Tag: electricity

The What and The How

A really long break, I know, but I have half a good excuse for a small chunk of it.

For three weeks this past month, I taught a bunch of kids three different courses. The three courses had some overlap in terms of the students who attended each week, and a lot of overlap in terms of how the three courses covered the subject matter, but as with all of the previous times that I have taught in this program, I had a blast.

Much more importantly, so did the students have a blast. Best as I could tell, at any rate.

One of the reasons they had a blast was because I used a lot of interactive tools, and this was one such:

https://en-roads.climateinteractive.org/scenario.html?v=23.2.2

Click on the link and try it out for yourself. It is, as the support page says, “a fast, powerful climate simulation tool”. And so we had fun trying to see what would happen if, say, coal was taxed more heavily. Or if, say, the transport sector saw much better rates of electrification. And so on and so forth. Have fun playing around with different scenarios, for that’s the point of this tool.

But after a lot of fun was had, and after a lot of scenarios were built, I had to put a dampener on the session. “This”, I gravely intoned, “is not public policy”.

What we have done, I went on to g.i., is build out scenarios. And while the best case scenario is a very pleasant thing to contemplate (relatively speaking, at any rate), it isn’t necessarily achievable.

In other words (still g.i.’ing, naturally), we may well know where we have to reach. Public policy, unfortunately, concerns itself with not just what the best scenario is, but also how realistic it is, and whether it is achievable at all in the first place.

In other words, “How > What” when it comes to public policy. Not always, and not necessarily, but it is a rather good heuristic when it comes to thinking about the subject.

The thing with teaching young (really young – I had the privilege of teaching 13-15 year olds) students is that you must learn to wait. You may know the next topic of discussion and you may know the correct answer to a question you yourself have asked, but you need to wait. Wait for them to process what you’ve said, reason things through, and then ask the inevitable question that will take the discussion forward.

And so I waited.

Until one of them asked, “But wait. Are you saying that this scenario is not achievable?”

And that allowed me to neatly segue into an article that – and let me be frank here – most adults would find boring. That’s not (at all) a slight on the topic, let alone the author. But quite a few folks would probably choose to skip over an article whose headline says “Free electricity ruined discoms. Now they will cause trouble in transition to renewables“. Especially when the subheading goes “When high tariff paying customers leave, discom finances will further deteriorate. Discoms, therefore, find ways to not allow open access to keep customers captive”.

Please do read the whole thing, but I’ve quoted the most important excerpt below:

If C&I (commercial and industrial) customers have ESG (environmental, social, and governance) mandates, they may prefer buying electricity from the renewable generating companies. As per the Electricity Act, distribution companies are required to grant “open access” when customers (largely C&I) and generating companies privately negotiate a deal, and want to use the network for transport of electricity. When the high tariff paying C&I customers leave, discom finances further deteriorate. Discoms, therefore, find ways to not allow open access to keep C&I customers captive.

https://theprint.in/opinion/free-electricity-ruined-discoms-now-they-will-cause-trouble-in-transition-to-renewables/1590543/ (Please note that abbreviations have been expanded to make this quote easier to understand)

Again, a wait, post an explanation of what the article was about.

Comprehension, horror and outrage all dawned at more or less the same rate on all the faces.

“Wait!”

“Hang on a minute!”

“So you’re saying that…”

They had realized, for themselves, that the public policy re:electricity in our country was such that we end up making it difficult for our commercial and industrial users to switch to renewables. And why do we do so? Because this is the only segment (for the most part) that pays over and above their fair share. And so while we know what is required for a greener world, we choose to prioritize more greenbacks in our wallets instead.

With good reason, discoms might say, and they have a point. Well, in a manner of speaking. But you do see what I meant when I told my students that building out the scenario was the easy bit. Actually getting to a place where one can begin to implement all these policies?

Ah, what a very, very long road that is.

An introduction to public policy, if you ask me, should be taught to everybody while they are in school. That sentence deserves to be expanded into an entire blogpost, which is what I plan to do next.

Notes on “Know Your Power” , A Prayas Publication

A while ago, I had written an essay on India and her urbanization. Related to this, I’ll be launching tomorrow a six part YouTube series on urbanization, and how to go about thinking about it. Keep an eye out for an announcement about this tomorrow!

The reason I bring this up is because I would like to do a similar series about electricity. Urbanization is relatively easy for me to think about because I have been reading about it, on and off, for a while. Electricity is rather more difficult to do, precisely because I know relatively little about it.

And the best way to learn is to write about it, of course!

I was recommended this publication: Know Your Power, by the Prayas foundation. What follows are the first installment of my notes from having read it. It’s 400 odd pages, and I won’t torture you by putting all my notes in one place: promise. The following are my notes from the first chapter, which is an introductory one, and the ninth chapter, which is about electricity reforms in India. Here we go!

Figure 1.1 from the publication cited above

India doesn’t too well in terms of energy consumption, and the data suggests that this may potentially have something to do with where we rank in terms of the Human Development Index.

  • As of the year 2015, about half of our total energy supply came from coal
  • About 2/3rd of our energy use as of 2015 was for industrial and residential purposes, with a roughly equal split between the two. I would have thought agriculture would be higher than the 2% that is quoted, and that makes me wonder about whether this data is not being captured correctly.
  • The concept of the energy tree is lovely (page 32 on the epub version. My apologies, copying and pasting is not possible.)
  • We’ve tended to allocate about 10-15% of our five year plan outlays to the electricity sector. The sector has been doubling in size every ten-fifteen years. That is, it grows at about 6% a year.
  • The installed power generation capacity has grown 300 times since independence. I don’t know whether to be amazed at the growth, or horrified at the implied low levels at independence. Both, probably.
  • The three most important components of the power sector (generation, transmission and distribution) were unbundled on the basis of the Odisha model, which is where it was attempted first.
  • The State Electricity Boards (SEB’s: MSEB in case of those of us who are from Maharashtra, for example)) were an outcome of the Electricity Supply Act (1948). Until then, provisioning of electricity was mostly by the private sector. This also helped supply of electricity reach rural areas.
  • Generation, Transmission and Distribution (GTD) was all handled by the state board alone. SEB’s could set the tariff so as to earn a fixed surplus of 3% over costs. But even this “autonomy” was in name only, since state government regulations meant that it was the state that would effectively set tariffs.
  • Four factors helped increase the supply of electricity at this time:
    • Government backing and subsidies
    • The development of regional and national grids
    • An increase in self-reliance for fuel
    • Cross subsidization: the rich paid more
  • NTPC and NHPC – The National Thermal Power Corporation (H is for Hydro) were set up in 1975, as was a company called POWERGRID.
  • Leaving the government in charge of deciding who pays what tariff worked about as well as could be expected, and SEB’s ran into financial problems beginning the late 1980’s. Four main causes for this too:
    • poor techno-economic management
    • Poor policies, especially pricing
    • Poor overall planning
    • Too much interference from the state governments in all asects of running the SEB’s.
  • The major change in the 1990’s reforms was to begin thinking of electricity as a tradable input, rather than as a development input. Or put another way: pricing matters!
  • Electricity Reforms Acts were passed by states around this time, as electricity is a concurrent subject.
  • The Central Electricity Regulatory Commission (CERC) was established in 1998, and soon began adjudicating on issues between Independent Power Producers (IPP’s) and SEB’s
  • A note to the reader, to help and to check that you’re still awake: I’ve yet to meet a field of study that doesn’t fetishize jargon and acronyms. But even so, the electricity sector is just whatay.
  • Both the CERC and the state ERC’s started pointing out the impossibility of the pricing structure surrounding electricity, and also started pointing out the need to carry out urgent reforms for this sector. “Tariff rationalization” happened around this time.
  • With great transparency comes great accountability. If a state government announced a populist scheme regarding electricity, it also had to explain how it was going to fund it. No longer could the government simply “announce” a scheme, and leave it to the SEB to figure out how to implement it.

    Obviously, state governments were less than thrilled about this.
  • In 2001, the Ahluwalia Committee was set up to decide the mechanism for settlement of SEB dues. Two main recommendations from this:
    • Operate like a commercial entity, which may well be where the phrase “easier said than done” was born (I jest!)
    • Operate more efficiently, by reducing AT&C losses. That’s Aggregate Technical and Commercial losses.
  • IPP’s only came into existence in 1991-92(!)
  • The idea behind allowing IPP’s to exist was good. The implementation of this idea was not (this sounds familiar, no?). A secretive process to select projects and IPP’s made the who thing far too opaque. Anybody who knows India can guess the rest of the story. (And if you don’t, see Dabhol, Enron. But be warned: your face and your palm are about to get to know each other really well)
  • Since 1991-92, 24,000 MW of hydropwer capacity has been added in this country. 3004 MW of this are from the private sector. 7% of all hydropwer projects in the country in 2018 were from the private sector.
  • The case studies on Odisha and Delhi are fascinating, but I’d recommend reading about them in their entirety.
  • The Electricity Act (EA) of 2003 is so important that it possibly deserves its own blog post, but here goes:
    • Vertically integrated SEB’s need to be unbundled (GTD to be separate)
    • ERC’s became much more powerful under the EA. Setting tariffs, adjudicating disputes, and granting of licences all now comes under ERC’s.
    • Checks and balances have been put in place, along with an Appellate Tribunal for Electricity as well as a Consumer Grievance Redressal Forum (CGRF)
  • We also introduced at this point of time the following: The National Electricity Policy, the Tariff Polisy, the Rural Electrification Policy and the National Electricity Plan (phew!)
  • The process for setting up captive plants and thermal generation plants was simplified: permission was not required from the Power ministry, but was required from other ministries (environmental clearances, for example). If you know how Indian bureaucracy works, this is nothing short of amazing.
  • The EA made generation a completely de-licensed activity (save for nuclear and large hydropwer)
  • Captive plants now became possible ( you could set up plants for your own needs, rather than buy from the grid. But note, this is much more complicated than I can write about here)
  • Consumers could choose their own supplier through the all important open access policy

This, I would think, is about as much as any reasonable person ought to be subjected to in a single sitting. Next Monday, we’ll continue notes from Chapter 9 of this same publication.

RoW: Links for 25th September, 2019

Five articles about East Asia today, all interesting in their own right.

  1. Reading this article reminded me (of all the things in the world!) of the conversation that Aakash has with his dad in Dil Chahta Hai, where Aakash’s dad asks him to find out the vajah. Weird? Yes. Relevant? You be the judge!
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    “Without really knowing what the North is about, it has been hard to be certain about what they really want: relief from the economic pressure of sanctions and the need to circumvent them so that the Kim dynasty can continue in not-so-splendid isolation, or economic and political engagement with the international community and a route to becoming a normal state without hostile relations with the US.”
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  2. Speaking of North Korea…
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  3. Part II of a two part series on energy (well, electricity)  in North Korea. Read both, though.
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  4. Hong Kong as a Shakespearean tragedy.
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  5. “There was no criteria except availability in English. Yes, this was more mad than methodical — but we’re proud of the result.”
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    A very useful list indeed: 100 books about China. I have read, I am happy to say, only six out of these. I am also slightly surprised to see that China Airborne didn’t make it to the list. And Taipan, maybe.