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Power surplus: Beyond investments

The world is rapidly moving towards power surplus. In a recent report, the Central Electricity Authority in India estimates that 82% of the country would have sufficient power in FY 2017-18 and even benefit from an 8.8% energy surplus. But does this in fact mean “power for all” across the country?

Achieving Power Surplus

The world is rapidly moving towards power surplus. In a recent report, the Central Electricity Authority in India estimates that 82% of the country would have sufficient power in FY 2017-18 and even benefit from an 8.8% energy surplus. But does this in fact mean “power for all” across the country?

To answer that question, let us for a moment consider the term “power surplus”. It is a simple concept, which merely means that the availability of power has exceeded its demand. Yet as the definition currently only includes people who already have access to electricity, it does not give a true measure of “real demand” (i.e., the demand of a country’s entire population). Therein lies the answer to the apparent paradox of how surplus and shortage continue to coexist in a country like India.

Clearly, the issue of power surplus is a layered one, which can be explored separately. However, arguably the real metric to focus on should be “power for all”, which can only be achieved by adopting a slew of constructive measures across the entire power value chain. While meeting energy needs and providing adequate energy of desired quality in a sustainable manner and at reasonable cost to all consumers are formidable challenges, these can be overcome. Continuing investments in generation, transmission and distribution, along with developments in areas like storage, demand-side management and net metering will be required for achieving this objective. . However, are we getting there anytime soon?

Thinking Beyond Investments

This decade has seen an exceptional change in the consumption pattern of energy resources and its production. Unexpected high growth in the renewable energy market, triggered by investments, new capacity building and high growth rates in developing countries has changed the landscape of the energy sector.

In India, power generation from renewable sources has become increasingly important over the last few years. Our power generation capacity stood at 330GW as of June 2017, of which capacity from renewable sources, such as wind, solar and small hydro projects , stood at 57GW.

The energy sector clearly aims at setting up quality infrastructure that will continue to produce power economically with minimal degradation and high performance levels. However, a drawback that we currently see is the misplaced focus on low tariffs that can lead to low-quality infrastructure. To offset this, the government can aid the process of rational price discovery by using the reverse auction mechanism in conjunction with defined high-quality standards, reasonable execution timelines, and appropriate penalties for non-performance, to reach the target of achieving 175GW from renewable sources by 2022.

A New Business Model

The current plan aims at generating 40GW of rooftop solar power by 2022, recognizing that it has become the fastest growing renewable power sub-segment. Nevertheless, the large-scale adoption of distributed generation can only happen if material, money and manpower come together to allow for seamless adoption. And while there has been considerable progress in the B2B segment, we still need to witness significant B2C adoption. Spotting this opportunity, businesses have focused attention on developing several innovative B2C solutions, such as rooftop solar solutions that will be marketed like consumer products backed by ease of financing, installation and maintenance—think TV set-top boxes!

Such consumer financing models will also have to be backed by modern infrastructure that caters to both changing energy consumption and production. Improvements in storage technology leading to declining battery prices are widely expected to provide the impetus for the sector’s true coming of age. . This would eventually lead to the mobility of power, or “anytime, anywhere” availability of power, which even supports B2C models such as TV set top box-like solutions.

Just as the Internet changed the way we use information, so are renewable sources, like wind and solar energy changing the way we produce and use energy—and electricity storage is an important part of that change. As battery technology improves and the associated costs continue to decline, renewable power generation with battery storage will become commonplace. Developments in storage technology, along with other domains such as material sciences, mechanical engineering, chemistry and computing and data analytics, supported by a suitable regulatory framework covering all these elements (e.g. currently suitable regulations don’t exist for power storage) will allow for the healthy, sustainable development of the sector.

This is a YourStory community post, written by one of our readers.The images and content in this post belong to their respective owners. If you feel that any content posted here is a violation of your copyright, please write to us at mystory@yourstory.com and we will take it down. There has been no commercial exchange by YourStory for the publication of this article.
Vikram Kailas, CEO, Mytrah Group, has worked in the Energy & Utilities investment banking group at Credit Suisse in New York, where he was involved in a number of renewable energy transactions, including a US$ 6 bn exit financing for Calpine and a US$ 300 mn loan for First Energy. Prior to joining Credit Suisse, Vikram Kailas worked for Deloitte Consulting in Hyderabad. Vikram Kailas has a Bachelor in Engineering degree from Indian Institute of Technology, Chennai and Master of Business Administration degree from Yale School of Management

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