered cost of power from storing the surplus power and releasing it during peak hours with today’s battery cost is prohibitively high and is not viable for the discom.  However, storing this surplus power in a battery for use in  transportation wherein the electricity is used to displace imported oil is highly viable.

For example the power consumption per Km for operating an AC city bus is 1.2 KWhr/Km. The 150 BU of surplus power can provide energy for operating E-bus for  125 Billion Kms. The equivalent diesel which can be displaced  is 50 Billion Liters ( @ 2.5Km/Ltr) which is 312.5 Million Barrel.  The 150 BU of surplus power( US$ 5.5 Billion)  if used for displacing diesel / petrol  will lead to a direct saving of US$ 15.6 Billion /Year thru lower oil import.

Surplus Power used for transportation is cheaper than diesel/petrol

With the discom supplying the surplus power at Rs 5/KWhr, the cost/ Km for operating the AC city bus is Rs 6/Km. The same bus using diesel at Rs 50/liter @ 2.5 Km/liter works out to Rs 20/Km. Lithium Iron Phosphate Battery can be assembled in India at US$ 350 / KWhr.  Assuming 4000 Cycles of charge-discharge, the cost per KWhr for the battery works out to Rs 6/Kwhr. Power cost +battery cost works out to Rs 13.2/Km which is still only 66% of the diesel’s  Rs 20/Km.

Promotion of Electric Bus thru Viability Gap Funding

The present cost of Electric Bus is quite high at Rs 2.5 Cr/bus.  The price is high not only due to battery but also because of new technology.  Once GOI comes up with a reverse auction policy for selection of private operators by providing Viability Gap Funding of the initial 5000 buses, the cost of the bus would come down significantly and the average VGF can come down to less than Rs 1 Cr/bus. After 5000 buses, cost of electric bus operation would equal that of diesel bus operation and no further support maybe required from the government.  Rs 5000 Cr infusion by GOI can trigger the transition to use of surplus power for transportation.

Quantum of power needed for powering the current fleet of buses

The 67 public-sector transport undertakings (STUs) in India today own about 1,16,000 buses. These buses normally operate about 70,000 Km per Year.  Electricity required to operate the entire fleet of 1,16,000 buses as electric bus works out to a mere 9.74 Billion Units / Year which is just 6.5% of the 150 BU/Yr of surplus power available in the country.

Recovery of fixed cost component by selling the surplus power for battery charging of EVs

As mentioned earlier, there is an annual impact of Rs 22,500 Cr to discoms due to the payment for the fixed cost  to the power generators for the 150 BU. If this surplus power is bought by the EV customer @ Rs 5 / Kwhr which adequately  covers both  the fixed cost and the variable cost, then the discoms would be recovering the Rs 22,500 Cr which was otherwise a drain on their balance sheet.

Boost to Make in India

Promotion of Electric Bus  would provide a big boost to Make in India program and  create huge job opportunities since this will catalyse large number of Lithium Ion Battery assemblers, manufacturers of permanent magnet AC motors, inverters, chassis and bus body building.

The use of surplus power will be a shot in the arm for the power sector and in combination with the UDAY program initiated by the government,  can turn around the ailing power sector.