Friday, March 30, 2012

Electricity Crisis in Kerala and Possible Options -2008

Electricity Crisis in Kerala and Possible Options - 2008.
'Athirappilly HEP is not the solution'

Conserving electricity is conserving nature and the community. It also means conserving the state's as well as our own financial resources

The state of Kerala is 'reeling under severe power shortage' according to the state electricity board. Apart from imposing 30 minutes of load shedding during evening peak hours, the board has now slapped 25% power cut on industries. It has recommended imposing heavy thermal surcharge on all consumers using more than 40 units per month. This is an extraordinary situation for a state having a total installed capacity of more than 3,500MW against a maximum peak demand of about 2,750MW and an annual generating capacity of about 19,000 million units (MU) against last year's consumption of about 15,500MU. The cumulative effect of three separate factors is given as the reason for this situation. The fatal accidents at Panniyar (30MW) and Moozhiyar (Sabarigiri project- 300MW) have kept these stations idle. Reduction in generation from some thermal stations has resulted in the state getting only about 700MW from central generating stations (CGS) against an allocation of 1041MW. To add to the woes, the south west monsoon is yet to pick up in the state even though it is half way through.

A section close to the KSEB has already started putting the blame for this situation on environmentalists suggesting that the controversial Athirappilly project would have solved this situation. Before jumping to any hasty conclusions, we feel that it is necessary to have a thorough analysis of the whole situation so that the public can take a learned stance on the issue.

Proposed Athirappilly project and the present crisis.

The KSEB sources are suggesting a shortage of 3500-4000MU for the current year (It is highly premature to make such an assessment at this stage and to make plans accordingly. This point will be discussed later). When the existing projects cannot produce targeted quantity of electricity, one cannot expect new hydel projects, if implemented, to produce much electricity.  At Athirappilly where almost 85% of electricity is produced during monsoons and which uses a portion of the spill also from existing upstream reservoir (Poringal kuthu HEP), the shortage in generation will be more than that in other stations. In case of a weak monsoon like the one being experienced now, the possible generation from Athirappilly will be as low as 100-150MU. This will be only about 3-4% of the total projected shortage.

The cost of Athirappilly project will be at least Rs. 1000-1200 crores even if one expects the KSEB to perform at its best.  The debt repayment and return on equity @ 80% debt and 20% equity: 15 year repayment alone will be between Rs.120-150 crores per annum. Maintenance cost and employee cost at the station should also be added. At this cost one can easily buy the costliest of thermal power.
Athirappilly project comes with a big list of social and ecological costs. Hence for the first time in the history of the state, people and organizations from all spheres of life are opposing a dam project. The loss of biodiversity rich forests, the loss of beauty of the famous Athirappilly and Vazhachal water falls and related livelihood issues, displacement of primitive tribal families, loss of existing irrigation facility and drinking water availability etc. are the major impacts of the project.

In economic terms, the annual loss of revenue from tourism due to drastic reduction in flow through the Athirappilly and Vazhachal waterfalls will be at least Rs. 12-15 crore rupees excluding the loss to tour and vehicle operators and water theme parks. The loss in agricultural production due to reduction in irrigation has not been estimated, but preliminary assessments suggest this to be at least Rs. 20-25 crores/ annum. The cost of drinking water shortage will only be known after the project is implemented. The ecological service value of the forest land that will be lost if the project is implemented, is worth hundreds of crores according to the State Biodiversity board. The cost of displacement of tribals cannot be calculated in monetary terms nor can the virtual loss of the river system be valued.

Load shedding and power cut- Is it avoidable?

An analysis of the present situation would suggest that even with the reduced availability, it is possible to avoid power cut. After a reduction in availability of 670MW due to accidents in hydel stations and reduced quota from CGS, the remaining installed capacity is about 2830MW. With this we should be able to produce at least 2500-2600MW during peak hours. (One generator at Moozhiyar has resumed operation from 16-7-2008. this provides an additional 50MW.) A sincere campaign with public participation can reduce the peak demand to this level. With a little care on the part of the consumer in avoiding wasteful use of electricity, the daily consumption can be brought to within 40-42MU/day.

This can be made available in the following manner;
CGS                -           14-15 MU/day
Hydel               -           15-16 MU/day
State Thermal   -           10-12 MU/day

The increase in the share of thermal stations in the state from the scheduled quantity of an average of 4.75MU/day to about 10-12MU/day will result in an additional financial burden of about Rs. 4-6crores/day. The consumer can justly demand that the KSEB should bear this additional expense for the time being as the excess rainfall received during last monsoon and this year's summer rains had made available at least about 2000MU of additional hydel power. In economic terms this was worth about Rs.800-1000 crores.

We have to question the rationale behind maintaining the thermal stations in the state if the board is not willing to use it fully even under emergencies. It has to be understood that the state has been scheduling only less than 5% of the capacity from these stations since June 2004 even as it was spending at least Rs.400 crores per annum just to maintain these stations (as fixed cost for NTPC Kayamkulam, BSES Kochi and KPCL Kasargod and salary and maintenance cost for state's own diesel plants at Brahmapuram and Nallalam).

It is the lack of proper planning and the practice of projecting unrealistically high future demands that has resulted in at least 4000-5000MU of production capacity remaining idle for years together, imposing heavy financial burden on the state electricity board.

There are options to tide over the crisis

Within the Box Options

The volume of power shortage for the whole year cannot be predicted at this stage. But the KSEB has gone for a worst case scenario and are trying to create panic among consumers. Looking at the haste with which the board had recommended tariff hike (in the form of thermal surcharge) one has to suspect a conspiracy in the board's projection of shortage.

It will be improper and premature to assess the rain pattern in the coming months as it is consistently defying all predictions. If the rain does pick up in the coming period then the shortage in hydel generation will be restricted to about 10-15%. Similarly the availability from central stations can improve if the production from these stations increases. The actual shortage on March 31st 2009 from hydel stations and CGS could be anywhere between 10-30%. It is possible to manage the situation with the help of the state's thermal stations and some demand side management steps even if the cumulative shortage from CGS and hydel stations goes up to 25%.

Then the availability will be as follows:

Hyde l+ CGS                           -           11,000 MU
State Thermal stations               -             4,100 MU
Total                                        -           15,100 MU (average 41.5 MU/day)
The average consumption in 2007-08 was about 42 MU/day

This scenario in turn would need an additional purchase of about 2400 MU (over and above the original target of 1700 MU) from state's thermal stations and the board may need an additional Rs.2000 crores.
If the cumulative shortage is limited to 20%, then the additional burden will be about Rs.1400 crores.
If it is 15%, additional burden will be about Rs.800 crores.
In addition the revenue from sale of power will be less by about Rs.325 crores due to reduced consumption.

  • If the wind projects under construction are completed on target, it can produce at least 50 MU for the remaining period of the year. Similarly the board must take immediate steps to start operating the new generator (25MW) at Neriyamangalam that was inaugurated by the Hon. Chief Minister in May. These steps can save about Rs.75-100 crores.
  • Transmission and distribution loss continues to be a major issue. The present average T&D loss is about 22% but the T&D loss in domestic and commercial sector during peak hours is more than 40%. The board proposes to bring down the T&D losses to 15% in the next 2 years. A three percent reduction this year will save more than 500MU. This can take care of the additional demand for new connections. (It may be noted that the demand for electricity had remained at almost the same level from 2000 to 2005 even though lakhs of new connections were given each year during that period.). The reduction in T&D loss will considerably bring down the peak demand too.

  • The board and the consumers can actually bring down the present consumption and bring down the additional burden considerably.  By just spending Rs.50-60 crores, the board can replace at least 50 lakh ordinary bulbs with CFL lamps. The peak demand can be brought down by at least 150MW and the energy saved will be more than 200 MU. (If LED lamps are used the savings can be still higher) This single step will lead to a saving of about Rs.125-150 crores.

  • A dedicated and participatory public campaign to avoid wasteful use, alone can save up to 5% of electricity without compromising on the actual needs. This will bring down the demand by about 750MU and the savings by way of avoiding costly thermal power will be about Rs.450 crores.

  • Installing solar power based lights for illuminating the thousands of bill boards dotting the entire state during night can also save on considerable power. The companies putting up the bill boards can easily bear the cost. A similar campaign had been launched in Maharashtra.

The State Government and KSEB should explore the following options too;

  • In case of the availability from CGS remaining at the present level, the state government should take up the matter with the center and demand for compensation from the center.

  • The cost of electricity from the thermal stations in the state includes 16% excise duty and 4% sales tax.  A 50% relaxation in this crisis period can save any where between Rs.150-350 crores (It should be noted that the government will still get the targeted revenue due to increased turn over.)

  • Options to buy electricity from other states at a lesser cost than that of our thermal stations should also be explored.

Outside the Box Options

In our state the dependence on hydroelectricity is to the tune of 45-50% (the national average is around 25%). Hence short fall in rains will seriously affect the power situation in the state. With the frequency of deficient rainfall years increasing considerably in the last 25 years, (this is the fourth such year in this decade itself) this short fall is likely to repeat frequently. We can only solve this by promoting other sources for new projects and there by reducing the share of hydro-power in the whole system. Non-conventional sources can play a big role here.

According to the State Planning Board, the potential for wind power in the state is for 600MW, that for mini-micro hydel projects is 1000MW and the potential from biomass is to the tune of 300MW. The state can target at least 50% of this potential during 11th and 12th Plan period. Many European countries are promoting solar energy in a big way. The cost of solar power has already come down to be on par with that of conventional sources. It is likely to reduce further as the efficiency of the solar panels slated to improve to about 35-40% from the present level of 15-20%. In a tropical country like ours, the future lies in solar power according to many experts.

Demands and actions required

The state electricity board that gets about Rs.1800 crores every year by utilising the waters of our rivers has to share the responsibility of catchment area re-forestation. Improved forest cover in the catchments of hydel projects will improve summer flows in to the reservoirs, thereby increasing both electricity generation and summer river flow. It will also help to improve the micro climate.

The economic and ecological costs of electricity are increasing alarmingly. Hence
optimising the efficiency of existing projects, minimising losses, promoting energy efficient devices and promoting end use discipline becomes extremely important.
Introducing time of the day metering and providing incentives for using less during peak hours and/or imposing penalties for using more at peak hours can help in bridging the peak-off peak difference.

Finally, the consumer and the general public have every right to know the details of the plan of action of the KSEB. The Government must come forward with a 'White Paper' on the electricity scenario including the activities of KSEB. The board should also make sure that informations regarding daily power generation and consumption, storage positions of reservoirs etc. are posted daily on its official website. Details of new projects, if and when they are proposed, must be subjected to thorough public scrutiny before they are finalised.