How suitable is coal based power policy for India?

Synopsis: Integrated Energy Policy draft of the Planning Commission has propounded coal based power policy for the country. There are also few influential persons/ organizations advocating for such a policy. There has been a great rush to set up a large number of coal based power stations both in public and private sectors. The implications of having 70% coal power by 2031-32 are huge, and need to be considered holistically in the best interest of the society. The social, –

Preface
In recent days quite a few articles have appeared in the media strongly advocating the need to add lot of coal power generating capacity in the country, that too in terms of hundreds of thousands of MW in just two or three decades. We also notice the frequent comparison in this regard with China, which is known to have added a lot of coal power capacity during last 10 -15 years. International reports indicate that in China on an average one coal based power unit was commissioned every 15 days from Year 2000 onwards. In such a scenario it becomes prudent to consider the potential impact of such a policy in our country in respect of social and environmental aspects, and similar experiences elsewhere.

A comparison of the environmental disaster that is facing China because of its coal power policy will be worth noticing. With so much of coal power having been added in such a short period there is no escaping the colossal pollution because the carrying capacity of the nature there seems to have been exceeded. No surprise, hence, that China is considered the second biggest polluter in the world. The atmospheric pollution there seem to be so heavy that a survey has revealed that about 50% of the rivers covered in the survey were found to be unfit for drinking. So much so that when Beijing won the rights to host 2008 Olympics it had to undertake massive clean up operation in and around Beijing to make it acceptable for breathing easily. As a part of this clean up drive on an average one old coal power unit was decommissioned every month, as per another report.

What does all this say? China has not covered itself with any glory by adding coal power generating capacity at such a frenetic pace. At the most it appears that it has covered its environment with coal ash. International agencies have repeatedly reported that the coal and ash handling systems in China were not adequately efficient; nor the efficiency of pollution control devices and of boilers the best. The result has been a massive polluting operation in the name of electricity generation, because of which the society there has to suffer at the least for many decades to come. The emissions from coal power are a major contribution towards China’s dubious distinction of second largest emitter of green house gases.

Present Scenario
Further, few recent news items in our own country need special attention. The state-owned thermal power utility, NTPC Ltd, has complained that coal supplies to its thermal power plants were inadequate. Though this was nothing new as many coal based power stations across the country have been known to be experiencing the coal shortage for a number of years, the latest report is that official letter has gone in this regard from Power ministry to Coal ministry. A day later, the minister of State for Coal said. “There are no two opinions about the need to switch over to other modes of power generation ……. Coal-based power production has to be restricted”. Coal ministry officials claim that the demand and supply of coal to the power units was going to run neck and neck in times to come. This only indicates the seriousness of the problem of reliable coal supply.

Industry observers had been predicting such coal capacity constraints since many years. Now that the concerned ministry itself has expressed the inability to meet the large additional demand for coal, how prudent it will be to base our energy policy on Coal, which is anyway not going to last for not more than few decades?

India has approximately 75 coal-based thermal power stations generating about 66,000 MW, out of which 72 (about 64,000 MW) are catered by Coal India Limited (CIL). With 97% power coal supply responsibility with just one state owned public enterprise, it is anybody’s guess how the reliability of coal supply is likely to be if our coal power capacity is to be increased by about 5 times.

In this scenario it can only be termed as unfortunate that the Integrated Energy Policy, as developed by Planning Commission, has projected the need for a total generating capacity of about 800,000 MW by 2031-32, out of which about 70% may have to be coal based. If this target were to be realized it is difficult to imagine the chaos in the transport sector to move coal from one part of the country/ port to the power generation sites. Since the country’s coal and transport infrastructure is struggling to cater to the needs of the present installed capacity of about 80,000 MW, it is difficult to envisage the reliability of coal supply for about 560,000 MW capacity additionally. In addition, the issues involved in procuring the huge chunks of land (about 0.5 Million Acres for the additional capacity) plus the huge quantities of fresh water will be serious issues to deal with. In view of the fact that there have been massive oppositions to acquisition of agricultural lands for setting up of any type of large sized industries, it is hard to imagine how this massive addition of coal based power plants can be realized. It is very disappointing that the draft Integrated Energy Policy has not discussed the need for resources and the difficulties in achieving the 70% coal power target by 2031-32, and the implications of the same. At a time when agricultural sector of our economy is demanding more of land and fresh water resources to meet the food requirements of a growing population, and other sectors of economy like housing, industry, infrastructure etc. are competing for a fair share of land and fresh water resources, its is inconceivable that about 500,000 MW of additional coal power capacity will be get priority over other sectors to secure these resources.
A less known report from USA states that the coal-fired power plants throughout the world are the major sources of radioactive materials released to the environment, and that there are several serious implications of such radioactive emissions. This report with the title “Coal Combustion: Nuclear Resource or Danger” by Alex Gabbard suggests that coal combustion is more hazardous to health than nuclear power, and that it adds to the background radiation burden even more than that by nuclear power. It also suggests that if radiation emissions from coal plants were regulated, their capital and operating costs would increase, making coal-fired power less economically competitive. The authors of the report concluded that Americans living near coal-fired power plants are exposed to higher radiation doses than those living near nuclear power plants that meet government regulations. A similar scenario in Indian conditions and serious ramifications of it are not inconceivable. The society needs to ensure adequate safety precautions in this regard.

Coal Power and Global Warming
While the avowed policy of the government is to reduce the GHG emissions, huge addition of coal based power plants as proposed by Integrated Energy Policy will seriously aggravate the total GHG emission in the country. In view of the fact that about 24% of all GHG emissions and about 42% of CO2 emissions are associated with the fossil fuel burning in Power sector alone, the projected scenario of having about 500,000 MW of additional coal power capacity by 2032 will seriously jeopardise our country’s international standing, besides serious environmental issues because of heavy contribution to Global Warming. There have been a number of reports, which have provided ample evidences of coal power stations adversely impacting the local environment, polluting the fresh water sources, and affecting the yield of agricultural crops. There is no doubt amongst the scientific community, such as IPCC, that a tropical country like India will be impacted to a maximum extent from the Global Warming.

The fast receding Himalayan glaciers, increase in sea level rise as experienced in Sundarbans, unpredictable weather patterns etc. have all been experienced and confirmed in recent years. These corroborate the findings of a report titled as “BLUE ALERT “commissioned by Greenpeace, in which about 120 Million people are estimated to migrate to larger cities towards the second half of this century because of the direct/ indirect effects of Global Warming in the business-as-usual scenario. The colossal impact of such large scale migration to large cities, whose infrastructures are already stretched to limits, is hard to imagine. This report concludes by saying that Climate Change is the most serious environmental problem South Asia has ever faced, and in the absence of early policy intervention, it is likely to cause devastating social and economic problems for the region. Taking very cautious approach towards burning large quantities of fossil fuels should be the primary plank on which such positive policy interventions are needed. In this regard adding coal based power plants should be the last resort in meeting the legitimate demand for electricity.
For these and many other reasons a number of countries around the world are contemplating decommissioning of old and inefficient coal power plants, and also not approving new plants. The idea of clean coal power and carbon sequestration largely appears to be theories only so far, and may not turn out to be environmentally and commercially viable.

Table 1: Major issues with coal based power policy

Economic	Puts huge pressure on natural resources such as land, water and minerals; demands a lot of construction materials like Cement, steel, sand; will increase average cost of power; road and rail transportation infrastructures need a lot more strengthening; pressure on ports will increase due to the need for import of coal; land costs around coal power projects will become unaffordable to locals; overall efficiency from coal energy to end use of electrical energy is very poor of the order of about 10% only.
Social	Peoples’ displacement will cause additional unemployment & increase in slums; will affect agricultural production, and health; prospect of displacement will create social tensions and stiff opposition; local buildings of heritage importance will degenerate; nearby places of tourist and religious importance loose prominence; causes serious erosion of local communities;
Environmental	Issues of Global Warming and Climate Change; pollution of Land and water and air; acid rain will affect flora and fauna including forests and agricultural crops; coastal power plants will affect marine creatures; have to contend with nuclear radiation in coal ash;

Costs & Benefits and societal issues
The above discussed issues are particularly relevant to states like Karnataka which have no known fossil fuel reserves, and which is a highly water stressed state. The Karnataka’s CM is on record saying that locating coal power stations in the state is not economical because of the need to transport coal over long distances. He is reported to have said this at the time of signing the agreement with Chattisgarh to set up a coal power plant in that state for Karnataka’s use. It is ironical that the same state government is planning to set up few coal power stations, in addition to asking the central government for setting up two Ultra Mega Power Projects in Karnataka.

The efficiency of converting coal energy to electrical energy in Indian power stations is about 33% only. The world’s best technology claims that this can be increased to a maximum of about 39%. About 8 – 9% of such generated electrical energy gets consumed by the processes within the coal power station itself. With Transmission and Distribution loss level of about 30%, and end use loss of about 15% prevailing in the country, the overall efficiency in coal energy to electrical energy put into productive / economic use can be only of the order of about 10%. Compared to this efficiency the Solar Photo Voltaic systems, which are being used in India have efficiency of about 14%, and is expected to reach about 25% soon with improved material technology. Our society has to carefully consider this economic aspect of coal power before embracing coal based power policy.

The National Forest Policy recommends a forest & tree cover of 33% of the land surface for a healthy environment, whereas at present this percentage is said to be less than 20% both in Karnataka and India. The “Economics of Climate Change” by Sir Nicholas Stern has estimated that preventing deforestation is the quickest and cheapest way of reducing the Green House Gas (GHG) emissions. In this background it is worthy of notice that large addition of coal power capacity will reduce the forest cover at an accelerated pace, because most of the coal deposits are below or close to thick forests. Setting coal power stations in these areas will also demand sizable chunk of forests for buildings, coal and ash handling facilities, townships and transmission lines. It should be a matter of great concern to the civil society that while forests are well known to be very good sinks of CO2, setting up of coal power stations can not only reduce forest cover but will also result in large addition of GHG emissions.

If an objective study of costs V/S benefits of setting up a coal based power station is carried out, the direct and indirect costs to the society will be so heavy that the benefits will be tiny in comparison. Such analysis of costs V/S benefits in case of each coal based power station should be insisted for by the society for all future projects.

As demonstrated in a Greenpeace report “hiding behind the poor” a small percentage of high income earners in our cities are consuming a high percentage of the electricity generated, while the majority of the poor and rural population do not have even access to it. Elimination of such glaring inequity itself can reduce the real demand for electricity by a considerable margin.

The need to establish more and more of coal power stations has been associated with the power deficits prevailing in the country. The data for various states during last 10 years indicate that this deficit is mostly during the peak hours of the day, and the annual energy deficit has not been huge. In this context also the blind addition of coal based power stations is not advisable because they are essentially base load stations, which means they become optimally economical only when they are run for most time of the day / year. In the absence of continuous running the plant efficiency and economy of a coal power plant gets seriously affected, which will be at a huge cost to the society. A simulation study of Karnataka scenario indicates that the planned addition of a number of coal power stations by 2025 is likely to lead to an average Plant Load Factor of about 35% for all the coal power stations in the state. This situation will be in sharp contrast to about 90% PLF of NTPC’s stations.

Sustainable alternatives to coal power: a case study of Karnataka
It is also amazing that many people in influential positions are advocating adding hugely to the generating capacity through coal power technology without even mentioning the potential impact of such additional capacity on social and environmental aspects of our densely populated society. It talks volumes about the social responsibility of our leaders, and about the serious consequences of coal based power policy, to know that a senior person in decision making position of Karnataka Power Corporation has suggested that 25% of all fresh water availability in the state should be reserved for coal power generation. Our society would do well to take a holistic look at the electricity needs of all sections of the society without ignoring other needs of the society such as clean air, drinking water, agricultural and forest lands, right to live in one’s ancestral property without being forcibly evacuated etc. We have no other option but to take an “integrated energy resource management” approach which will include the highest possible operational efficiency of every asset, effective Demand Side Management, optimal energy conservation and wide spread use of new and renewable sources of energy. Table 2 shows the gross inefficiency prevailing in the power sector of the country, which alone provides a huge scope to increase virtually the net power availability by as high as 40 – 50%.

Table 2: Power Sector Efficiency in India

Power Sector Area	Prevailing level of efficiency / loss in India	International best practice
Generating capacity utilisation	50 – 60%	More than 85%
Aggregate Technical & Commercial losses (AT&C)	35 – 40 %	Less than 10%
End use efficiency in agriculture	45 – 50 %	More than 80%
End use efficiency in industries and commerce	50 – 60 %	More than 80%
End use efficiency in other areas (domestic, street lights and others)	20 – 30 %	More than 80%
Demand Side Management	Potential to reduce the effective demand by more than 20%

(Source: Integrated Energy Policy, Planning Commission)

Table 3: N&RE potential in India

	Potential (Grid interactive power only)
1. Wind energy	45,000 MW
2. Small hydro	15,000 MW
3. Solar	Over 5,000 trillion kWH/year Potential (estimated to be more than the total energy needs of the country)
4. Bio-mass	17,000 MW
5. Ocean Wave	With about 7,000 Km of coastal line it should be huge, but no estimates available

(Source: MN&RE and other sources)

Table 4: Alternatives available for Karnataka to meet its electricity demand

Technique	Estimated Potential for savings
R, M & U	160 MW / 800 MU per annum
T&D loss reduction	1,100 MW / 7,000 MU per annum
Utilisation loss reduction – non-agricultural	1,100 MW / 4,300 MU per annum
Utilisation loss reduction – agricultural	100 MW peak demand savings and 2,500 MU per annum energy
Wind energy	600 MW /2,100 MU per annum
Biomass	480 MW / 2,000 MU per annum
Solar – Water heating	2,100 MW during morning Peak and 1,050 MW during Evening peak / 1,100 MU Per annum
Solar –residential lighting	300 MW / 600 MU per annum
Solar – water pumping for IP sets	1,000 MW / 3,200 MU per annum
Solar – Public and commercial lighting	40 MW / 640 MU per annum

(Source: Compiled from various sources including Integrated Energy Policy, Planning Commission)

An application of such a holistic approach, in a pilot study for Karnataka, has demonstrated that it is techno-economically feasible to meet fully the legitimate demand for electricity of all sections for next 10-15 years without having to add a single MW of generating capacity based on any conventional energy sources. There is a huge potential available for our society in the areas of energy efficiency, Demand Side Management, energy conservation and wide spread use of new and renewable sources of energy. Being a tropical country, India has tremendous potential through new & renewable energy (N&RE) sources, which has many advantages as compared to the conventional sources of energy. It would be a great disservice to burden the society with huge liabilities of coal based power stations without fully optimizing the use of existing electricity infrastructure. Keeping in view the social and environmental obligations to the present and future generations, the option to go for large size conventional energy sources should be only a last resort.

An application of such a holistic approach, in a pilot study for Karnataka, has demonstrated that it is techno-economically feasible to meet fully the legitimate demand for electricity of all sections for next 10-15 years without having to add a single MW of generating capacity based on any conventional energy sources. There is a huge potential available for our society in the areas of energy efficiency, Demand Side Management, energy conservation and wide spread use of new and renewable sources of energy. Being a tropical country, India has tremendous potential through new & renewable energy (N&RE) sources, which has many advantages as compared to the conventional sources of energy. It would be a great disservice to burden the society with huge liabilities of coal based power stations without fully optimizing the use of existing electricity infrastructure. Keeping in view the social and environmental obligations to the present and future generations, the option to go for large size conventional energy sources should be only as a last resort.

Instead of dreaming to blindly emulate Chinese practice of adding huge capacity addition of coal power units, it is essential to address effectively the pathetically low efficiencies in the usage of our existing power infrastructure. If we objectively take into account the operational inefficiencies in generation, transmission, distribution and utilization in India, the overall efficiency in the usage of the generated electricity for productive or developmental purposes is probably only about 50%, whereas at the international level it is known to be about 85 to 90%. With Aggregate T&D loss of about 33% and with about 40% loss in the agricultural pumping system (which itself is known to be consuming about 35% of all the electricity sold in the country) we can never hope to provide energy security to our masses without increasing the energy efficiency to a much higher level. With so much enthusiasm at various levels of the government to increase the generating capacity, it may even be possible to increase it by five times by 2031-32, as recommended by Planning Commission, but at a huge cost to the society. By that time our environment would have reached a point of no return.

In this context a recent report by Greenpeace deserves special attention. This report titled “energy {R}evolution, A SUSTAINABLE INDIA ENERGY OUTLOOK” with international authorship has dealt with the Indian energy scenario in good amount of detail, and has come up with a credible set of solutions. An important point highlighted in this report is the huge potential available in reducing the demand for energy without adversely affecting the legitimate needs of our society. This projection indicates the feasibility in reduction of about 38% in demand by 2050 as compared to the reference scenario of IEA. The study report is confident that by adopting suitable measures “by 2030 about 35% of India’s electricity could come from renewable energies” AND ” by 2050, 54% of primary energy demand will be covered by renewable energy sources”.

A hugely significant statement in this report, which many may find hard to accept in today’s scenario of deficits, is that “A more radical scenario – which takes the advanced projections of renewables industry into account – could even phase out coal by 2050. Dangerous Climate Change might force us to accelerate the development of renewables faster.” It is very pertinent to note that the credible model discussed in this report has indicated that it is possible to phase out coal based power stations by 2050 by taking appropriate measures.

What is most important in this report is the huge potential available to our society to move away from a vicious cycle of “addition of installed capacity – shortages – further addition – shortages – social & environmental catastrophe – further addition – shortages” to a sustainable energy scenario without shortages and with minimised risk of social & environmental catastrophe. In this background it must be stated that the integrated energy policy as adopted by the GoI has stated that even after the huge addition of about 5 times the present installed capacity for electricity generation by 2031-32 the country may not see energy security even by 2050.

Looking at the huge difficulties in adding huge generating capacity as experienced in the last few five year plans, when the additions were much less than the targeted capacity, it will be credible to assume that the country will continue to see chronic deficits indefinitely unless there is a paradigm shift. The other major issues of interest in this report are: the huge emphasis on energy efficiency at all levels, role of renewable energy sources as distributed energy sources, suitable tariff policies, and the massive reduction in GHG emissions possible from the proposed methodology.

It is very pertinent to note that there are unambiguous requirements under our constitution to protect the environment. Article 48A says: “Protection and improvement of environment and safeguarding of forests and wild life.—The State shall endeavour to protect and improve the environment and to safeguard the forests and wild life of the country.”
Article 51A says: “Fundamental duties.—It shall be the duty of every citizen of India—
(g) to protect and improve the natural environment including forests, lakes, rivers and wild life, and to have compassion for living creatures.”

It is relevant to mention here that it is not inconceivable to meet most of our electricity needs without basing our policy on coal. A recent report by Earth Policy Institute, USA has discussed the feasibility of meeting the electricity needs entirely without coal based power. In this report titled,”Time for Plan B: Cutting Carbon Emissions 80% by 2020”, it has been convincingly demonstrated that a good combination of efficiency improvement measures and renewable energy sources can eliminate the need for coal based power stations. In Indian scenario, if such feasibility appears to be unrealistic, the potential to drastically reduce the need for coal based power stations cannot be questioned.

IPCC has recommended that in order to prevent the temperature increase beyond 2 Degree Celsius the GHG emissions must peak latest by 2015, after which it should start decreasing sharply. Ignoring such a recommendation the integrated energy policy has advocated a coal based policy even for 2031-32. In view of all the above mentioned concerns MoEF should strongly recommend an objective review of coal based power policy for the country.

Our society must take tough decisions such as taking stock of the situation in an objective manner, and adopting a holistic approach to the needs of various aspects of our society than just adding coal based power plants. The present generation has the obligation not to leave polluted rivers or barren agricultural lands or degraded forests or mountains of ash to the future generations just to meet the insatiable demand for electricity of the present generation. The present generation will probably go down in the history of the mankind as being directly responsible either for saving the bio-diversity against so many odds or for leading to the destruction of human race.

Conclusions
The societal cost of coal power stations in the form of economic, social and environmental issues is so huge that it cannot be ignored in the name of development. At a time when the human kind is staring at the inevitable crises due to Global Warming, the necessity of coal power stations which are associated with about 42% of CO2 emissions worldwide must be reviewed carefully if we are to remain a welfare state. Many countries in the world are either denying clearances to new coal power stations and / or even decommissioning old power stations basically to minimise the GHG emissions. Our country, which has been boasting of a major initiative in the name of National Action Plan on Climate Change (NAPCC), cannot go on blindly adding coal power stations because this will negate the very claim under NAPCC.

MoEF should seriously consider launching an objective analysis of the socio-environmental impact of coal power stations in the country through an independently funded study of one or two existing coal power stations in each state.

Since the sole objective of a coal power station is to generate electricity, the society must consider various benign options available to us instead of high impact coal power stations. In view of the serious consequences of coal power generation MoEF should not hesitate to insist on credible justification in the context of economic, social and environmental issues before considering environmental clearance for any new coal power station. The carrying capacity of the local environment should be objectively studied while considering the application for environmental clearance for a new coal power station by taking into account the cumulative effect of all industrial activities in a given area.

Shankar Sharma
Consultant to Electricity Industry
shankar.sharma2005@gmail.com

Power Sector Reforms: a pilot study on Karnataka

{The State Planning Board, Karnataka, and the Institute of Social and Economic Change, Bangalore had arranged a two day seminar on 11th Five Year Plan of Karnataka: Perspectives, in Bangalore on 4-5 May 2007. The author was invited to make a presentation on Power Sector Reforms in Karnataka to take into account the possible steps during the 11th Plan period. Present article is based on the presentation made in the seminar. Though the article may appear to focus on Karnataka for the sake of statistical details, the issues discussed are generally relevant and applicable to most states in the country. The article has tried to focus on the sustainability, energy security and environmental protection. }

1. Introduction

Electricity being a crucial part of fundamental infrastructure of the modern society, the importance of an efficient, reliable and innovative power sector requires no special emphasis for the sustainable development of all sections of our society. In order to make the power sector adoptable to the changing times, an objective review of its past performance has to be carried out, future requirements have to be recognized and suitable policy decisions have to be developed and implemented. A paradigm shift is needed in the way we look at the overall needs of the society.

For Karnataka’s power sector it has been a case of many firsts and a brief surplus, but mostly crises of power cuts. The continuous growth in the demand for electricity has resulted in multi dimensional crises for the state: economic slowdown, huge letdown for those who depend on it, fast depletion of ground water table, environmental concerns etc.

Whereas the recent philosophy all over the world has been to maximize the efficiency of operation of the existing electricity infrastructure, Karnataka continues to think that addition of generating capacity will solve the problem even though this policy has failed since many decades. The recent report of Inter Governmental Panel on Climate Change (IPCC) has provided enough proof that such a policy is not suitable for a sustainable lifestyle. Hence there is a need for thorough review of the power sector during the 11the five year plan.

2. Recent past history

The state of Karnataka (starting from the erstwhile Mysore state and its predecessors) can proudly be considered a pioneer in the development of many areas of Electricity not only in India but also many parts of Asia. Starting from one of the first hydro-electric station in Asia at Shivanasamudra in 1902, to the then longest high voltage transmission line in the world between Shivanasamudra and Kolar, to the first state to promote the use of electricity in residences and agriculture in 1960s, to start one of the first co-operative society for electricity distribution in 1969, it had been a story of bold initiatives and adventurous actions. But it has also been a sad story of power shortages during the last few decades.

The decade of 1970s was a strange mix of surplus and heavy deficit. Whereas, there was huge surplus of electricity in early 70s, ever since 1973 Karnataka has been facing power shortage continuously. While, the state is seeking massive private investment in manufacturing and services sector, the lack of adequate infrastructure, including electricity, is being quoted by the private investors and financial institutions as the main hurdle in such an investment. Even though the shortage of electricity is not unique to Karnataka, its impact is quite discernible in the state’s socio-economic development. The green revolution of 60s and 70s, which made India self sufficient in food, has largely been possible because of electric pumps for agricultural purposes. If the society cannot sustain the supply of adequate and quality electricity, not only the agricultural output, but also the industrial output will be seriously affected.

There is no question as to the need for any modern society to be able to supply adequate and quality power to all sections for the socio-economic development. The need for Karnataka has come to be a pioneer again in devising economical ways and means of bridging the gap between the galloping electricity demand and limited energy resources, without compromising the environmental sustainability.

Starting from a meager generating capacity of 720 KW at Shivanasamudram in 1902, its own generating capacity has increased to 7,685 MW in 2008 (an increase of more than 10,600 times); its total power availability has increased to 8,954 MW (an increase of about 12,400 times).

Table 1: Available power capacity in Karnataka as on 30.9.2008 (MW)

State Sector (all types of fuels)	5,783
Private Sector	1,902
Share in Central Sector projects of Southern Region	1,269
Total	8,954

(Source: CEA website as on 20.10.2008)

Some of the other salient features of the Karnataka power sector are:
• Per capita electricity consumption has increased from about 148.28 kWH/person/annum in 1980-81 to about 600 kWH/person/annum at present.
• Easy access to electricity for agriculture since mid 70s has been attributed to be one of the main reasons for self sufficiency in food production even in times of drought like situations.
• For the same reason there has been a steep growth in industries also.
• The access to electricity has also been associated with the improved health and literacy.
• However, except for a short duration in early 1970s, there has been continuous shortage of electricity with a 100% cut for industries in 1980s.

3. Current Power Supply Position

“There is no energy shortage. There is only a crisis of ignorance.” – R Buckminster Fuller

Since the completion of Sharavathy Valley Hydro-electric Project in 80s, there has been an addition of more than 4,800 MW of generating capacity within the state and an increase of more than 1,200 MW of Karnataka’s share in Central Sector Power generation. Recently a High Voltage Direct Current transmission line from Talcher (in Orissa) to Kolar was also commissioned to import surplus electricity from the Eastern region to Southern region. But the load growth, with the onset of industrialization, pumped irrigation method and All Electric Homes, has been more than the additional availability of power in Karnataka since 1973.

Each year the demand and supply situation is generally manageable during the monsoon months, but results in chaotic scenes during summer months. During the year 2006-07 (April 2006 – Feb 2007) the deficit was estimated as about 7.6 % in peak demand and 1.9 % in energy requirement. Since 1970s it has been a story of shortages, power cuts, scheduled and unscheduled load shedding, refusal of power supply connections to some category of consumers, protests from rural consumers, reduction in agricultural and industrial output, threat of moving industries to other states etc.

Table 2 (A) : Electricity Demand, supply and shortage in Karnataka: (April 2007- Mar 2008)

	Demand	Supply	Deficit	% Deficit
Peak Hour Requirement (MW)	6,583	5,567	1016	15.4
Annual Energy Requirement (MU)	40,320	39,230	1,090	2.7

(Source: CEA Website as on 21.10.08)

Table 2 (B): Electricity Demand, supply and shortage in Karnataka: (Last 5 years)

	2003-04	2004-05	2005-06	2006-07	2007-08
PEAK POWER
Requirement (MW)	6213	5927	5949	6253	6583
Availability (MW)	5445	5612	5558	5811	5567
Shortage (%)	12.4	5.3	6.6	7.1	15.4
ANNUAL ENERGY
Requirement (MU)	36,153	35,156	34,601	40,797	40,320
Availability (MU)	31,145	33,687	34,349	39,948	39,230
Shortage (%)	13.9	4.2	0.7	2.1	2.7

(Source: CEA Website as on 21.10.08)

The total IP set consumption assumed in 2005-06 was 9,640 MU against the approved total sale of about 26,000 MU (as per KERC tariff order). This represents 37% of the total energy sold.

Table 3: Consumer profile in Karnataka ( 2004-05)

Consumer Category	IP Sets	Power (LT+HT)	AEH	Domestic lighting	Commercial	Others
Energy consumed (MU)	9,641	5,362	2,206	1,670	2,258	4,863
% of total energy sold	37	21	8.5	6.5	8.5	18.5
No. of consumers	15,27,800	2,48,100	14,00,350	81,00,000	10,85,000	—-

(Source: KERC Tariff order 2005)

Table 4: Available Power capacity in Karnataka as on 30.9.2008 (MW)

	Hydro	Thermal	Others	Total
KPCL	3,249	2,098	436	5,783
Private Generating Companies	52	587	1,263	1,902
State Total	3,301 (43%)	2,685 (35%)	1,699 (22%)	7,685
Central Projects share	Nil	1,073	137	1,269
Total	3,301	3,758	1,826	8,954

(Source: CEA Website as on 20.10.08)

4. Load Growth and Generation Potential

As per the Planning Commission to deliver a sustained growth of 8% through 2031, the country would need to grow its electricity supply by 5 to 7 times of today’s consumption. For this to happen, by 2031-32 the power generation capacity at the National level has to increase by about 5 times of the present capacity which is about 160,000 MW. As per the present thinking of the govt. most of this additional 640,000 MW has to come from thermal power stations (like coal, diesel or gas based) or large dam based hydro power stations, with some small contributions by nuclear sector and Non Conventional Energy (NCE) sector. One can only shudder to imagine the huge impact of such addition on flora, fauna and the society as a whole. Unfortunately even the Planning Commission document does not focus adequately on the social and environmental impacts.

• One has to keep in focus the availability of primary energy sources after we run out of our own economically extractable coal reserve (in about 40 years as per Planning Commission);
• With our petroleum product import expected to reach 90% of our consumption by 2015 AD, how are we going to ensure energy security?
• The load growth forecast for Karnataka is expected to be a CAGR figure of about 5% for the next ten years.

Table 5: Load forecast for Karnataka

Year	2006-07	2011-12	2016-17
Peak Demand (MW)	7,740	10,460	14,071
Annual Energy Requirement (MU)	44,748	60,478	81,354

(Source: 16th Annual Power Survey, CEA)

• Though the CAGR for Karnataka shown in the CEA projections is about 7% a year, the real growth rate seems to be closer to 5 – 6% as per the past experience.
• Hydro: Against assessed potential of 6,602 MW (almost all of which is in Western Ghats), 3,400 MW has been utilized so far. The rest of the hydro potential will be difficult to harness due to huge impact on the environment and stiff opposition from the public.
• Fossil Fuels: No known reserves in Karnataka;
• Establishing power stations based on coal, gas or diesel is fraught with uncertainty of fuels; example of Yelahanka diesel station and the Bidadi gas project;
• Nuclear: Kaiga in operation (3* 210 MWe); difficulty in getting adequate supply of Uranium;

5. Constraints in ensuring the security of electricity supply

Some of the major constraints in bridging the gap between supply and demand in the future could be:
• Planning Commission has projected that the domestic sources of fossil fuels identified can last not more than few decades;
• With a growing population (expected to touch 1.5 Billion by 2025) the country will have a serious problem to provide adequate amount of energy for all;
• In this regard we should seriously look at energy scenario not just for next 25-30 years, but for our future generations also;
• Conventional technology electricity is heavily subsidised, and the negative environmental impacts of its production are not objectively reflected in the cost to end-users;
• The electricity supply companies have been running under loss for very many years; on an average about 35% of the cost of supply is not recovered.
• The untargeted and unscientifically based subsidies will continue to thwart all improvement efforts.
• The inefficiency in usage in all sectors including agriculture, industry& commerce, domestic etc, has resulted in artificial shortages;
• The huge capital outlay required @ about Rupees 4 to 6 Crores per MW of additional generating capacity depending on the source of electricity;
• The additional capital outlay required in constructing the transmission and distribution system to handle this extra power.
• Huge AT&C losses, and the wastage in utilization will force us to plan for about 40% more installed capacity than we really require;
• The actual T&D loss for FY 04 was reported as 30.7%; the transmission loss only reported for FY 04 was 4.87% (Source: KERC annual Report 2004-05)

Table 6: Transmission and Distribution (T&D) losses in Karnataka

Year	94-95	95-96	96-97	97-98	98-99	99-00	00-01	01-02
% Loss	19.00	18.50	18.00	18.60	30.20	38.00	36.50	36.00

(Source: Ministry of Power, Govt. of India)

• Reluctance of Financial Institutions to fund the power projects because of inadequate / uncertain returns on the investment.
• In view of the huge inefficiency prevailing in the existing infrastructure, the environmental scientists/ economists argue that additional power generation through conventional technology sources should be considered only after making the industry highly efficient.
• They argue that instead of spending thousands of crores of rupees on dam based hydro stations or large size thermal power stations based on coal brought from other states/countries, our state should first explore all the alternatives to tap the hidden energy in the existing electricity infrastructure;
• There has been popular opposition to dam based hydro stations in Western Ghats or coal fired thermal power stations in coastal areas; Bedthi, Aghanashini, Gundiya, Barpole, Tadri Thermal and other thermal projects planned ;
• Potential social impact due to problems of displaced people in case of large hydro-electric projects; the recent past experiences including that of Narmada Sarovar;
• As Dy. Chairman Planning Commission has said, we cannot hope to be a leading economic power if we continue to recover only about 65% of the cost of energy supplied;
• The State has failed to ensure adequate electricity to all by conventional means during the past 60 years.
• All these will affect the power supply position of the state if we are to continue with the conventional philosophies.
• We should consider suitable alternative means of bridging the gap between demand and supply.

6. Efficiency of the electricity industry

The efficiency of the electricity industry in the state, so also at the national level, has left a lot more to be desired.
• Aggregate Technical & Commercial losses of the electricity network are about 35%.
• IP sets are known to consume about 40 to 45% more energy than that is really required.
• Of the total 1,414,907 IP sets as on 31.3.2005 only 23.77 % were metered.
• A large no. of domestic, commercial and Street Light installations have incandescent lamps, which are highly inefficient;
• A sizeable percentage of motors, pumps, welding sets etc. are of low efficiency;
• The cycle efficiency of coal conversion to electricity is only about 31%, and can be increased to only about 39% (Source: Planning Commission document).
• By the time 1 energy unit of coal energy is converted into electrical energy, transmitted from Raichur to Bangalore, distributed and utilized at the existing level of efficiencies the overall energy usage can only be about 10 to 15%. Hence additional coal power stations cannot be the best option to bridge the gap between supply and demand.

As per the Secretary, Power, GOI, the national overall energy usage can only be about 10 to 15%; average of PLF is about 65%; if this is increased to 80% the peak hour deficit of 12% will disappear, and the energy shortage will also go. He has also called for reduction in inefficient consumption, which is about 20 per cent of total power consumed in the country. According to him if 10 per cent savings were made, then the energy shortage also would be wiped out.

7. Impact of inefficient electricity sector on industries & commerce

The National Electricity Policy states:
“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 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.”

The direct result of the inefficiency of the electricity industry is the crippling power cuts every year with huge impact on all sections of the society. This is entirely avoidable as illustrated in Table 7 below.
• Whereas the gross power availability in the state was 7,784 MW in 2008, the net power availability after accounting for auxiliary consumption and unplanned outages should have been about 7,000 MW. But the maximum demand the state has met has been only 5,811 MW.
• This indicates the sub-optimal use of the existing capacity, which if used well at the international T&D loss level of less than 10%, will be enough to meet not only the peak demand but also the annual energy.
• This inefficiency in managing the existing capacity in the state is the prime reason for the power cuts each year.
• The inefficiency of the electricity industry in the state has made the authorities to plan for coal based or gas based power stations even though the state has no known reserve of fossil fuels. The examples for such decisions are: the KPCL proposal for Bidadi gas station, ONGC proposal in Mangalore; coal based power station in Raichur and Bellary, proposals at Tadadi, Mysore, Hassan, Bijapur etc.

Table 7: Net power availability in Karnataka as on 21.10.2008 (MW)

	Installed Capacity {A}	Aux. consumption @ 9% for thermal; @2% for hydro {B}	Unplanned Outage @ 5% {C}	Net capacity Available for use {A-B-C}
Thermal	2,685 + 1699	395	219	3,770
Hydro	3,249 + 52	66	165	3,070
Central sector share	1,269	Not applicable	63	1,206
Total	8,954	461	447	8,046

(Source: compiled from different sources)

• The inability to use the existing electricity infrastructure to the maximum extent has also lead to the authorities planning for more of base load stations like coal fired power station where as the deficit is largely during peak hours.
• A simulation study by D. Narasimha Rao, Visiting Faculty, IIM Bangalore in May 2006 has revealed that such a situation would result in excess base generation capacity by year 2015, and is likely to result in thermal PLF of less than 35%. In addition, various proposals to set up coal fired power stations have witnessed widespread opposition from the public on socio-environmental grounds. So, the state has to find out an acceptable way of meeting the growing demand for electricity on a sustainable basis.
• The diesel power station in Yelahanka is known to be experiencing low PLF due to high cost of fuel on a regular basis;
• Due to the above mentioned reasons, in terms of purchasing power parity the power tariffs in India for industries and commerce are among the highest in the world. The situation is very much similar in Karnataka (Source: Planning Commission document).
• If the Indian industries are to compete internationally their input costs have to come down; the energy efficiency has to improve considerably;
• In 2000-01 against the average supply cost rate of Rs. 3.11 per unit in the state, whereas power and commercial consumers paid much more than the supply cost, all others paid much less;
• An industry report has suggested that the increase in the Non Performing Assets (NPA) levels in the State, especially industrial NPA, was due to repeated power cuts affecting production and consequent revenue losses (Source: CMIE Report January, 2003).
• IP sets were supplied about 37% of the total energy in the state almost free of charges;
• Industries, which were supplied with about 25% of the total energy sold in the state, paid @ about 14 times that of the IP set consumers.
• Commercial consumers, who were supplied with about 4% of the total energy, paid about 3 times that of the domestic consumers, who consumed about 9% of the total energy.
• One can notice a lack of rational and realistic approach in tariff fixing leading to skewed economic development;
• Such a distorted tariff regime is neither necessary nor in the interest of the society;
• Whereas the contribution by all segments of the economy is important, some have been burdened more than the others; this has resulted in sub-optimal utilization/ distribution of state’s resources.

The National Electricity Policy states:
“Out of total energy generated, only 55% is billed and only 41% is realised. The gap between average revenue realisation and average cost of supply has been constantly increasing. During the year 2000-2001, the average cost of supply was 304 paise per unit and average revenue per unit was 212 paise per unit.”

• Due to the reasons enumerated above, during times of shortages, the ESCOMs have not been able to purchase high cost power from the private parties/other states;
• Continued power shortage and poor quality of supply.
• All these have resulted in increased cost of supply to industries and commerce.
• At about Rs. 4 to 6 Crore/MW investment needed for additional generating capacity, the burden on the state economy will be huge under the business as usual scenario; other infrastructure areas like poverty alleviation, education and health are suffering due to reduced budget allocation;
• The state is known to be incurring more than Rs. 2,000 crores of loss each year due to the inefficiency in the electricity industry.

8. Environmental and social impacts

The societal impact of electricity industry is huge. Unless managed responsibly, the electricity industry has the potential to be the biggest polluter of our environment. It will also lead to fast depletion of natural resources like forests, water resources, coal, diesel, cement, steel etc.

• The inefficiency of the electricity industry has forced the authorities to opt for inefficient coal fired stations in Karnataka, even though there are no known reserves of fossil fuels in the state.
• Huge amount of high ash content domestic coal is being burnt to produce electricity at low level of efficiency; resulting in the fast depletion of fossil fuels;
• Increased emission of Green House Gases(GHGs); potential for brown clouds, and acid rains;
• The environmental scientists are seriously concerned that large size coal fired stations like the one at Tadadi in Uttara Kannada district (4,000 MW), at Nandikur in Udupi district, and few others in plains of Karnataka may result in massive & irreversible damage to the ecology, including the acid rain in Western Ghats.
• An objective analysis of the real costs (both direct/indirect) to the society and the projected benefits of the proposed ultra mega coal project at Tadadi will clearly establish that the project is not in the best interest of the region in view of the highly sensitive estuary of river Aghanashini near Tadadi.
• More and more coal blocks are being opened up with considerable impact on environment; more forest/agricultural lands are being acquired for this purpose;
• Large quantity of fresh water is required for the coal fired power stations; additional stress on fresh water resources of Karnataka, which is considered the driest state in the country; result will be acute water scarcity in the affected areas.
• A major report (“Stern Review – Economics of Climate Change”) indicates that in Year 2000, 24% of all GHG emissions were from power sector. Another report also indicates that about 42% of all global CO2 emissions are from fossil fuel burning in power stations.
• The Stern Review has estimated that certain scenario of Global Warming may result in poor countries like India suffering economic costs of about 20 % of its GDP, whereas the mitigation of the same now can be achieved at a cost of about 1% of present GDP.
• The Review also indicates that more we delay in addressing the Global Warming the higher we will have to spend in mitigation of the same in future.
• The Stern Review also states that “Emissions have been, and continue to be driven, by economic growth; yet stabilization of greenhouse-gas concentrations in the atmosphere is feasible and consistent with continued growth.”
• Hence it can be said that “the costs of mitigation of around 1% of GDP are small relative to the costs and risks of climate change that will be avoided.”
• “Emissions from deforestation are very significant – they are estimated to represent more than 18% of global emissions”.
• Hence “Curbing deforestation is a highly cost-effective way of reducing greenhouse gas emissions.”
• The recent reports by IPCC have concluded on similar lines, but with the warnings of much more severe consequences if the ‘business as usual’ were to continue in the way we are handling our energy systems.
• Since the emission from fossil fuel power stations and methane emission from large hydro power stations are known to be large contributors to Global Warming, the power sector needs to review its policy of establishing additional power stations based on conventional technologies.
• Policy makers seem to believe that additional dam based hydro stations have become necessary; but they are ignoring the fact that such dams are associated with drowning of large tracts of dense forests and fertile agricultural lands; large dams also are known to emit Methane, which is a highly potent GHG.
• Large dam based power stations are also resulting in displacement of a large number of people from their natural habitat, which in turn has resulted in social upheavals.
• Hydro power stations with high negative impact but low benefits, like the proposed Gundia project in Hassan district, are being planned;
• Bio-diversity rich Western Ghats have already lost huge areas of thick forests due to a number of hydro-electric projects on river Sharavathy, Kali, Varahi etc.
• Another example for the lack of holistic approach is the proposed Gundia hydro electric project in Hassan District. The Detailed Project Report (DPR) in this case indicates that a vast stretch of dense rain forests (about 490 Hectares) in the Western Ghats will have to be destroyed to get 400 MW of installed capacity at an annual Load Factor of 32.42%, which is quite low as compared to Sharavathy valley or Kali valley hydel projects. Can our state afford to loose this much of thick rain forests for such a small benefit? If we take all the direct benefits of rain forests of highly sensitive Western Ghats, the value of these forests alone will be many times more than the benefits of the project over its entire life time.
• The costs of forest destruction and that of R&R of the Project Affected Families, which have not been included in the cost estimate, themselves may push the overall cost of such projects to a high level. An objective analysis of the real costs (both direct/indirect) to the society and the projected benefits of this project may establish that the project is not in the best interest of the society.
• Huge social impact due to rehabilitation problems; some estimates indicate that since 1947 excess of 20 million people have been displaced in our country, without providing them with comprehensive rehabilitation; social deprivation and creation of additional slums.
• Free power or very low tariff power to agricultural sector has resulted in highly wasteful exploitation of fresh water resulting in fast depletion of surface and ground water. Unsustainable level of ground water exploitation will result in water salinity.
• The inefficiency/ unreliability of grid quality power has also resulted in mushrooming up of a large number of diesel pump sets for agricultural/ commercial/ industrial uses. These are known to be very inefficient and highly polluting.

What our society is doing at present is to supply inefficiently derived electrical energy from limited conventional sources at subsidized rates for highly inefficient and wasteful end uses, for which the real subsidy cost will be debited to the account of future generations.

9. World best practices

All the developed countries demonstrate much higher level of efficiency in T&D, and much better operational and commercial performance.

• The AT&C losses are below 10%; as low as 6 % in some countries;
• Operational and commercial performance are similar to successful private enterprises;
• Industry best practices in all areas of the business are adopted: planning, design, procurement, O&M, revenue collection, quality, customer service etc.
• Availability and the reliability of power supply are very high.
• Comparison with International bench marking parameters.
• There is continuous look out for innovation and improvement.
• Strict compliance with tough requirements of financial & environmental legislations.
• High degree of corporate responsibility and effective public consultation.
George Deikun, mission director, USAID: “India, to sustain its estimated GDP growth (of 8% a year), must add around 500 MW of power generation on a weekly basis for the next 25 years. This is an astronomical figure and energy efficiency measures can offset at least a part of this future demand.”

10. Road ahead to meet the electricity requirements

Unless we take urgent and highly effective measures, our state will not be able to cater to the energy needs of our ever increasing population on a sustainable basis. The 100 % power cut as experienced in 1980s or the unreliable power as being experienced frequently will become the order of the day. Without effective and urgent measures to eliminate the need for power cuts the contribution of the industries, commerce and agriculture to the state may deteriorate steeply; the viability of some of them may even be threatened. As per Planning Commission (integrated energy policy document): “India’s conventional energy reserves are limited and we must develop all available and economic alternatives. … Clearly over the next 25 years energy efficiency and conservation are the most important virtual energy supply sources that India possesses.” Planning Commission also estimates that CO2 generated from energy use can be reduced by 35% through effective deployment of efficiency, DSM measures and renewables. Planning Commission’s main action recommendation for energy security is: “… relentlessly pursue energy efficiency and energy conservation as the most important virtual source of domestic energy”.

Some urgent and suitable measures should be:
• Huge emphasis on all-round efficiency improvement and energy conservation measures.
• Effective Demand Side Management (DSM).
• Widespread use of new & renewable energy sources.
• Integrated Resource Management Planning with a holistic approach to the society’s overall needs.
• Strict adherence to commercial viability of every power project, when viewed with objective analysis of various societal costs.
• All-round innovativeness, accountability and professionalism.
• Suitable regulatory measures, tariff policies and effective public participation.
• Adoption of international best practices.

11. Efficiency improvement and energy conservation measures

As per IREDA, under the Ministry of Non-Conventional Energy Sources:

“Energy is a basic requirement for economic development. Every sector of the national economy – agriculture, industry, transport, commercial and domestic – needs inputs of energy. The economic development plans implemented since independence have necessarily required increasing amounts of energy. As a result, consumption of energy in all forms has been steadily rising all over the country.”

Whereas the need for high overall efficiency of the industry has been appreciated and implemented in the developed countries, the same has not been appreciated to the desired extent generally in our country and particularly in our state. Some of the efficiency improvement measures are:

• The generating capacity of older hydro stations can be improved by more than 5% by adopting modern technologies; example of SVHEP project;
• International norm for T&D losses is less than 10%; MoP is targeting 15%. If we could reduce the T&D losses to 15%, it will release about 15% of the total energy / power available for economic and productive use; this hidden energy can be obtained at a cost much less than that of the additional generation capacity;
• IP sets are known to consume about 40 to 45% more energy than that is really required; wastage can be reduced to less than 10% by spending Rs. 2,000 to 4,000 per IP set.
• A quick estimate indicates that the loss reduction techniques can reduce the existing loss level in IP sets with a savings of about 5,000 MU of energy each year and an avoided new generation capacity of about 1,500 MW in Karnataka alone.
• Both Planning Commission and the National Productivity Council believe that upto 25% of the energy in industries and commerce can be saved;
• There is considerable scope for energy conservation in houses, offices, street lights and other public places; replacing the incandescent lamps and florescent lamps by energy efficient CFL alone has the potential to save 5 to 10% of total energy;

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.

12. Demand Side Management (DSM)

There is considerable scope for electricity demand reduction (both peak hour demand & annual energy) in almost all applications. The Planning Commission has taken into account the techno-economical feasibility of 15% reduction in grid electricity demand through DSM in the Integrated Energy Policy. Adequate management of peak load will assist in substantial reduction of system network costs. All feasible options available to flatten the demand curve in the state should be deployed, and the difference between max. demand and the average demand should be reduced as low as techno-economically feasible.

• The use of energy efficient Compact Fluorescent Lamps (CFL) instead of inefficient incandescent lamps is the quickest, surest, and cheapest way of reducing the peak demand and also the annual energy consumption. The benefit to both an individual user and the system becomes obvious in the table 8 below, with the potential to reduce the lighting load of the system by more than 70%, and the total cost of lighting to a consumer coming down by about 66%.

“MSEDCL has already distributed close to four lakh CFL bulbs at Nashik. Now, it plans to save about 900 MW during the morning and evening peak hours by large scale use of the energy-efficient CFL bulbs”.

• A reduction of 10% in the peak load of a system can result in saving additional network system cost by more than 10%.
• The future need for peak load stations like Varahi project (2*115 MW) and any need for pumped storage plant can be avoided by reducing the variation between peak load and off-peak load.
• Planning Commission is of the opinion that the cost effective savings potential is at least 10% of the total generation through DSM.
• Effective energy audit of all major consumers of electricity will assist in reducing the demand.

Table 8. Cost-benefit analysis of different lighting systems

	Incandescent	CFLs	LEDs
To achieve 504 lumens of light (normal light), lamp wattage required (Watts)	40 (@12.6L/watt)	8.4 (@ 60 L/watt)	9.16 (@55L/Watt)
No. of Lamps needed for 50,000 hours of lighting needs	16.6 (@3,000 hour life)	7.14 (@7,000hour life)	1 cluster of LEDs (@50,000 hour life)
Cost of Lamps needed for 50,000 hours of operation	Rs 182.60 (@Rs11/bulb)	Rs 1071 (@Rs 150/bulb)	Rs 916 (@Rs 100 Watt)
Electricity consumed for 50,000 hours (kWH)	2,000	420	458
Cost of electricity for 50,000 hours of operation (@Rs 3.60/unit)	Rs 7,200	Rs 1,512	Rs 1,648
Total cost (Rs.)	7,383.6	2,583	2,564

(Source: Compiled by: Jacob Cherian, Mumbai)

• Industries within Bangalore and across the state should try and diversify the peak load hours to reduce the state peak demand.
• Time of day (TOD) metering of the majority of installations along with suitable tariff differentiation will reduce the peak hour requirements on the system.
• Better design of buildings and street lighting systems will reduce the demand.
• Wasteful and unnecessary illumination of commercial buildings, and night time sports should be curtailed.
• Compulsory use of photo sensitive switches in all street lighting systems will reduce the wastage to the minimum level.

13. New & renewable energy sources

There is an ever increasing conviction that the new & renewable energy sources could be the solution to our future energy security problems. With the fast depletion of our fossil fuels, global warming and the issues associated with the dam based hydel projects, all over the world attempts are seriously on to develop suitable technologies to harness the ever lasting non-conventional & renewable energy sources.

As per IREDA, under the Ministry of Non-Conventional Energy (NCE) Sources:
“Promotion of energy conservation and increased use of renewable energy sources should be the twin planks of sustainable energy policy.”

• European Union has a plan to meet 20% of all its energy needs by 2020 AD through renewable energy sources; Israel is reported to be targeting 50% of its energy needs through renewable energy sources;
• Greenpeace has come up with plans to meet 100% & 50% of energy needs of New Zealand and India respectively through renewable energy sources;
• There are many time tested and techno-economically viable renewable energy sources;

Explains Subhash C Mullick, professor, Centre for Energy Studies, IIT Delhi:
“Fossil fuel reserves are limited and nuclear energy has waste disposal and other safety concerns. Renewable energy sources are our only hope.”

• Karnataka has a huge potential in renewable energy sources, including ocean tidal energy, as in table 9 below.
• Even if 75% of the AEH consumers, and 50% of the houses/offices/schools/street lights etc. can be encouraged to install solar panels for water heating and for lighting, a conservatively estimated 1,500 MW of morning peak demand, about 800 MW of evening peak demand and about 1,000 MU of energy per year could be saved in Karnataka.
• There is considerable scope for commercial and industrial establishments also to reduce their grid quality electrical energy requirements by harnessing solar power.
• All these measures will result in many direct /indirect benefits like massive reduction of T&D losses, energy theft, and recurring expenditure on fossil fuels, environmental protection, reduced human displacements etc.

As per IREDA, under the Ministry of Non-Conventional Energy Sources:
“As against the estimated 80,000MW renewable energy based grid connected power generation potential in the country, so far only about 6,000 MW installed capacity has been realized.”

Table 9: NCE potential in Karnataka

	Potential	Remarks
1. Wind energy	1,180 MW	A number of potential sites
2. Small hydro	650 MW	A number of potential sites
3. Solar	over 5,000 trillion kWH/year ( 2400 Mtoe/year)	Potential is more than the total energy needs of the country; against 4,500 Billion Units of electricity requirement in 2031
4. Biomass (wood and biogas)	640 Mtoe/year (million tonnes of oil equivalent/year) or about 19,500 MW	Huge potential when compared to the total household energy consumption of 135 Mtoe in 1999-2000 for the country.
5. Wave energy	Huge but the details of potential not known	The state has a long coast line , and hence immense potential

(Source: Ministry of Non-conventional Energy Sources, Govt. of India)

13.1 Cost effectiveness of the new and renewable energy sources

Two most common issues raised in case of new and renewable energy sources are that they are not firm power and that their comparable cost with conventional energy sources is high. The reality behind these issues is as follows:

• Many applications like lighting loads, water pumping for domestic and smaller agricultural needs, water heating for bathing etc. are not heavy and do not require 24 hours supply. Lighting loads can be adequately met by backup battery systems when the main sources like solar or wind energy is not available. These battery systems can be charged by the respective energy sources. Applications like solar water heating with adequate capacity water storage facility need not have battery backups. Solar water pumps for lighter agricultural or domestic loads can be used during the sunlight hours. These can also function much more reliably in conjunction with other renewable energy source of bio-mass, where feasible.
• Though it is true that the initial cost of these new and renewable energy sources seem to be high as compared to the conventional energy sources, it is only because the society has already invested very heavily for the infrastructure required for the development of the latter. Also, the real cost of recurring fuel needs in case of coal, diesel or natural gas will be avoided in the case of renewable energy sources. Whereas both the capital cost and energy cost from the conventional energy sources is increasing all the time, the same is opposite in case of new and renewable energy sources. Already the cost of new and renewable energy sources has come down by many times in the last decade. In addition, if we take the environmental costs, social costs, T&D losses and the large infrastructure required for the grid quality conventional energy sources, the distributed energy generation based on new and renewable energy sources will be much cheaper.
• The benefits of the new and renewable energy sources will be optimum when we consider them as distributed generation sources. An objective analysis of all the societal costs and real benefits over the duration of the known life cycle of conventional energy sources as compared to that of new and renewable energy sources will reveal that the renewable energy sources are of much higher benefits in almost every situation.

14. Environmental responsibility for sustainable development

The economic analysis of ‘business as usual’ of not doing anything about Global Warming, by Sir Nicholas Stern, indicates that the reduction in GDP could be about 20% in few decades time, whereas the cost of mitigating Global Warming now will be about 1% of GDP at present. So there is clear need to reduce the fossil fuel burning and saving forests. At the global level it is estimated that about 42% of the CO2 emissions are due to the burning of coal in power stations. The burning of Indian coal, having low calorific value and high ash content, should be reduced to a low level if we are to discharge our responsibility towards containing the global warming. Electricity industry, as a whole, has to play a major role in reducing the impact of Global Warming.

Many countries are taking major initiatives to reduce the dependence on fossil fuels for their future energy needs.

“Norwegian Prime Minister Jens Stoltenberg has proposed to make Norway the first “zero-emission” state by 2050 and reduce emissions of greenhouse gases by 30 percent by 2020.”

As per the Dy Chairman Planning Commission “India knows that the Global Warming is a scientific fact supported by strong evidences”.

European Union is proposing a target of 20% reduction in CO2 emission by year 2020. Israel is reported to be planning to source 50% of its energy needs through renewable energy sources.

All these essentially mean that it is techno-economically viable to plan for reduced role for fossil fuel based electricity generation in addition to avoiding large dam based hydel projects. Such a strategy requires that before planning for any large scale electricity generation project all the available alternatives should be fully explored. In view of the huge social, economical and environmental impact of large scale electricity generation projects, whether they are based on coal or gas or diesel or large dam, there is huge incentive for the society to objectively consider all the remedies to drastically reduce the need for such projects.

It is worth mentioning here the common gist of five official reports regarding the environmental considerations while planning any major project. The five reports referred to are: (1) “Industrial and Economic perspective of Dakshina Kannada” by Karnataka Centre for Infrastructure Planning; (2) A report by DANIDA – Management of Sustainable Development – 1993-95, (3) NEERI Report – 1996, (4) Carrying capacity for industrialisation of a region – 1998, (5) Karnataka’s Environmental Status and Action Plan -2003. All these reports have said one thing in common: that the local conditions of a region like Dakshina Kannada, which are ecologically very sensitive, should be a major consideration while selecting the site for any large scale project like coal fired power station. Another clear recommendation has been to conduct the ‘Carrying Capacity’ study of the region, which includes the impact of all the existing and planned projects for the region, before finalizing the site for each such project. The government and the society should take seriously the recommendations by such expert committees, which have been set up by the governments.

All these issues lead us to the eminently credible and essential option of Integrated Resource Management Planning to meet the future demand for electricity on a sustainable basis, before considering projects based on fossil fuel or large dam.

15. Integrated resource management approach for sustainable development

Integrated Resource Management basically refers to a management system, which aims at optimizing the utilization of various energy sources available to meet the energy requirements of all sections of the society on a sustainable basis at the lowest overall societal cost. Effectively implemented Integrated Resource Management is essential for ensuring energy security on a sustainable basis. As far as end consumers are concerned it does not matter as to what the source of energy is: whether it is electricity from fossil fuel power stations or hydel power stations; whether it is from distributed sources or from electricity grid, as long as it can provide affordable and reliable energy on a sustainable basis. What the society needs is a good combination of reliable and affordable sources of energy for meeting the demands of lighting, heating and motive power etc. Hence the responsibility of the concerned authorities is to find an optimal mix of various alternatives acceptable to different sections of our society at the lowest overall societal cost. A good look at the table 10 below indicates that most of the additional electricity demand in the state can be met comfortably by responsible use of various avenues readily available to us.

Table 10: Additional sources of electricity for Karnataka

Technique	Basis of savings	Estimated Potential for savings
R, M & U	5-8% of 2,300 MW of existing hydro capacity	160 MW / 800 MU
T&D loss reduction	Present loss level is about 30%; can be reduced to 10%; 20% of a base of 5,500 MW and 34,300 MU energy	1,100 MW / 7,000 MU
Utilisation loss reduction – non-agricultural	20% savings assumed feasible on a base of 5,500 MW and 21,600 MU (63% of 34,300 MU)	1,100 MW / 4,300 MU
Utilisation loss reduction – agricultural	40% energy consumption savings assumed feasible in each of the 50% of the IP sets; savings during peak demand assumed negligible; energy base of 12,700 MU (37% of 34,300 MU)	Nil peak demand savings and 2,500 MU energy
Wind energy	600 MW from the potential of 1,200 MW assumed feasible; PLF of 30% assumed	600 MW / 2,100 MU
Biomass	50% of estimated potential of 950 MW is assumed feasible at a PLF of 50%.	480 MW / 2,000 MU
Solar – Water heating	Assumed 75% of 14 lakh installations can be fed at average load of 2kW; at an average use of 1.5 hour a day assumed	2,100 MW during morning Peak and 1,050 MW during Evening peak / 1,100 MU
Solar –residential lighting	Assumed 25% of 81 lakh installations can be fed; average load of 160 Watts and average 5 hrs a day energy consumption	300 MW / 600 MU
Solar – water pumping for IP sets	Assumed 25% of 15 lakh installations can be fed; at 3 kW average load this comes to about 1,200 MW; 25% of the total savings in demand assumed for evening peak hours;	300 MW / 3,200 MU energy
Solar – Public and commercial lighting	Assumed 40% of 11 lakh installations (with 1,600 MU annual consumption) can be fed; average load of 100 Watts assumed.	40 MW / 640 MU

(Source: Compiled from various sources)

This table provides only a conservative estimate of the potential available for Karnataka through improvements in the existing facilities, and by deploying the benign and renewable energy sources of wind, biomass and solar power etc. The potential for solar energy use is immense and most of the smaller existing and additional loads can be fed by solar power systems. With the continuous improvements in the efficiency of the solar energy conversion a larger number of applications are coming under the solar energy’s purview, and hence there is potential for considerable reduction in the growth rate of the grid demand. Karnataka, which has a considerable length of coast line, also has great potential for wave energy which is not quantified in the table. This table indicates that there is huge potential in Karnataka to become energy efficient, energy secure, socially responsible and environmentally sustainable.

A conservative estimate of the potential mentioned in the table 10 indicates that these options can provide additionally an equivalent of about 5,300 MW peak hour support and 25,000 MU per year energy at a much reduced overall societal costs. In this background we, as a society, have to seriously question the wisdom of continuing with the failed old policy of adding large size power generating stations at huge societal costs without first considering the much cheaper and benign alternatives.

Integrated Resource Management plan looks at all such alternatives available to our society to meet the legitimate requirements of annual energy / peak hour demand at the lowest overall societal cost on a sustainable basis. It basically attempts to optimize the utilization of all the avenues available to the society, including the efficiency improvement in the existing infrastructure. Such an approach will lead to the sustainable harnessing of our natural resources for the benefit of all sections of the society without endangering the environment.

15.1 Integrated Resource Management Plan Model

Annexure 1 below demonstrates a model of how the additional demand for electricity in the state can be met by a combination of various techno-economically viable alternatives to fossil fuel based or dam based hydro power stations.

This model indicates how a combination of various alternatives available to us can be deployed to achieve the self sufficiency in meeting our electricity requirements on a sustainable basis. The peak hour and annual energy demand for the state has been projected from Year 2009 up to year 2018 at Annual Compounded Growth Rate (ACGR) of 7% starting from Year 2009 and gradually reducing by 0.5% in subsequent 10 years. This gradual reduction is to take into account the reduced growth expected due to various efficiency, conservation and DSM measures. The actual reduction in CAGR may vary between 0.25% to 2% depending on how serious are the implementation of the measures discussed above, but for the sake of simplicity 0.5% reduction per year is assumed in the model. 50% of the estimated potential as mentioned in table 10 above is assumed to be realized over 5 year plan period. The renewable energy sources in this model are all assumed to be distributed energy sources, and hence the corresponding benefits are viewed as reducing the net demand on the electricity grid.

This model indicates that the peak hour demand of the Karnataka Electricity Grid can be reduced from the projected level of about 9,281 MW in Year 2018 to less than 4,500 MW by effectively deploying various alternatives indicated in Table 10. Since the net power availability to the state at present is about 7,000 MW, there should not be any problem in meeting this peak hour demand. Similarly, the annual energy requirement can be reduced from the projected level of about 51,000 MU in the year 2018 to about 27,000 MU. Since the net annual energy availability is more than 34,000 MU there should be no energy gap either. What this model indicates is that without having to invest huge sums additionally on fossil fuel or dam based power stations, the projected demand of the state by 2018 can be met comfortably.

This Integrated Resource Management approach clearly establishes that huge benefits can accrue to the society by adopting a holistic approach to meet our electricity needs.

It should also be noted that this model has not taken into account the additional generation capacity that will be available to Karnataka from the ongoing and /or committed power projects like Bellary TPS (2*500 MW), Raichur TPS (unit 8, 9 &10), and Karnataka’s share in central sector projects like Kaiga Nuclear project (Unit 3 & 4), Kundankulam Nuclear project (2 * 1000 MW) etc. Taking all these into account Karnataka can become hugely surplus both in peaking power capacity and annual energy capacity. This situation may even provide us with the luxury of planning for the decommissioning of older coal fired generating units and the Kaiga nuclear power station.

Though the huge reduction shown for grid demand may appear to be unrealistic, it is credible and techno-economically feasible. The figures indicated in the model have been arrived at on a conservative basis, but no claim is made on a high degree of accuracy. This model was presented in AER2006, IIT Bombay, on Dec 4-5, 2006. The objective of this exercise is to demonstrate the benefits of the order of magnitude only. Only a fraction of the potential benefits have been used in the model, and even 50% of the indicated benefits can help us to overcome the chronic power shortages we are facing every-year.

The inference that can be drawn from the Integrated Resource Management approach is that there are many beneficial ways of meeting the growing electricity demand of the Karnataka Electricity Grid than through power capacity addition based on conventional technologies like fossil fuel based or large dam based power stations.

Compared to the option of additional generation capacity, these measures provide a large number of additional benefits to the society such as:

• greatly reduced AT&C losses,
• avoided cost of network expansion,
• improved operational parameters,
• much lower gestation periods,
• much reduced growth in demand (CAGR) for grid electricity,
• reduced need for land acquisition for lines and substations,
• avoided costs of recurring fuel expenditure,
• reduced complexity in system operation,
• avoided costs of peak load power stations,
• absence of the need for people’s displacement,
• advancement of local employment opportunities,
• reduced urban migration,
• much higher success in rural electrification etc.

In effect this approach will mean highly reduced societal costs of electricity infrastructure, and improved quality of electricity supply, and minimum impact on the environment.

The renewable energy sources when used as distributed generation sources are eminently suited for rural electrification, which otherwise would require unsustainable levels of financial commitment if grid quality electricity is to be supplied.

16. Societal costs of ‘business as usual’ policy V/S ‘holistic approach’ policy

Having advocated the technically suitable alternatives to the addition of generating capacity based on conventional technology to meet the growing electricity demand of the grid, the economics of these alternative measures will have to be examined.

A conservative estimate of the potential benefits mentioned in the table 10 above indicates that these options can provide additionally an equivalent of about 5,300 MW peak hour support and 25,000 MU per year energy to Karnataka. At the prevailing cost of new generation capacity based on conventional technology (@about Rs. 4.5 Crores / MW), to add 5,300 MW will cost about Rs. 24,000 Crores of direct additional investment.

Of the 5,300 MW of potential benefits available to Karnataka from alternative sources (as indicated in the table 10 above), about 2,500 MW can be obtained by efficiency improvement, energy conservation and DSM measures in the existing infrastructure. 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. As per this universal experience it requires only Rs. 2,800 crores for saving power equivalent of 2,500 MW, whereas the cost of additional generating capacity of 2,500 MW based on conventional technology will be about Rs.11, 250 Crores.

A high level estimation of the cost of implementing the measures indicated in table 10 is compiled in Annexure 2 below. The approximate cost of implementing these measures to obtain a benefit of 5,300 MW equivalent will be about Rs. 13,374 Crores. This is in stark contrast to the direct cost of about Rs. 24,000 Crores to install additional generation capacity based on conventional technology. The actual cost to the society in developing additional generation capacity based on conventional technology will be much higher because of the environmental and social & health costs of Project Affected Families.

Annexure 3 provides a rough budgetary plan for next five years to meet the additional electricity demand.

In order to achieve energy security on a sustainable basis for the development of all sections of our society, we have no other viable alternative but to adopt such integrated resource management approach.

17. Future options in conventional technology electricity generation

It is not inconceivable that by adopting the Integrated Resource Management approach in an objective manner the additional electricity demand can be met largely by the measures discussed above. However, if the additional demand for electricity is so high that it cannot be met by these measures alone, much better options of harnessing the conventional technology energy sources must be considered.

17.1 Fossil Fuel Technology:
Since Karnataka has no known reserve of fossil fuels, the fossil fuel based technology for locating additional power stations within the state cannot be considered as best in the interest of our state. It is a conventional wisdom that the location of a coal fired power station at either the coal pit head or very close to the load centre will result in maximum benefits. The location of coal power stations at places like Raichur, Mysore, Tadadi, Hasan, Bijapur etc. which are neither at the coal pit head nor at the load centre, brings in the disadvantages of both options. Karnataka, which is already ranked as the driest state in the country as per some reports, cannot afford to have more of coal fired power stations requiring huge quantities of fresh water. The prevailing scarcity of fresh water in the state should not be allowed to get further exacerbated. In addition, the need for drastically reducing the emission from fossil fuel burning to mitigate the Global Warming should get high priority. Hence the proposals to set up more coal fired power stations in the state should not be considered at all.

If the fossil fuel power stations based on highly advanced technologies of low emission and high efficiency is considered absolutely essential through objective analysis of the situation, the option of either investing in a joint venture or entering into agreement with another agency, which can set up a coal fired power plant at the coal pit head, should be considered. Power can be wheeled much more efficiently from such locations. The state government itself has admitted that it is much more economical for the state to set up coal power stations in coal rich states like Chattisgarh than in the state.

A better option with the already polluted Raichur thermal power station (RTPS, 7 x 210 MW) location could be to replace the existing 210 MW capacity generating units by large size units of super critical boiler parameters (660/800/1,000 MW units). Such an option would result in the reduced consumption of coal and hence the emissions per MW of installed capacity, reduced water consumption, and higher generating capacity in the same location. The occasion to design unit 8 at Raichur was a good opportunity in this respect. In place of the unit no. 1, which is 20 year old and which would need replacement soon, and the unit 8 of 210 MW capacity, a 660 / 800 MW unit could have been considered. It is reported that Unit 9 & 10 of 500 MW each are also planned at RTPS. This is another occasion to consider the optimization of unit size to obtain higher overall efficiency and reduced pollution in the same location, which is already having land, water and rail linkages instead of acquiring additional agricultural lands.

Since the state of Karnataka has no know reserve of any type of fossil fuel, the state’s interest would be best served by not considering setting up any new power plants based on fossil fuels, at least in the near future. The proposed 1,000 MW coal based power stations at Mysore, Hassan, Hasan, Bijapur, Bagalkot etc. will only exacerbate the problems associated with pollution, land acquisition and water resources in the state.

Since the thermal efficiency of the coal power stations with sub-critical boiler parameters is only about 34%, and that there is huge inefficiency in transmission, distribution and utilization of electricity, the overall efficiency of energy conversion from coal to steam to electricity and then to end applications like water heating for bathing purposes could be only about 10%. Society has to objectively deliberate on throwing so much resources such as land, water, air etc. on fossil fuel technology with such a poor efficiency record.

Similarly, the Yelahanka diesel plant due to the high cost of generation is reported to have resulted in low PLF (where the average annual PLF has been only about 45% in 13 years). Since the diesel import of the country, which is expected to reach 85% by 2012, will become costlier and difficult in the coming years the diesel power plants also are not suitable to our state. In view of the inability of the state to acquire gas linkage for Bidadi gas project even after 10 years of attempt, and the fact that inadequate natural gas supply has already affected the operation of existing NTPC power plants in the North and West also indicate that gas power projects cannot be suitable options for the state.

In summary, it can be said that since the power plants based on any type of fossil fuel are not in the best interest of the state, the society has to consider investing large sums of money on such plants only as a last resort.

17.2 Hydro Power:
Though our state is known to have good hydro potential, not all of it can be harnessed due to social and environmental constraints. Almost all of the potential hydro sites are in think forests of Western Ghats. These Western Ghats, which are among the 18 most important bio-diversity hot-spots as per UN, have already been ravaged by various developmental activities, including major hydel power stations of the state. These Western Ghats, which are the source of fresh water for the state, and the source of livelihood for thousands of families, cannot take any more abuse of its ecology. A healthy ecology of the Western Ghats is very important for the sustainable development of not only Karnataka, but the entire peninsular India. Since last few decades the people who are living in these areas, have become very conscious of the credible threats to their very livelihood from such projects, and are staging very strong protests as experienced in the case of proposed projects at Bedthi, Kaiga, Tadadi etc. The Ministry of Environment & Forests also is viewing any project proposals in Western Ghats with serious concerns, because of which getting the environmental clearance is getting increasingly difficult.

Considering these facts any proposal to build large dam based hydel projects in the state will meet a lot of obstacles in getting through the various stages of approval. Instead of planning for large hydel projects in our state few joint ventures or investment or agreement with other states or agencies which are very rich in hydro power like Himachal Pradesh, Arunachal Pradesh, Uttaranchal could be considered. The possibility of investing in hydel projects of Nepal and Bhutan, as done by the constituents of Northern Region, should also be considered.

17.3 Nuclear Power:
Though the country has spent a considerable amount in the nuclear sector since 1960s, the contribution of nuclear power to the total installed generating capacity is less than 4%. Though there have been strong advocacy on part of the nuclear lobby to promote nuclear power the issues confronting the society have been very many; safety of the nuclear reactors, huge capital cost, adequate quantity of nuclear fuel, safe storage / dsiposal of spent fuel, apprehension of the common public, inability to establish that the overall cost-benefit is in its favour etc.

“India is poorly endowed with Uranium; the most commonly used nuclear fuel. The substantial Thorium reserve will be useful only when it is converted into fissile material, which requires complicated processing.” As the Planning Commission itself has admitted the contribution of nuclear power to the total installed generating capacity by 2031-32 will be only about 5%. Though there have been proposals of late to construct few large size projects (10,000 MW capacity at each locations) in coastal areas, the popular opposition to such large size projects as experienced in West Bengal is an indication of the difficulties ahead.

Nuclear fusion technology, though being talked about highly amongst the nuclear powers, is not yet proven and is many decades away from the possibility of commercial use. Hence the nuclear power option as part of the conventional energy sources in India also seems to be very limited.

“Nuclear power cannot save us because the world’s supply of uranium and other radioactive minerals needed to generate nuclear power are very limited,” Chen Mingde, vice chairman of the National Development and Reform Commission, said in comments quoted by the China Daily newspaper.

18. Organisational framework & human resources for the future

Since the policies followed during the last 6 decades have not been able to meet the electricity demands of all sections of our society satisfactorily, there is a need to review the organizational structure of the electricity supply industry in the state. The reforms undertaken by the state govt. in recent years has resulted in unbundling of the sector. Now we have separate companies for generation, transmission and distribution even though they are all still under the control of one department. Though the IE Act 2003 requires the transmission company and the distribution licensees to be independent of each others, Karnataka Power Transmission Corporation Ltd (KPTCL) has been controlling the higher level policies of the five distribution companies in the state. Karnataka Power Corporation Ltd (KPCL), however, is functioning independently of KPTCL and the distribution licensees. Karnataka Electricity Regulatory Commission (KERC) also has started functioning since late 1990s.

Since the state government has full control in the functioning of electricity companies, and also heavily influencing the policy matters, these companies seem to be struggling to operate on commercial basis. These companies together are reported to be incurring losses to the extent of more than Rs. 2,000 crores every year, which cannot be sustained. In addition there does not appear to be good co-ordination of the functioning between the five distribution licensees, the transmission licensee and the generating company. Without good co-ordination of the functioning of these seven companies, it will be impossible to optimize the utilization of the resources of the state. For example: KPCL seem to practice a single corporate objective of setting up more and more additional generating capacities; KPTCL seem to be working towards expanding the transmission network and its assets; and distribution licensees seem to be interested in selling more and more electrical energy. Under such a scenario the public cannot expect the optimization of the state’s resources. As has been experienced during the last few decades the investment in the electricity sector has continuously increased, but neither the power cuts have been overcome nor has the quality of supply been improved to a satisfactory level. At the same time the natural resources of the state are not being put into maximum use because of the overall inefficiency in the industry.

18.1 State level co-ordination committee: It is very unfortunate that there is no single agency in the state which is entrusted to take a holistic look of the integrated resource management within the state. The experience so far indicates that the state’s Energy Department is found to be lacking in the required manpower competence to handle these issues. It is obvious that the interests of the paying public, the natural resources and the fragile environment of the state cannot be adequately protected with the existing industry structure. A state level coordinating body to consider all the relevant issues in meeting the additional demand for electricity at the lowest overall societal cost is an urgent necessity. The state govt. should consider setting up a state level co-ordination committee, which has complete autonomy, to develop policies and procedures for appropriate environmental regulations of electricity sector and utilities in the State, including the electricity generating companies. Such a co-ordination committee should be vested with the responsibility of optimising the use of natural resources of the state as far as electricity industry is concerned, and to coordinate with environmental regulatory agencies so that all issues relating to environmental impact of every power project are objectively considered to ensure the sustainable development of the state at the lowest overall societal cost. Such a co-ordination committee shall insist that any proposal for large power projects must be first supported by objective cost benefit analysis of all the viable alternatives available.

The articles of association of KPCL should be suitably modified, if necessary, to mandate it to look at all techno-economically available alternatives to meet its business objectives, including the virtual generating capacity addition through energy efficiency, DSM measures and distributed renewable sources of energy. KPCL should also objectively consider investing in other states or joint ventures to get additional electricity at lowest overall cost to the society, keeping in view the direct and indirect impact of its projects on the environment.

KPTCL, instead of looking only to expand its network, should consider all the available alternatives to reduce the overall cost and to optimize the use of its network elements.

The distribution licensees, instead of operating only as electricity supply companies, should consider offering the energy services in a holistic way. They should advise individual customer on the most suitable way to meet his/her energy requirement. It may be grid supply, or solar PV system or bio-mass plant. Effective DSM should be one of the most important corporate objectives for the distribution licensees.

It is essential that all these companies are run professionally, instead as govt. departments. Professional managers, with clearly identified responsibilities and performance objectives, should be appointed to run these companies. These companies should also be given adequate operational autonomy, with the government’s involvement restricted to only high level policy guidelines.

18.2 Energy Service Companies: The state government should consider encouraging private entrepreneurs setting up energy service companies. “.. (there should be) adoption of a least cost planning and policy approach that ensures energy efficiency and DSM have a level playing field with supply options. The regulatory Commissions should invite bids for DSM while approving new capacity additions (Planning Commission’s recommendation)”.
18.3 Performance yardsticks for the electricity companies: An established way of ensuring good performance from these companies is to make them accountable to the common public through periodical performance review. One of the main issues the society needs to concern itself with is to ensure that the electricity companies involved in generation, transmission and distribution are performing to the industry standards and they strive to emulate the world best practices. Progressive companies all over the world have a practice of benchmarking their performance at international level. Our society should continuously need to remind itself that there are many countries, which have uninterrupted electricity supply of very high quality, and the real cost of such a supply is either coming down in real terms, or at least not increasing exponentially as it is happening in India. There is a lot we can learn from international best practices in all areas of electricity generation, transmission, distribution and utilization. A continuous review of our practices with international industry leaders is essential to provide the better service to the society, which is the main objective of establishing the state owned electricity supply companies. Once their business objectives are clearly defined with measurable goals, they should be subjected to public audit.

18.3.1 Common obligations of various electricity companies:
• Whether the planning, design, construction, specification, procurement, testing, commissioning, operation, maintenance, fault investigation, repair procedures, safety aspects, cost control; and the performance/service standards follow the industry best practices, and subjected to peer review?
• What are the performance/service guarantees given to the stakeholders in general, and to customers in particular?
• Is the customer satisfaction feedback obtained scientifically and regularly, and remedial actions taken earnestly?
• How does the performance compare with the industry leaders both within the country and internationally? Without adequate benchmarking there is no way of telling whether the performances can be improved further.
• How does it propose to accurately measure the performance indices and publish the same?
• Whether quality certification like ISO certification obtained? Few of the electricity companies in India have adopted one or more of: ISO 14001 certification for environment safeguard: OHSAS 18001 for occupational hazard; ISO 9001 for quality management system etc. These are needed to achieve not only power self sufficiency, but a quality power system; they will help to assure the stakeholders that certain systematic approaches are being adopted to maintain good quality.
• Does these companies have regular interaction on all common issues with similar companies within the country and internationally?
• What role are they playing in R&D of the respective sector?
• How close a relationship does the company have with the public? Are the public, especially the affected sections of the society, being consulted effectively on all major projects? If so, what is the mechanism employed?
• How is the public being kept informed of the new major projects of considerable investment and of environmental importance?
• What are the policies adopted as far as safety (of operating personnel and public), asset management, risk management, environmental management, and the surrounding communities are concerned?
• How do these companies compare in cost effectiveness with similar companies in India and abroad?
• Do they have perspective plan for development over a horizon of 5 to 10 years? If so, they should be available in public domain.
• Before they seek to increase the price of supply of electricity, do these companies have taken all possible measures to reduce the cost of such supply, and can they prove so? In return for the increase in the supply tariff what improvements in service standards can the consumers expect?

18.3.2 Obligations of generating companies:
• Whether all the existing generating units OR generating stations are generating electricity at maximum efficiency and lowest possible cost?
• Are there detailed studies/plans to either increase the efficiency or the generating capacity of the existing units through renovation and modernization? When are these plans set to be completed?
• Has there been a study to compare the performance of each of the generating unit with the best in the industry, and whether improvements are being implemented?
• What sort of agreement it has with Transmission Company for the supply of MVAR? Such an agreement helps in obtaining remunerative price for the additional MVAR it may be asked to generate more than that is technically necessary.
• Is it considering the options other than electricity generation within the state; like partnering in private/public sector generation like a pithead coal station in Bihar or a hydro station in Himachal Pradesh?
• What are its plans to harness the small, mini and micro hydel potential in the state?
• Whether the non-conventional energy sources are being harnessed? If there are any impediments in doing so, what actions have been taken to overcome them?

18.3.3 Obligations of transmission companies:
• Whether the system losses are comparable to the industry standards, and how does it compare internationally?
• How often is the network optimization study carried out, and whether all the feasible recommendations from it are implemented earnestly?
• Before embarking upon new lines or higher system voltage, whether all other options like existing transmission corridor up-gradation or the system improvement have been explored and implemented to the extent possible?
• What commitment does it give to the public to reduce the transmission losses to the international standards?
• What is the service standard assurance given to its customers? What are the targets for achievement as far as SAIFI, SAIDI, CAIDI are concerned?
• SAIFI – System Average Interruption Frequency Index, gives an indication of the number of interruptions for a given period averaged out at the grid level. This can be measured at the sub-station level to effectively determine its reliability.
• SAIDI – System Average Interruption Duration Index, gives an indication of the average duration of interruptions for a given period averaged out at the grid level. This too can be measured at the sub-station level to effectively determine its reliability.
• CAIDI – Customer Average Interruption Duration Index, gives an indication of the average duration of interruptions per customer for a given period averaged out. This too can be measured at the sub-station level to effectively determine its reliability, and to compare it with the performance of other stations.
• What should be the self imposed penalty or KERC imposed penalty for not achieving the service standards by a given deadline?

18.3.4 Obligations of distribution companies:
• Whether the distribution losses are comparable to the industry standards, and how does it compare internationally?
• What is the service standard assurance given to the customers? What are the targets for achievement as far as SAIFI, SAIDI, CAIDI are concerned?

Note: It will be a revelation to compare these performance measures with some international companies. As an typical comparison, ESCOM, a South African supply company operating in similar conditions to ours is compared with that of a progressive company in India as follows:
SAIFI – ESCOM (11 interruptions per year) and Indian company (166 interruptions per year)
SAIDI – ESCOM (22 minutes per year) and Indian company (13,150 minutes per year)

• Such indices have been well accepted as typical performance indicators at international level. The objective should be to take all the techno-economically viable measures to improve on these targets every year.
• What should be the self imposed penalty or KERC imposed penalty for not achieving the service standards? What are these penalties for inadequate quality of supply as far as voltage and harmonic contents are concerned?
• What should be the penalty if the supply interruption extends beyond a target, under normal circumstances?
• What sort of agreement it has with Transmission Company for the supply of MVAR?
• Whether the tariff sought for different categories of consumer is sustainable to achieve fair return on the investment, protect the weaker sections of the society, encourages energy efficiency, and avoids wastage?
• What commitment does it give to the public to reduce the distribution losses to the international standards, and to minimize the overall cost of supply?
• What are its plans to ensure that the VAR requirements of the individual loads are met the load itself? Such an arrangement reduces the distribution losses by a considerable extent.
• What are its plans to make the distribution system, including the LT lines and transformer centers, safe to the public and its own staff at a level acceptable to the industry? Are there any plans to get peer review of its safety procedures?
• What process has it in place to receive and address the public complaints? What is the minimum and maximum time frame needed to attend to typical complaints under normal circumstances? A detailed statement is needed in this regard.
• What is its commitment to provide adequate electricity of high quality to everyone in its license area? What initiatives are in place to have access for adequate quantity of electricity in future?
• Whereas, Bangalore city consumers are enjoying better quality and continuity of electricity supply as compared to other towns and cities, and rural areas, are there any plans to compensate the affected customers in the form of reduced tariff for the similar category of customers?
• How easy it is for its customers to pay the bills, lodge complaints, apply for new connections, or to get any of their complaints addressed?

18.4 Strengthening the role of KERC: Industry experts are of the view that Electricity Regulatory Commissions are the best thing to happen to the industry in recent years. KERC has the potential to turn around the industry to the overall satisfaction of the society. But KERC need the necessary powers to discipline the electricity companies in the state. The state govt. should not only provide all the assistance, which KERC may require, and respect its decisions, but also create a legal environment, where the KERC becomes the people’s mouthpiece. For this to occur the state owned electricity companies should be mandated to fully comply with the directives of KERC. KERC’s directives should clearly reflect the public opinion by making the public hearing a good representation of the people’s view. KERC should also be vested with powers to scrutinise all major investment proposals in the power sector, to ensure optimal utilisation of the state’s natural resources at the lowest societal cost. All such proposals costing over a certain limit (say Rs 10 Crore) should have prior approval by KERC.

19. Public participation towards inclusive growth:

An effective way to keep the industry transparent and responsible is to have the public awareness of adequate level by making available all the relevant information to them. The society should seek, through KERC, answers to all the relevant questions on the functioning of the electricity companies to ensure that best practices are employed in all business aspects of the industry. The enactment of suitable laws along with efforts by KERC to make available all the necessary information to the public can play a crucial role in protecting the precious natural resources, and fix responsibility for different organizations and individuals.

As discussed in the earlier sections, the efficient use of the existing set up and the assets themselves can go a long way in addressing many of the issues, which the different stakeholders of electricity are facing since many decades. The issues mentioned in section 18.3 above, amongst others, should be addressed by the society through the good offices of KERC.

Public participation in all major decisions through effective public consultation process is crucial in this regard. A major factor in the success of such companies in developed countries is that there is effective public consultation process in those countries. Such public consultation processes are employed in all projects of societal importance. Information dissemination on all relevant issues of the company business should be made available to the public freely on a regular basis. Consumer awareness campaign on energy efficiency, DSM, safety etc. should be a primary objective for these companies. Social and environmental responsibilities should rank high on their business priorities, which should be measured by the public feedback.

19.1 The role of Public in power sector reforms
As in any other economic sector of our society the public’s role is critical in finding a solution to the power crises. Our society would do well to appreciate that energy profligacy, as seen in rich countries such as USA, Australia and European countries cannot be sustained for a long time. This is certainly relevant to populous countries like India. As long as we cannot ensure equitable and legitimate share of energy availability to all sections there is no hope of energy security.

Some of the areas where the public can help the electricity supply companies to overcome the chronic deficits in power are:
• Reduce individual energy consumption to a level where it can be sustainable on a long term basis; make an honest effort in distinguishing between energy needs, energy wants and energy luxuries;
• Persuade people around to do the same;
• Persuade public service agencies such as local administrations to reduce energy wastage in street lights, libraries, public buildings;
• Build / develop local lobbying groups to reduce electricity consumption for decoration purposes and unnecessary lighting;
• Not to use lifts, instead of steps, wherever possible;
• Persuade the organizers of public and private functions to minimize the energy wastage;
• Make all possible efforts to use only high efficient electrical appliances such as CFLs, TVs, PCs, refrigerators, mixers/grinders, motors/pumps; avoid Air Conditioners wherever possible;
• Minimise the use of electrical appliances during morning peak (6 AM to 9 AM) and evening peak hours (6 PM to 9 PM);
• Consider using the Time-of-day metering wherever possible;
• Adopt energy auditing measures to reduce wastage of energy;
• Consider deploying distributed sources of renewable energy at individual premises / communities, wherever possible to reduce the pressure on the electricity grid;
• Keep a vigil on the electricity supply voltage at individual premises, and persuade the concerned authorities to correct the same quickly if the voltage is outside the stipulated range; the supply voltage should be 240 Volts (+/- 10%) for single phase supply of two wires, and 415 Volts (+/- 10%) for 3 phase supply of 4 wires;
• Adhering to the relevant regulations of electricity supply, including prompt payment of bills, will go a long way in making the electricity industry efficient and accountable to people.

20. Recommendations

20.1 Adequate investment on efficiency improvement of the overall electricity industry should be a top priority for the government.
20.2 Efficiency improvement in Generation, transmission, distribution and utilization to the international levels should precede any additional investment in new generating capacity.
20.3 Effective DSM measures should get the necessary priority at the same time.
20.4 KPCL and ESCOMs should seriously consider promoting new & renewable energy sources.
20.5 The crippling power cuts should be dispensed with through a combination of energy efficiency, conservation and DSM measures.
20.6 All the techno-economically viable options should be considered effectively, along with objective cost-benefit analyses, before planning for large size projects.
20.7 Objective consideration of all the social, environmental and economical issues should be seriously undertaken in the decision making of all projects.
20.8 International best practice in all business processes should be adopted.
20.9 The electricity companies in the state should be mandated to demonstrate a high level of corporate responsibility on all social, environmental and economical issues, preferably through periodical public audits.
20.10 Power plants based on fossil fuel or large dams should not be considered for the state until all the other techno-economically viable options are fully exploited.
20.11 Because of the growing population and demand, we should seriously look at energy scenario not just for next 5-10 years, but for the future generations also.
20.12 Optimum use of new and renewable energy sources, especially as distributed generation sources, should be the primary plank of our future energy policy.
20.13 The credible risk of the scenario of surplus base load generating capacity in the near future should be objectively considered while planning for additional coal based power stations in our anxiety to bridge the gap between demand and supply.
20.14 The distribution licensees should make a scientific study of the cost of supply to each category of consumers, on the basis of which the cross-subsidy should be eliminated as per the requirements of IE Act 2003.
20.15 The serious implications of Global Warming and Climate Change as discussed in IPCC reports, and the recommendations thereof should be a major consideration in all the decision making processes.
20.16 Integrated Resource Management Planning along with a holistic approach to the societal needs should be the critical business process.
20.17 Widespread use of energy efficient CFL lamps instead of inefficient incandescent bulbs should be encouraged on a war footing.
20.18 The electricity companies should be run by professional managers with adequate autonomy; they should be made accountable for clearly measurable performance targets.
20.19 A state level coordinating body, preferably under the aegis of KERC, with adequate autonomy and powers to consider all the relevant issues in meeting the additional demand for electricity at the lowest overall societal cost is an urgent necessity.
20.20 Suitable business environment should be created for setting up of energy service companies both in private and public sectors, by adoption of a least cost planning and a policy approach that ensures that energy efficiency and DSM have a level playing field with supply options.
20.21 As recommended by the Planning Commission, the regulatory Commissions should invite bids for DSM while approving new capacity additions.
20.22 The renewable energy sources should be preferred to be used as distributed generation sources for rural electrification of remote or small villages.
20.23 Based on good performance yardsticks the electricity companies should be made accountable to the common public through periodical performance review.
20.24 Effective public participation in all important decisions should become mandatory.
20.25 Public awareness campaign and information disclosure should be a major corporate objective for the electricity companies in the state.

21. Conclusions

The much needed security of a reliable and quality electricity supply to all sections of the society has not been achieved even after 6 decades of independence. Such a failure on part of the electricity sector has major impact on social, environmental and economical aspects of the state’s development efforts. The crippling power cut is a disgrace on the state’s avowed goal of a welfare society. Through suitable policies and initiatives, this situation must be arrested and improved if we are to aim at the all-round development of not just the present generations, but also of the future generations. Growing population, ever increasing demand, and vastly unmet energy requirements are demanding serious measures immediately, without which our society will face grave future. A paradigm shift is needed in the way we look at the overall needs of the society.

Unless the efficiency of the overall electricity industry is improved to international standards, no amount of additional generation capacity will be able to bridge the gap between demand and supply; it will only put tremendous pressure on the limited resources of the state. Sustainability of the energy resources with strong emphasis on social and environmental impacts should be a key factor in our policies.

Highly objective consideration of the electricity scenario in the state will reveal that in reality there is no shortage of the electricity generating capacity if we can achieve international standards in the performance of the assets in generation, transmission, distribution and utilization. Hence, efficiency improvement, energy conservation, DSM, and optimum deployment of distributed renewable energy sources will not only enable us to eliminate the deficits, but also will reduce the need for large additional power generating capacities. There is huge potential for this approach to ensure much improved status of social, environmental and economical aspects of our state.

The fact that our state has no known reserve of fossil fuel of any kind, and the real economic viability of planning for power plants based on these fuels should be another major consideration in our decisions. The multi-dimensional issues associated with coal from distant places, imported diesel / petrol, and the uncertainty of the supply of natural gas should be objectively factored in while making decisions on additional generating capacity. Though there appears to be huge potential for additional hydro capacity in the state, the unquestioned need to protect the ecologically sensitive Western Ghats, where most of such potential is available, must not be compromised at all. The Western Ghats, which are already devastated to a considerable extent by many developmental projects, should be considered as the life line for our state and protected with all the seriousness it deserves.

In formulating policies for the energy security the findings and recommendations of IPCC should be the focus of our attention. Integrated Resource Management Planning based on lowest overall societal cost, along with a holistic approach to the societal needs, should be the critical business process.

International best practices and bench marking shall be adhered to in all business processes. In planning to meet the additional electricity demand, all the techno-economically viable options must be considered objectively without relying on large power projects only.

The companies engaged in electricity generation, transmission and distribution business should be managed by industry professionals like a successful private enterprise with adequate levels of autonomy and societal responsibilities. The articles of association of these companies should be modified, if necessary, to reflect the changing needs of the society.

Suitable tariff policies without cross subsidies, which will encourage economical & productive use of electricity, and which will directly discourage the wastages should be implemented with a sense of total commitment.

Performance yardsticks for the electricity companies should be developed in consultation with all the stakeholders and effectively implemented.

A state level coordinating body to consider all the relevant issues in meeting the additional demand for electricity at the lowest overall societal cost is an urgent necessity.
—————————

Annexures

	ANNEXURE – 1
Karnataka Electricity Industry – Integrated Resource Management Model
PART I: High level calculations of benefits: forecast for peak demand power (MW)
	Year 2009 onwards		2009	2011	2013	2015	2017	2018
A	Load forecast @7% growth from 6,200 MW base in 2006 with 0.5% reduction in CAGR every year (peak hour demand)	MW	7595	8051	8453	8791	9055	9281
B	Demand reduction feasible through existing system improvements
	B1. Generation improvement through R, M & U	MW	16	16	16	16	16	16
	B2. Transmission & Distribution loss reduction	MW	110	110	110	110	110	110
	B3. Non-agricultural uses	MW	110	110	110	110	110	110
	B4. Agricultural use (100 MW reduction during peak hours assumed)	MW	10	10	10	10	10	10
	Aggregate reduction feasible from efficiency measures	MW	246	738	1230	1722	2214	2460
C	Demand reduction feasible through solar technology
	C1. AEH Installations (50% reduction during evening hrs assumed)	MW	105	105	105	105	105	105
	C2. Residential installations	MW	30	30	30	30	30	30
	C3. IP sets (100 MW savings during evening hrs assumed)	MW	10	10	10	10	10	10
	C4. Public & commercial lighting	MW	4	4	4	4	4	4
	Aggregate reduction possible through solar technology	MW	149	149	149	149	149	149
D	Demand reduction feasible through wind energy	MW	60	60	60	60	60	60
E	Demand reduction feasible through biomass	MW	48	48	48	48	48	48
F	Aggregate demand reduction through NCE sources	MW	257	771	1285	1799	2313	2570
G	Net power demand forecast on the grid (= A-(B+F))	MW	7092	6542	5938	5270	4528	4251
PART II: High level calculations of benefits: forecast for annual energy requirement (MU)
H	Load forecast @7% growth from 34,300 MU base in 2006 with 0.5% reduction in CAGR every year (annual energy demand )	MU	42019	44540	46767	48638	50097	51349
I	Energy reduction feasible through existing system improvements
	I1. Generation improvement through R, M & U	MU	80	80	80	80	80	80
	I2. Transmission & Distribution loss reduction	MU	700	700	700	700	700	700
	I3. Non-agricultural use	MU	430	430	430	430	430	430
	I4. Agricultural use	MU	250	250	250	250	250	250
	Aggregate reduction feasible from efficiency measures	MU	1460	4380	7300	10220	13140	14600
J	Energy reduction feasible through solar technology
	G1. AEH Installations	MU	110	110	110	110	110	110
	G2. Residential installations	MU	60	60	60	60	60	60
	G3. IP sets	MU	320	320	320	320	320	320
	G4. Public & commercial lighting	MU	64	64	64	64	64	64
	Aggregate reduction feasible through solar technology	MU	554	554	554	554	554	554
K	Energy reduction feasible through wind energy	MU	210	210	210	210	210	210
L	Energy reduction feasible through biomass	MU	200	200	200	200	200	200
M	Aggregate energy reduction feasible through NCE sources	MU	964	2892	4820	6748	8676	9640
N	Net energy demand forecast on the grid (= H-(I+M))	MU	39595	37268	34647	31670	28281	27109

 

Annexure 2

High level estimate of costs of additional sources of electricity for Karnataka

Technique	Estimated Potential for savings	High level estimate of costs
R, M & U	160 MW / 800 MU	Rs. 104 Crores (@Rs. 65 Lakh/MW, as per BBMB experience)
T&D loss reduction	1,100 MW / 7,000 MU	Rs. 1,240 Crores (@Rs. 1.125 Crores/MW, as per BEE estimations)
Utilisation loss reduction – non-agricultural	1,100 MW / 4,300 MU	Rs. 1,240 Crores (@Rs. 1.125 Crores/MW, as per BEE estimations)
Utilisation loss reduction – agricultural	Nil peak demand savings and 2,500 MU energy	Rs. 200 Crores (@Rs. 0.75 /kWH as per BEE estimations)
Wind energy	600 MW /2,100 MU	Rs. 2,700 Crores (As per Planning Commission estimate)
Biomass	480 MW / 2,000 MU	Rs. 1,440 Crores (As per Planning Commission estimate) 25% of the MW benefit to come from distributed generation sources. Hence this much cost shall be borne by beneficiaries
Solar – Water heating	2,100 MW during morning Peak and 1,050 MW during Evening peak / 1,100 MU	Actual costs to be transferred to the end users as all of the benefits are expected to come from distributed generating sources
Solar –residential lighting	300 MW / 600 MU	Rs. 750 Crores (As per Planning Commission estimate; @ Rs 25 Crores /MW). 90% of the MW benefit to come from distributed generation sources. Hence this much cost shall be borne by beneficiaries
Solar – water pumping for IP sets	300 MW / 3,200 MU energy	Rs. 2,250 Crores (@Rs.30 Crore/MW, as per Planning Commission estimate) All benefits to come from distributed generation sources. 10% of the total cost in the form of subsidy and technical support cost shall borne by the society.
Solar – Public and commercial lighting	40 MW / 640 MU	Rs. 750 Crores (As per Planning Commission estimate;@ Rs 25 Crores/MW). 75 % of the cost to be borne by State.

Annexure 3

Schemes /Programme for managing the demand in Karnataka

 

Programme	Total cost (Crore Rupees)	Annual maintenance capital cost (Crore Rupees)	Annual recurring costs (Crore Rupees)	Remarks
1. CFL for Bhagyajyothi Scheme	10.5 (for three years)	3.5	Nil	In three years all the BJ scheme houses should have CFL lamps only
2. CFL for others	23.75 (for five years)	4.75	Nil	Only interest on capital at 5 % per year
3. Solar water heaters	405 (for three years)	45	90	Discount of Rs.100 per installation per month PLUs difference in interest cost of 2% lending and 5 % borrowing.
4. Efficiency improvement in IP sets	56 (for five years)	Nil	17	Only difference in interest cost of 2% lending and 5 % borrowing.
5. Technical loss reduction	1350 (for five years)	270	Nil	15% loss reduction (3% each year); from a base of 6,000 MW and @4.5 Crores per MW of capital cost
6. Generating station upgrade/refurbishment	240 (for five years)	48	Nil	32 MW benefit each year; at 33% cost of new generation
7. Efficiency improvement in non- agricultural consumption	375 (for five years)	75	Nil	50 MW benefit each year; at 33% cost of new generation
8. Solar PV cells	25 (for five years)	5	Nil	10,000 installations each year; 3% interest loan
9. Bio-mass energy	25 (for five years)	5	Nil	3% interest loan
10. Making use of captive power plants in the state	Nil	Nil	Nil	Direct investment may not be needed; in some cases strengthening of T&D systems may be needed.
11. Massive awareness campaign on energy conservation	5 (for five years)	Nil	1	Use of NGOs
12. Energy auditing on all industries/establishments with connected load more than 25 KW	10 (for five years)	Nil	2	Make use of accredited energy auditors; the cost may also be recovered from the consumers

 

Shankar Sharma
Consultant to Electricity Industry
Thirthahally, Karnataka – 577 432
Phone: 08181 203703 & 296402 / 94482 72503
e-mail: shankar.sharma2005@gmail.com

Inefficient Electricity Industry and Global Warming

1. Preface:
Since the release of 4th Assessment Report (AR4 Synthesis Report) by Inter Governmental Panel on Climate Change (IPCC) released on 17th Nov. 2007, there are probably no serious deniers of the concept of Global Warming & Climate Change. While some skepticism is still being heard from some quarters, generally there is widespread acceptance of the causes and consequences of Global Warming & Climate Change. The unanimity of opinion at UNFCC conference in Bali to deliberate further to find a mechanism to replace Kyoto Protocol by 2012 is a clear vindication of this statement. Most importantly, most of the provincial and Union governments seem to have accepted the harsh realities of Global Warming & Climate Change. Union govt. has even mentioned that the reduction of GHG emissions will be a priority task.

However, there will always be a considerable gap between such an assurance from the govt. and its effective implementation. Since the issue of Global Warming & Climate Change concerns the entire world, at present and in the future, the civil society has to take the initiative of mitigating the impacts, without having to relying entirely on the govt. IPCC / ORF had sought feedback from the public on various measures to mitigate the impact of Global Warming as apart of IPCC Outreach Activity on WG III Fourth Assessment Report, Mumbai, on 9th October 2007. The efforts by IPCC / ORF to seek the feedback from the public are very laudable objectives.

In this feedback only the issues relevant largely to the electricity industry are considered. In view of the fact that about 21% of all GHG emissions and about 42% of all CO2 emissions are known to be coming from the activities associated with electric power generation alone, adequate emphasis on this industry goes a long way in mitigating the impact of Global Warming & Climate Change. IPCC, UNEP and many other Global organizations have no doubt that by reducing the need to add more electricity generating stations through measures like higher efficiency of the usage and energy conservation, the total GHG emission can be brought down considerably. In this regard an analysis of the efficiency of the electricity industry in Karnataka and India can reveal a disturbing picture.
Appropriate change in policies and practices relevant to electricity industry alone can go a long way in reducing the total GHG emission of the country. What is required is a paradigm shift in our energy policy.

Table 1: Annual Green House Gas emission by Sector

Sector	GHG gases (%)	CO2 (%)	Methane (%)
Power Stations	21.3	29.5	–
Industrial Processes	16.8	20.6	–
Transportation fuels	14.4	19.2	–
Agricultural bi-products	12.5	–	40
Fossil fuel retrieval, processing and distribution	11.3	8.4	29.6
Residential, commercial and other sources	10.3	12.9	4.8
Land use and bio-mass burning	10.0	9.4	6.6
Waste disposal and treatment	3.4	–	18.1

(Source: IPCC Report)

2. Inefficiency in Indian electricity industry:
2.1 The high level of inefficiency prevailing in various aspects of the electricity industry in India is a major contributor to the present level of GHG emissions, even though India’s per capita GHG emissions is considered to be one of the lowest in the world. But it should be noted that there is a huge potential for phenomenal increase in such GHG emissions because of the hugely projected increase in population growth and largely unmet demand for electricity even at the present level of population. In this regard the Union government’s stand that due to low per capita GHG emissions, the country should not be expected to spend considerable sum in reducing such emissions does not carry enough conviction. Since there is huge scope for improvement in the efficiency and decrease in the GHG emissions, our country should set itself a stiff target.

2.2 The civil society should do all that is possible to convince the government that the containment of GHG emissions to the lowest level possible, keeping in view the sustainable development activities of all sections of our society, is in the overall interest of our own people. Whereas the per capita emission of GHGs can be a useful indicator in international negotiations, it is the total GHG emission which is important from the Global Warming perspective. Even if India’s per capita emissions remains below the world average in next few decades, its total GHG emission can be still a major contributor to Global Warming. As a matter of fact International Energy Agency (IEA) has projected that India could be the third largest emitter of GHGs by 2015 after China and USA if the present trend continues. In addition, being a tropical country India also faces high risk from the impact of Global Warming, as compared to temperate and cold countries. Besides, the high level of GHG emissions in the country will also have local impact on its own environment first, before it affects other parts of the world. Hence it becomes critical that the country, as a responsible member of the international community, must do all that is possible to minimize the GHG emission to the minimum levels possible within its constraints, without giving too much credence to the argument of per capita emission alone. There will be no possibility to reduce the total GHG emission at the Global level, if each of the developing countries attempts to match even half of the per capita electricity consumption as reported from USA.

2.3 The major areas where the electricity industry in India is exhibiting much lower level of inefficiencies, because of which the GHG emissions are high, as compared to the international best practices are:
• Low Plant Load Factor (PLF) of the order of about 60% at the National level (as low as 25% in some cases) in the operation of the older and smaller size coal based power plants; this PLF is in stark contrast of more than 90% in some of the modern power stations of NTPC;
• Aggregate Technical & Commercial loss of about 40% against less than 10% elsewhere;
• Utilisation loss in applications of about 15%;
Additionally there is huge scope to reduce the very demand for electricity by means of Demand Side Management & Energy conservation, which is of the order of about 15% and which are also techno-economically feasible.

2.4 Due to these inefficiencies in the usage of electricity from the existing assets more power generating plants, especially fossil fuel based, are being planned & commissioned than those which may really be necessary. There are techno-economically viable measures, which can improve such efficiencies to international best practice levels. As per the prevailing wisdom / experience these measures are expected to cost only about 25% of the cost of establishing new generating capacity.

2.5 In addition, the widespread use of non-conventional energy sources like solar, wind, bio-mass, wave energy etc. can reduce the current and future demand for grid quality electricity through large fossil fuel based or dam based power plants by a considerable margin. These measures will be able to reduce the need for fossil fuel burning and submergence of forests and vegetation in the form of large size electric power generation projects. They will also assist in preserving certain natural resources like fertile land and water.

2.6 In summary, it can be said that about 40 to 50% more virtual capacity addition (than what is available now) is possible through various efficiency improvement measures, which is expected to obviate the need for new generating capacity of about 60,000 to 70,000 MW in the next few years. These measures will reduce the GHG emissions not only from the existing coal power plants, but will also reduce the total GHG emissions in the future.

2.7 These measures will also have huge positive impact on economic, social and general environmental aspects of the society. While providing clear economic benefits, these measures will also result in reduced need for land acquisition, displacement of Project Affected Families, and acute pressure on fresh water and other natural resources. At a conservatively estimated cost of new generation capacity of Rs. 5 Crores per MW the savings to the national economy could be more than Rs. 250,000 Crores in today’s prices. If we also take the economic benefits associated with the carbon credits, which can be earned through these measures under CDM regime, the overall benefit to the nation will be huge.

These measures while reducing the need for additional generation capacity will also assist in reducing the GHG emission from the electricity industry in excess of 500 millions of tons of GHGs per year.

2.8 Keeping these multiple societal benefits in mind there cannot be any reason why the governments should not like to invest adequately in these measures. Hence there is an urgent need for the civil society to persuade the state and central governments to put huge emphasis on efficiency improvement measures and the effective deployment of distributed renewable energy sources.

3. Action Plan to improve the efficiency in the electricity:
The governments should be urged to seriously consider implementing the following action plan:

3.1 The national average of electricity transmission loss should be brought down to less than 3 % by Year 2015, and that the board of directors of each transmission authority should be held directly responsible, as in the case of the financial disclosures. Also there should be a target to decrease AT&C losses to below 10 % by 2015, failing which a financial penalty of some sort should be considered. In this regard each of the central sector agencies like NTPC, NHPC and PGCIL should be mandated to adopt few state transmission & distribution systems by investing 20 – 30 % of their annual budgets to reduce the technical losses below 10%.

3.2 The thermal efficiency of the boilers in new coal fired stations should not be below the efficiency of super critical boilers, which is of the order of 39%. For the existing ones a cut off date should be set, failing which the operating license should be withdrawn.

3.3 ‘Polluter pays principle’ is a novel idea put in to practice with the desired effect in many parts of the world, and it is best applied at the stage of mining and electricity generation itself. A suitably designed pollution tax should be applied to each ton of coal /gas, litres of diesel, mega litres of water or kWh of energy produced /consumed /generated. Suitable incentive also should be admissible for exceeding the targets of reduction in pollution, and efficiency in generation.

3.4 After thorough study and consultations with the industry experts, firm target levels should be mandated for efficiency improvement measures, time frame and accountability for each sector of the energy industry.

3.5 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. In this regard Central Electricity Authority (CEA) should look at each of the stations state by state, consult the original equipment manufacturers or experts to determine the opportunities available in this regard. The experience gained so far in enhancing the capacity / efficiency of power generation capacity in projects like the Bhakra Nangal project in North, Sharavathy valley project in South should be extended to all other projects. In the case of coal fired power stations of older designs, a close examination is likely to reveal the potential to save 3 to 5% energy in the station auxiliary consumption alone.

3.6 All feasible options available to flatten the demand curve in each state should be deployed, and the difference between maximum demand and average demand should be reduced below 10% by 2012 in all the states. These options may include widespread use of CFL or LED lamps in place of incandescent lamps, the use of roof top solar water heaters, use of solar PV panels for street lights and village electrification, diversifying the peak load occurrence within and across states, two time zones for the country etc.

3.7 A detailed study should be undertaken to look at every alternative available to conventional energy sources in each state, action plans drawn up, stiff targets set, adequate resources made available for implementation, all the technical help provided and diligent monitoring of the same should be employed. The target should be that 25% of each state’s installed capacity should be in the form of renewable energy by Year 2020 along with yearly targets.

3.8 An adequate national fund should be set up to reduce the agricultural pump set losses from the present level of about 50 % to below 10 % by 2015.

3.9 The PLF of each of the coal fired generating units should be brought above 90% by 2020, failing which they should be stopped functioning after that year. Generating units with low PLFs are major burdens to our society than of any real benefits. Erring units should be taken over by NTPC for modernisation.

3.10 Electricity Supply Companies (ESCOMS) should set a target to persuade and encourage at least 50% of domestic consumers, and about 75% of AEH consumers to install solar panels for lighting and water heating by 2015.

3.11 Energy auditing should be implemented in all premises with connected load more than 25 kW.

3.12 Before planning new thermal power stations at green sites, the more sensible option of considering the existing sites of older and low PLF power stations should be fully explored seriously. Such sites should be used to install new super critical boiler technology units of 600/800/1,000 MW capacity, and to improve the average PLF to more than 90%. Such an approach is essential in view of the popular opposition to acquire additional lands and fresh water sources for the sake of power plants, which have serious social, economic and environmental consequences anyway.

3.13 The usage of CFL should be fully implemented by 2015 by: (a) following the example of Maharastra, where the electricity companies are providing millions of such lamps to house holds on easy payment terms; (b) provide tax benefits/subsidy for the manufacture of CFLs for few years; (c) directly & indirectly discouraging the usage of incandescent lamps by levying Cess on their sales or completely banning the incandescent lamps.

3.14 In view of the fact that electricity industry has the potential to become the biggest polluter, if not managed responsibly, there is an urgent need to declare Electricity as a national asset and bring legislation, if necessary, to optimize its use and minimise its wastage. Central Electricity Regulatory Commission should be asked to formulate suitable tariff policies to discourage wastage of electricity in non-economic or non-essential uses.

3.15 There should be a clear policy directive to states that any new proposal to set up conventional power stations, whether fossil fuel based or dam based, should be supported by in-depth analysis of cost V/S benefits to the society of such projects by taking into account all the direct and indirect costs, and the benefits like carbon credits of suitable alternatives. Such proposals should clearly demonstrate that the proposed project is the best alternative available to produce additional electricity or meet the electricity demand in the state. Effective peer review of such project proposals by a committee of independent experts would a go a long way in addressing the multifarious ills facing the industry.

3.16. It is also well known in the academic / industry circles that the price of delivered energy, whether electricity, LPG, petrol, diesel etc, is generally much below the actual cost of supply. Making this price realistic with respect to the social, economic and environmental cost of delivering to the end users will go a long way in making the Indian energy industry a lot more efficient, which will in turn reduce the GHG emissions. The government should seriously consider the importance of pragmatism in this regard and adopt suitable policies and do away with populist measures.

4. Conclusions:
There cannot be any doubt that the electricity industry has the potential to become the biggest polluter, if not managed responsibly. It also is a major contributor of GHG emissions.

The Indian electricity industry has been highly inefficient since decades. In view of the ever increasing demand for electricity for a growing population, if course corrections are not applied immediately this industry will result in massive increase in the contribution to global GHG emission. Although the per capita GHG emission in India is known to be below that of the world average, there is huge scope for containing the total emission at an acceptable level, without having to compromise on the developmental activities in the country.

There are techno-economically viable means and huge scope to make the Indian electricity industry efficient to international standards. India also has a vast potential as far as renewable energy sources, especially as distributed energy sources, are concerned. A good combination of these measures will not only lead to highly reduced GHG emissions, but will also provide huge benefits to the society from social, economic and environmental perspectives. All the legitimate demand for electricity, not only of the present generation but also of the future generations, can be adequately met by a combination of high overall efficiency in the electricity industry, effective Demand Side Management, optimum level of energy conservation, and widespread use of distributed energy sources of renewable nature.

These measures while reducing the need for additional generation capacity will also assist in reducing the GHG emission from the electricity industry to the tune of millions of tons of GHGs per year.

Without fully harnessing these attractive and much benign alternatives, to continue to pour Billions of Rupees of our meager national resources in conventional power generating sources, is not only a huge let down for its own people, but also a failure in discharging its responsibility to the international community.

Shankar Sharma
Consultant to Electricity Industry
shankar.sharma2005@gmail.com

1. Introduction

The phenomenon of Global Warming, the calamitous consequences of accelerated Climate Change, and the anthropogenic reasons for the same are no more the issues of contention. The scientific community has prepared exhaustive reports giving scientific evidences, root causes and credible estimation of damages across the globe. Inter Governmental Panel On Climate Change (IPCC), consisting of scientific community in various interrelated disciplines and decision makers from most of the countries, and set up by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP,) has not left any doubt about the urgent need to reduce the emission of Green House Gases (GHGs) to the level at the beginning of industrial era. Through four Assessment Reports, IPCC has provided the relevant details and has urged the world community to urgently take specific steps to reduce the GHGs.

In this regard UNFCC says in its website (http://www.ipcc.ch/):

“The average temperature of the earth’s surface has risen by 0.74 degrees C since the late 1800s. It is expected to increase by another 1.8° C to 4° C by the year 2100 – a rapid and profound change – should the necessary action not be taken. Even if the minimum predicted increase takes place, it will be larger than any century-long trend in the last 10,000 years.

The principal reason for the mounting thermometer is a century and a half of industrialization: the burning of ever-greater quantities of oil, gasoline, and coal, the cutting of forests, and the practice of certain farming methods.

These activities have increased the amount of “greenhouse gases” in the atmosphere, especially carbon dioxide, methane, and nitrous oxide. Such gases occur naturally – they are critical for life on earth, ……..,.. Eleven of the last 12 years are the warmest on record, and 1998 was the warmest year.

The average sea level rose by 10 to 20 cm during the 20th century, and an additional increase of 18 to 59 cm is expected by the year 2100. (Higher temperatures cause ocean volume to expand, and melting glaciers and ice caps add more water.) If the higher end of that scale is reached, the sea could overflow the heavily populated coastlines of such countries as Bangladesh, cause the disappearance of some nations entirely (such as the island state of the Maldives), foul freshwater supplies for billions of people, and spur mass migrations.

Agricultural yields are expected to drop in most tropical and sub-tropical regions – and in temperate regions too – if the temperature increase is more than a few degrees C. Drying of continental interiors, such as central Asia, the African Sahel, and the Great Plains of the United States, is also forecast. These changes could cause, disruptions in ………….and food supply. And the range of diseases such as malaria may expand. Global warming is a “modern” problem – complicated, involving the entire world, tangled up with difficult issues such as poverty, economic development and population growth. Dealing with it will not be easy. Ignoring it will be worse.

As per IPCC some of the catastrophic consequences of Global Warning beyond 20 Centigrade increase are: famines and droughts threatening millions of lives; worldwide drop in agricultural and horticultural crops; up to 3 billion people at risk of flooding and without access to fresh water supplies; destruction of half the world’s nature reserves and a fifth of coastal wetlands; Global sea levels could rise by more than 20 feet; significant effects on biodiversity and ecological productivity; potential for international conflicts, border disputes, war due to water and food shortages, forced migration, extreme weather events, huge impact on general health etc.

In this background all out efforts to mitigate and adapt to the Global Warming by reducing the Global GHG emissions to the lowest possible levels are an urgent necessity. Being a country with the second largest population India’s potential to be one of the biggest GHG emittors is credible. Also tipped to become one of the most affected countries by Global Warming India has an important role to play in the comity of nations.

In this regard the govt. of India has published a National Action Plan on Climate Change (NAPCC), and the same is being projected at the international fora as India’s unique contribution in addressing Global Warming. But an objective study of issues around NAPCC reveals that it leaves a lot more to be desired.

2. Shortcomings of NAPCC

The Plan has identified eight broad areas for focused action, encompassing both mitigation and adaptation. These National Missions are:

1. National Solar Mission
2. National Mission for Enhanced Energy Efficiency
3. National Mission on Sustainable Habitat
4. National Water Mission
5. National Mission for Sustaining the Himalayan Ecosystem
6. National Mission for a “Green India”
7. National Mission for Sustainable Agriculture
8. National Mission on Strategic Knowledge for Climate Change.

Each of these Missions is aimed to have a technology development and R&D component, while the Mission on Strategic knowledge seeks to fill many gaps that continue to exist in our understanding of climate change phenomenon and its impact specifically on India and our region.

In an address to Carnegie Endowment for International Peace on March 24, 2009, Mr. Shyam Saran, Special Envoy of the Prime Minister for Climate Change, has been eloquent about India’s Climate Change Initiatives, and has praised its strategies for a Greener Future. He has referred to NAPCC as a very responsible act by India towards mitigation and adaptation of Climate Change. He said “The developmental imperatives are huge and yet we are determined to meet them with a sense of ecological responsibility.” He has insisted that India is not one of the top polluters, but fails to mention that India is considered as the third largest emitter of CO2, and is projected to become one of the top five emitters of GHGs very soon. He goes on to say “Despite the growth of population and the need to ensure food security, India is increasing its forest cover and intends to raise it from the current 22% of total land area to 33%. India has also for the past several years severely restricted the conversion of forests in the country to other uses; as a result deforestation has been halted and reversed.”

While it is fashionable to claim that “India is increasing its forest cover and intends to raise it from the current 22% of total land area to 33%” the ground realities are different. A large number of dams, coal and hydel power stations, and SEZs, which are proposed and being implemented in the country will only reduce the natural forest coverage. To commission the large number of additional coal mines, which are needed to keep the coal power stations running, the thick rain forests of states like Jharkhand, Chatttisgarh, Bihar and Madhya Pradesh have to be destroyed because these coal deposits are mostly below these rich forests.

The NAPCC is silent on the issue that electricity industry is responsible for about 24% of all GHG emissions and about 42% of CO2 emissions. In this background one cannot but ask the question: how ecologically friendly policy it is to plan for a large number of coal based and dam based power stations?

An objective review of issues around NAPCC can reveal a sad story. Many independent critics are of the opinion that NAPCC appears to be more of noise than substance. The difference between what is preached in the NAPCC and what is being practiced by the union and state governments is very huge, and in no way can be seen as an honest action plan to combat the Global Warming.

Our country needs a holistic look on all the major economic sectors such as agriculture, natural resources, energy etc.. The country must make sincere efforts to balance the social and environmental aspects on one hand and the demand for more exploitation of these sectors on the other hand. Such a holistic look has been lacking not only in the past policies of the government, but also in the implications of NAPCC.

The biggest issue with the National Action Plan on Climate Change is that it appears not to have the support of the people since there have been no effective deliberations on it. It is reported that even the people’s representatives were not consulted before formalizing it. A senior official from the MoEF, who was involved in preparing this plan, is known to have told a group of people that this action plan was meant only for the international audience and not for actual implementation. If the intent of the government is true to this extent it is bad not only for our society but for the international community.

The dire necessity for effective actions to quickly reduce the GHG emissions and to implement suitable adaptation plans needs no special emphasis at this point in time. There are growing sections of the society in our own country, and elsewhere too, which are hugely concerned that the governments across the world are not serious enough to combat the adverse impacts of Glob Warming, and that only political games are being played in bilateral and international interactions.

A glaring inconsistency with NAPCC is that while it refers to establishment of eight missions to address the Global Warming it states unequivocally that this issue should not be in conflict with the objective of fast economic growth. This stand is clearly contradictory. While power and transport sectors account for more than 40% of GHG emissions, these are the sectors to which the government is giving priority in the name of economic growth. Climate Change is not one of the components of the environmental impact assessment (EIA). More than 650 mining projects and about 300 Special Economic Zones (SEZs) and other projects like Coastal Corridors have been sanctioned without taking the impacts of Climate Change into account.

The NAPCC mentions biodiversity as a national priority but the government is planning to build a large number of major and minor dams in Himalayas and sub-Himalayas, which are one of the 25 mega biodiversity zones of the world. The state of Uttarakhand alone is reported to be planning about 150 major and minor dam based hydel projects. A number of large dams are also being proposed for Arunachal Pradesh and North East, which are still having a good percentage of land area under rich forests. The Western Ghats and coastal regions will be devastated if the mad rush to install dams, coal power stations and SEZs get implemented in these ecologically sensitive areas. More than 80 major thermal power plants are reported to be in various stages of planning and implementation in the eastern and western coastal areas alone which too are rich in biodiversity. These projects will cause massive destruction of bio-diversity and the ecosystems.

In 2008 the author was invited to participate in two national level round table conferences to discuss the civic society participation in the crises of Climate Change. In these two meetings a number of NGOs and individuals, who are rendering very laudable service to various sectors of our society, expressed their concerns regarding the inadequacy of the National Action Plan on Climate Change. A major issue mentioned in this regard was that the there are no clear targets, dead lines or accountabilities in NAPCC. Many useful recommendations to the Government for strengthening the National Action Plan on Climate Change were made in these meetings. Some of the major concerns expressed and recommendations made in these two meetings (at Delhi on September 25-26, 2008 and at Visakhapatnam , November 5-7, 2008 ) were as follows:

I. Overarching Principles:

1. The urban and rural poor have preserved the environment for centuries and they continue to do so. The country needs to find ways of recognising the traditional knowledge systems, because the ecosystem communities are the first to suffer the ill-effects of climate change.
2. It was recognised that the sectored approach of NAPCC was an obstacle to facilitating a holistic strategy in addressing the issue of climate change. There is a need to ensure involvement of civil society in future processes of the NAPCC. In this regard the following steps are needed:
   • Up-scaling adaptive measures at the grassroots level based on experiences gained across the country.
   • Up-scaling energy efficiency initiatives and decentralised energy options at the grassroots level.
3. Adaptation to and mitigation of Climate Change is feasible only by preserving/ protecting bio-diversity, forests, fresh water bodies; using agricultural waste for bio-fuels and through livestock improvement; organic farming; vast improvements in governance of electric power production, distribution and utilisation; undertaking renewable decentralised energy options such as micro hydro, solar and bio-mass based initiatives.
4. A definitive shift in emphasis from a centralized production model to a decentralized/ democratic production model is needed.
5. Not withstanding the obligation of developed countries, India must deploy its own resources for both mitigation and adaptation, and both these need to go hand in hand.
6. There is a need to recognize that economic growth will not automatically result in sustainable development, and therefore strong regulatory measures are critical to protect lives and livelihood in India.
7. Recognize that market led investments can only be a partial response to combat climate change and hence public resources must be employed in a big way to deal with climate change.
8. Climate change concerns can only be effectively addressed when GDP growth stops becoming an excuse for endless energy consumption. The GDP growth and increased energy consumption must be decoupled.
9. Recognize that the rich within India make their contribution towards mitigating of and adapting to climate change and pay suitable costs towards their higher contribution to green house gas emissions. ‘Hiding behind the poor’ should no more be acceptable.
10. We must apply the “Precautionary Principle” especially in situations where there are high risks of ecological/ social costs, such as use of GM technology in agriculture or big sized dams and big sized coal power projects or Carbon Capture and Storage for power plants, or large scale deployment of bio-fuels.
11. Recognize and respect the traditional knowledge systems and practices are a science and have great relevance for dealing with climate change alongside modern science and technologies.
12. The urban and rural poor have preserved the environment for centuries and they continue to do so. The country needs to find ways of recognising the traditional knowledge systems, because the ecosystem communities are the first to suffer the ill-effects of climate change.
13. The sectored approach of the plan will be an obstacle in facilitating a holistic strategy in addressing the issue of climate change. There is a need to ensure involvement of civil society in future processes of the NAPCC. There is a crucial need for
    • Up-scaling adaptive measures at the grassroots level based on experiences gained across the country.
    • Up-scaling energy efficiency initiatives and decentralised energy options at the grassroots level.
14. Adaptation to and mitigation of Climate Change is feasible only by preserving/ protecting bio-diversity, forests, fresh water bodies, using agricultural waste for bio-fuels and through livestock improvement, organic farming better governance of electric power production and distribution, undertaking renewable decentralised energy options such as micro hydro, photovoltaic solar based home lighting systems and bio-mass based initiatives

Glaring contradictions between what NAPCC claims to do, and what the government is practicing makes it very difficult for any one to believe in the earnestness of the government’s initiative.

II. Specific Issues on Mitigation and Adaptation

A. Agriculture

• The current paradigm of high input, intensive agriculture in pursuit of very high production is not only unsustainable but also will accelerate climate change crisis because of the chemical fertilizer and pesticide use and unlimited irrigation. This should be changed as early as possible.
• Appreciate the differences in agro-ecological zones in the country and allow and encourage the farmers to cultivate local/ indigenous/ non-competing crops that are not input intensive and are compatible with the agro-ecological zones in which they have been bred/ grown traditionally.
• There should be a determined shift from intensive irrigation based farming systems to rain fed indigenous farming systems such as Millet based farming systems practiced over much of India’s rainfed landscape
• Wherever possible, rely on rainwater harvesting to provide water for irrigation and avoid large-scale canal irrigation schemes that have high social, economic and environmental costs. Also, adopt watershed management practices to conserve soils and moisture for the future. Increased build up of carbon in the soil should be rewarded as it not only reduces net carbon emissions; it also increases the moisture conservation capacity of the soil.
• The current reliance of India’s centralised Public Distribution System on water and input intensive wheat and rice must stop. These crops will become environmentally unsustainable once climate change exacerbates. Instead effort must be made to design a decentralized Public Distribution System (PDS) that is based on local grains and rewards farmers for producing traditional/ local food grains. This also has the additional advantage of cutting food miles through avoidance of long distance transportation of food grains using fossil fuels, as is currently done in India’s PDS.
• The application of Genetic Engineering technologies is no solution for developing drought or other kinds of climate resilience of seeds. Climate resilience of seeds is a function of many genes, and genetic engineering technology cannot handle such engineering. On the other hand, being an untested science and undeveloped technology, genetic engineering might create new crisis that we may fail to handle.
• Support the conservation of agro-biodiversity at the local level and ensure that farmers continue to have the rights to use their seeds and other natural resources
• Make appropriate changes to drought and flood codes in order to make them compatible with the unfolding impacts of climate change across the country. For example, such codes could include appropriate and timely distribution of seeds that would produce food in a given weather/climatic situation at a given location
• System of Rice Intensification should be adopted in widest possible area with maximum possible resource allocation and incentives, not only for rice, but also other crops where appropriate. This has the potential to reduce the seed use, fertilizer use, water use and yet increase the yields without any new technology or seeds.

B. Water:

• The approach towards water must not be purely targeting an increase in the resource base, in any case not through more large projects. Equity and access to water for all through rights based regime must be a central plank for any plans that the government implements.
• In this light, suitable changes must be made to the National Water Policy. For the formulation of a new NWP, a detailed participatory exercise should be started immediately. The NAPCC recommends such review only in consultation with states, but this process has to start from the people and would have to be aimed at a new NWP.
• Stop the ongoing destruction and neglect of natural, local and traditional water harvesting systems (including tanks, wetlands, johads, flowing rivers) and rehabilitate the systems that have been already destroyed, create new systems were possible, as first priority when going for new developments
• Emphasise on groundwater recharge and rainwater harvesting strategies. Groundwater is India’s water lifeline and that lifeline can be sustained only through direct recharge where appropriate and through protection, rejuvenation and creation of local water systems.
• Make available adequate funds in the budget to maintain the existing water related infrastructure rather than spending money on new schemes. For example, there is a need to ensure that dams and canals do not get silted up quickly and therefore there is a need to make adequate investments for catchment area treatment of existing large, medium and small dams. Similarly, maintenance of the canal infrastructure to ensure optimum use of created infrastructure should be given first allocation of available resources. To ensure that all this actually gets done in a transparent way and accountable way, the governance in water sector will have to be changed so that the local people have decisive say in planning, decision making, implementation and operation of the systems.
• To ensure proper and optimum functioning of the existing and under construction reservoirs in the interest of the people, each reservoir should have a reservoir operation committee, in which at least 50% members should come from the local communities. As a first step in this direction, the reservoir operation rules and actual reservoir operation details (inflows, outflows, levels, capacities, and anticipated inflows) should all be made public on daily basis for each large dam in India.
• Similarly for embankments, canals, pipelines, and other related water infrastructure such committees should be formed right from planning stage of the projects and they should be statutory bodies with powers to make necessary mandatory orders with respect to the functioning of the projects.
• While considering new storage requirements, the priorities should be in following order:
  1. for ensuring sustainable use of created capacities, e.g. arresting siltation.
  2. For ensuring optimum use of the created capacities, in large number of cases it has been found that huge quantities of water remain unused till the next monsoon arrives
  3. For groundwater recharge
  4. For creating local water systems through tanks, lakes, wetlands, watershed development and so on
  5. Only after all this has been shown to be exhausted in a credible way, should a larger project in any basin be considered.
• There should be an assessment of contribution of GHG emission by various crops, the organic and chemicals based crops, the SRI and non SRI crops.
• There are a very large number of ongoing big irrigation projects, many of them are non viable or amounting to zero sum game as the basins or sub basins where they are situated are already over exploited. They are drain on the economy and there is need to put in place a credible, independent system to ensure that unviable and undesirable projects may be weeded out or scaled down appropriately.
• The waste water treatment systems would work only when it is more decentralized, and not centralizes as is the norm now. The decentralized systems would also be less energy intensive, less cost incentive, more efficient and is actually likely to lead to more recycling of the treated water.

C. Energy:

• Indian energy sector requires a complete over-haul – starting from a shift in policy direction. Hence, there is a need for a paradigm shift in the energy policy and direction which is currently articulated in the “Integrated Energy Policy” of the Planning Commission. The current energy policy needs to factor in the huge potentials of energy efficiency, DSM and renewable energy in the country, and also follow a sustainable path way in addition to being low-carbon.
• There is an urgent need that the energy growth is de-coupled from GDP growth. Energy Projections should factor in huge potential in efficiency improvement, energy conservation and demand side and peak hour power demand management measures.
• There is a critical need for a paradigm shift in emphasis from “Centralised Energy systems” to de-centralised energy systems. There are clear advantages from the decentralized system which is evident from:
• Reduced Losses
• Increased efficiency
• Reduced infrastructure cost
• Better quality
• Rural development and livelihood generation
• Inclusive growth and energy secure communities
• Potentially more democratic systems with participation of the people at all levels
• Hence to promote decentralized energy systems, there should be policies which would incentivise decentralized systems.
• Energy Efficiency and energy modesty needs to become the center piece of the national and state energy policy since energy saved is as good as energy produced. The only way to balance economic growth and satisfy domestic consumption needs without endangering the future of life on the planet is by gradually raising the level of energy efficiency of all domestic, commercial, industrial and agricultural usage.
• Starting with the areas of highest energy consumption, the government should put legislation in place to promote innovations towards energy efficiency and phase out wasteful uses and practices. Specifically, the government should implement progressive and mandatory energy efficiency standards cutting across all energy applications in the country. These standards should have clear time lines.
• Policy measures to incentivise energy efficiency should include
• Reforms in the banking sector to ensure that energy efficiency projects are made bankable
• Needs substantive government investment to promote efficiency, especially in enabling the small and medium enterprises sector to change over from energy inefficient production and products to efficient ones
• Regulatory systems to implement and monitor efficiency
• Trading of efficiency certificates
• The Indian electricity sector is currently besotted with a number of problems, issues and concerns such as poor efficiency, very low renewable energy uptake, lack of demand side and peak power demand side management(DSM) measures, unrealistic pricing systems and so on and yet very high per capita consumption by a very few. These issues need to be addressed effectively.
• As starters, the government should ensures that the Transmission and Distribution Losses are reduced to a maximum of 10% by 2017.
• Yet another crucial area is the low plant load factor of thermal power plants. There was a demand that the government ensures that generation companies immediately put in place all the necessary measures to improve the national average of plant load factor to at least 85-90%, which needs to be achieved not later than 2017.
• Currently, the project developers have no obligation to ensure that the projected generation at 90% dependability as assessed at the Detailed Project Report stage is actually achieved in case of large hydro projects. This should not be acceptable. The revenues to the developers should reduce proportionally when they fail to generate at projected levels. Similarly, when they fail to generate peaking power as per project design, their revenues should again be proportionately reduced.
• There should be an assessment as to how much of the power generated by large hydro projects is during peaking hours and what can be done to ensure that more of the generation is during peaking hours.
• There should be an assessment of all the existing large reservoirs to assess whether these projects have delivered on all the project objectives, and whether they have complied with all the conditions posed at the project approval stage. These should also be assesses as to how much emissions to green house gases they are contributing.
• Related to efficiency is the current policy of unrealistic pricing system especially in the electricity sector. This is one of the causes for huge quantum of electricity being mis-used. Hence, it is imperative that we have in place, a dual pricing mechanism, which is based on the usage and consumption patterns and specially with regard to “free electricity”, it should be strictly on the basis of “farm sized based pricing policy”.
• India has very high potentials for Renewable Energy, which currently forms only 4% of the energy mix in the country. Hence, there should be a national renewable portfolio standards for renewable energy of 25% of total installed capacity by 2020.
• When renewable energy is referred to, it should generally mean, solar (PV, Concentrated Solar Power and Solar thermal), Wind, small, mirco, mini hydro, bio-energy, tidal energy and geo-thermal.
• On bio-energy, however, only very small scale, farm and community level tapping of bio-based energy sources should be supported for use within communities to facilitate their energy sovereignty and not for export outside the communities.
• To incentivise renewable energy, there should be an immediate shift in subsidies from fossil fuels to renewable energy.
• Furthermore, there should also be a national feed-in-tariffs for renewable energy, something which has no upper caps.
• Renewable energy as a decentralized option works best and with a source such as solar energy can be tapped through solar photovoltaics on roof tops. As an incentive for our building sector to opt for solar photo voltaics on their roof tops, the feed-in-tariff must be made applicable even for small quantum of excess supply to the grid from the buildings.
• Currently, one major barrier to renewable energy options, particularly solar energy is its capital cost. Hence, there is a need for the government to increase the Research and Development expenditure to Solar by a factor of 8, which is what it is currently spending on nuclear research.
• There should be a shift in energy direction with immediate effect, with a gradual phase in of energy efficiency and renewable energy with a gradual reduction in our dependence on nuclear, coal and other fossil fuels and large dams.
• Hence, it should be mandated that the deployment of large scale projects of coal, hydro and nuclear power are made only after all viable alternatives of reduction of T&D losses, energy efficiency, demand side management (including peak hour demand management) and renewable energy have been fully explored, implemented and exhausted and after a comprehensive cost benefit analysis in full participation with the people. For large hydro power projects, the planning and decision making process should follow the guidelines of the World Commission on Dams (http://www.dams.org/report/).
• Historically, the present model of Cost Benefit Analysis (CBA) has proved inadequate to accurately measure social and environmental impacts of large conventional power projects (Coal, Hydro and Nuclear). Therefore, deployment of such projects must be done only after a rigorous and proper assessment of all risks and costs, both direct and indirect. This would involve:
• considerable strengthening of the Environment and Social Impact Assessment regulations that have remained largely on paper and the assessments are unaccountable and pathetic
• Extensive stake-holder consultation right from the stage of beginning of project formulation.
• The EIA and SIA should be formulated in full consultation with the local people. The EIA should include an assessment of the potential contribution of the project to the green ground gas emissions during its entire life cycle, right till the stage of decommissioning.
• Full EIA and SIA should be available to the local people in the language and manner they can understand, at least two months before the public hearing date
• The public hearings should be conducted by an independence panel, which would also certify to what extent the EIA and project proponent have addressed the issues raised at the public hearing and what next steps are required, including a new or improved EIA and fresh public hearings.
• If the public hearing committee finds that EIA has been incomplete or doctored, or giving wrong, biased or tendentious information, the independent panel can order black listing of and stoppage of payments to such EIA consultants.
• There should be a legally mandatory committee for each project in which at least 50% of members should be from the local area, for monitoring and ensuring that the EIA-SIA is implemented as required, pari passu with the project and when that is not the case, the committee has the power to order stoppage of construction till the EIA-SIA implementation catches up. Such committee should also continue to function during the project operation.

III. Clean Development Mechanism Projects

• Many of the CDM projects so certified by the MEF have proved to be not only unsustainable, but actually are scams in terms of not contributing any net benefits to the climate. This is unacceptable and MoEF should stop certifying any further projects as sustainable.
• MoEF should form a transparent and credible set of norms for planning, decision making, implementation and operation of the project proposals in which local people have decisive say.
• Projects without new technology or which would have happened in any case without the CDM credits should not be considered for CDM credits. Projects where local people do not get majority of the additional revenue from CDM credits should also not be considered.

3. Conclusions

Without addressing these and all the related issues in an objective manner the country can neither address the issues of Climate Change effectively for the sake of its own people, nor can claim a position of importance and trust in the international community.

Though the government insists that India is not one of the top polluters, it is considered as the third largest emitter of CO2, and is projected to become the one of the top five emitters of GHGs very soon. With a large population base and which is growing rapidly, such a projection is not unrealistic. When we consider fact that for about 40% of such a large population the commercial energy is out of reach even after 60 years of independence the gravity of the situation becomes crystal clear. If we aim to provide energy security to our growing population in a business-as-usual sceanario, the pollution level in our country will be enormous. As per Greenpeace’s projection India’s contribution to the global CO2 emissions will increase from 1,126 million tonnes in 2003 to approximately 4,039 Million Tonnes in 2050, increasing its share in global emissions from 4.8% to 8.7% in a business as usual scenario.

It is well recognised by the international community that the people and countries that have contributed least to climate change are and will be experiencing the most severe impacts of climate change. Hence India has a primary obligation to its own people, if not to the Global community, to do all that is possible to minimize the impact of climate change. The correct thing to do in this regard is to minimize its total GHG emission to as a low a level as possible without adversely affecting the human development index of its population, and lead the world towards sustainable life style.

Whereas Indian government’s stand in international Climate Change negotiations is that it should have no obligations 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 small 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 recent survey report by Greenpeace under the title “Hiding Behind the Poor”, wherein it was shown that in India the richest consumer classes produce 4.5 times more CO2 than the poorest class, and almost 3 times more than the average Indian (501 kg). 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 of Global Warming.

All international projections also indicate that India will be amongst the top five GHG emitters soon, and in all probability will be the second or third largest emittor in a business-as-usual sceanario in about 10 years keeping in view the large population base and the largely unmet energy demand of the masses.

But there is no denying that the adverse impacts of country’s unrestricted GHG emissions because its consequences on Climate Change will impact our own people first before it affects the other countries. Hence we need very honest, effective and concerted measures in order to adapt to and mitigate Climate Change.

As far as India is concerned, the fast receding Himalayan glaciers, increase in sea level rise as experienced in Sundarbans, unpredictable weather patterns etc. as consequences of Global Warming have all been experienced and confirmed in recent years. These corroborate the findings of a report titled “BLUE ALERT “commissioned by Greenpeace, in which about 120 Million people from coastal regions (mostly from Bangladesh coast) are estimated to migrate to larger cities towards the second half of this century because of the direct/ indirect effects of Global Warming in the business-as-usual scenario. The colossal impact of such large scale migration to large cities, whose infrastructures are already stretched to limits, is hard to imagine. This report concludes by saying that Climate Change is the most serious environmental problem South Asia has ever faced, and in the absence of early policy intervention, it is likely to cause devastating social and economic problems for the region.

While large number of coal based power projects are being planned all over the country (even in those states having no known reserve of coal), the economic, social and environmental impact of such a large number of projects are hardly mentioned by the state and union governments. Greenpeace in a recent report “The True Cost of Coal” has vividly recorded the social and environmental impact of coal mines and coal power stations, not only in India but at different pats of the world. An objective study of this report will convince anyone that the coal based power policy will be suicidal for our country, but that is exactly what the union government wants to pursue through its integrated energy policy document.

The poor arguments the union government has been offering in this regard are the urgent need for large quanity of additionl power and the high capital cost of renewable energy sources. But a pragmatic and ‘integrated resource plan’ approach, taking all the related issues into account, will clearly provide many benign alternatives to meet our growing electricity demand than lare size conventional power projects which are all contributing for GHG emissions.

As per Greenpeace’s Energy [R]evolution Scenario worldwide the electricity sector will be the pioneer of renewable energy utilisation. By 2050, around 65% of electricity and 50% of the Primary Energy demands will be met from renewable energy sources. Greenpeace has also projected that by 2030 the share of renewable enrgies in India’s electricity sector could increase form the present level of about 15.5% to 35%.

Greenpeace’s Energy [R]evolution Scenario provides solutions to reduce India’s CO2 emissions to 1,000 million tonnes in the next 43 years. As a society we must be looking at such credible solutions than blindly adding large size power plants based on coal, water or nuclear, if we want to be an environmentally and socially responsible nation.

Business as usual cannot be an option for the future. As per the reference scenario based on IEI’s ‘World Energy Outlook 2007’ the projection would almost double the Global CO2 by 2050 and the climate will heat up by well over 20 C. This is expeted to have catastrophic consequences for the environment, economy and human society. Sir nicholas Stern, former chief economist of the World Bank, has clearly stated in his report ‘Economics of Cliamte Change’ that the countries which invest in energy saving technologies and renewable energies today will be the economic winners of tomorrow.

What the country urgently needs is a set of highly effective policies to reduce the total GHG emissions to an accetable level, implement such policies earnestly and set a model of development to the global community. In this regad effective public consultations are essential.

Shankar Sharma
Consultant to Electricity Industry
Thirthahally, Karnataka, India – 577432
e-mail: shankar.sharma2005@gmail.com