Author: pmanifold@admin

While Indian Discoms continue to focus on AT&C loss reduction, which in many cases stands to the order of greater than 60%, and lot of private efforts is getting attracted in, it is clear that this is a massive Energy Efficiency (EE) drive. There are various talked instruments for EE financing, but not much has been realised by Indian Discoms. With this Rahul Bagdia from pManifold team spoke to Mr. Vinod Kala, Founder & MD, Emergent Ventures India. He has over 25 years of industry experience, centered on Clean Energy, Strategic Management and Finance. Over the years, he has helped launch a number of new businesses in Clean Technologies including Renewable Energy Aggregators in wind, hydro and bio-mass energy, LED Appliances, Sustainable Farming etc.

This interview focuses upon ‘If and how Indian Discoms could leverage & possibly expedite their AT&C loss reduction drive through potential financing from EE programmatic interventions’. The below shared are the author’s personal views and not to be associated with any of their company’s association.

1. What are key Green House Gas mitigation related opportunities you see in Indian Discoms?
   • AT&C loss reduction is of course one of the key areas of GHG mitigation for  Discoms. EVI has successfully registered a Program of Activities (PoA) for Punjab State Electricity Board (PSEB). This was supported by World Bank. The PoA focused on transmission and distribution infrastructure up-garadtion in rural areas, which resulted in reduction of transmission losses.
   • Other significant areas for Discoms, wherein Discom could play Aggregator or Program Manager role:
     • ‘Reduction of leakages of SF6’: a high impact GHG substance used in circuit breakers because of its excellent insulating properties. UNFCCC AM35 is the approved methodology for designing carbon projects for reducing SF6 leakages.
     • Demand- side management programs. Energy efficiency programs for residential customers (e.g replacement of light bulbs, fans etc). Energy efficiency programs for commercial and industrial customers (lighting, HVACs, process effy etc).
     • Distributed renewable energy generation programs on customer premises (e.g solar roof tops, solar co-generation etc).
   • Apart from Certified or Verified Emission Reductions (CERs or VERs), some of these initiatives could also qualify for other types of environmental credits such as RECs (Renewable Energy Certificates) / ECERTs (Energy Efficiency Certificates). The benefits could flow to users, investors or the Discom, depending on the structure of the Program.
   • As far as Carbon Credits go, it is important to note that for projects registered after 2012, the saleability of carbon credits is low. The prices are also depressed. Hence the benefit of carbon credits can be meaningful only under bilateral mechanisms (e.g the mechanism with Japan).
2. How did the PSEB CDM transaction work and what is current status?
   • World bank had supported this initiative and Punjab State Electricity Board was the Managing Entity for the Program. The Program was registered in Dec 2012. The Program is still under implementation although it can go for verification for first year credits in 2013.
3. AT&C loss reduction is one pointed goal for Indian power discoms. Any ideas on raising a programmatic intervention for raising useful finance? Will the new emerging private Distribution Franchisees benefit and look upon this as funding source?
   • As I outlined earlier, new PoAs for CERs may not realise any significant monetary value because of sales restrictions on such credits from projects registered after 2012. However, an interesting possibility might to be extend the PSEB program to cover other Discoms as well. This will require further work by the interested Discoms with World Bank and learning from experience of PSEB.
4. With RPOs enforcement getting stricter, what various market driven instruments are finding applications in Indian Discoms?
   • RPO mechanism as it stands today is not very friendly to Programs integrating numerous, small sized project activities. Concept of Program of Activities under CDM is well designed for such integration.  Also because of strict rules regarding who can buy (only Obligated Entities can) or sell (Only generators can) RECs, there are constraints on aggregation roles such as Program Managers. This needs further discussions with CERC.
   • The current approach to meet RPO is therefore simple- either buy Renewable Energy under Preferential or Feed-in-Tariff or buy equivalent RECs. With slight modifications, if Program friendly provisions can be brought in, Discoms can  meet their obligations partly through designing and implementing distributed Renewable Energy generation Programs.
   • The other option for Discoms may be to devolve the RPO targets to  large customers in Residential, Commercial and Industrial Segments. This will require working with SERCs and CERC for enabling provisions
5. Indian Power discoms are seriously struggling with financial viability. Are ‘financial viability’ and ‘sustainability’ different dimensions, or are they interrelated?
   • Sustainable development has become a national priority and therefore slew of policies are coming up, with inbuilt incentives or penalties to encourage sustainability initiatives.
   • Therefore, sustainability should be looked with a fresh perspective. It is a business opportunity, with costs and risks if you lag behind and enhanced business value if you lead. It is no longer a feel- good activity undertaken only for reasons of conscience. Therefore sustainability and financial performance are not contradictory.  Dis-coms can either be good at sustainability initiatives and benefit from related incentives or face the penalties.
   • Discoms must also consider that Energy Sustainability is critical from the State perspective and would continue to be pursued. Both renewable energy and energy efficiency help reduce long term costs of energy, improve energy security and improve energy access, crucial for India’s development ambitions.
   • Indian Discoms have three domains of sustainability work, which also positively influence financial performance:
     • Technical efficiency and up-time improvement of transmission and distribution infrastructure, which reduces losses and improves throughput of energy in the system. Both positively impact the bottomline.
     • Demand side management: efficiency improvement at customers end and flattening of peak load. Efficiency improvement by customers, specially in segments which are subsidized (such as agriculture or low income customers),        will reduce the subsidies and release the energy capacity for high paying customers. Flattening of peak load will help the Discoms reduce average pooled cost of purchased power and thus improve the financials.
     • Renewable energy generation – Long term cost of energy comes down. Present costs can also be brought down, if RPOs are implemented at customer level. Program management role can also unleash value for the Discom.
6. What suggestions you will make to Discom and Franchisee Top Mgmt to pursue sustainability in true meaning?
   • With sustainability thrust, new opportunities in Demand Side Management, Renewable Energy Generation etc. open up for Discoms or Distribution Franchisees. New revenue models, cost reduction opportunities and new ways of financing can be developed.

Posted by: Kunjan Bagdia @ pManifoldThese expert interviews are part of pManifold and IUKAN initiative to bring new ideas and help overall Indian Utility industry to grow strong and sustainable. Please bring to our attention if you would have interest to share your views with broader utility professionals and help drive this change. You can write us at contact@pManifold.com, and our team shall get in touch with you.

Mr. Ajoy Mehta, MD, MSEDCL, in a recent Business Technology Conclave of IUKAN extended strong support to Power Distribution Franchisee model, for country to build sustainable power utilities. He shared his experience and vision for further strengthening of the Power DF model. A brief excerpt in form of Q&As from his Vision session at IUKAN is shared below. (The views here are personal views, and not to be associated with any company in any forms)

Q1) What role of privatization you see in Indian Discoms?

A) Electricity Act, 2003 made Generation de-licensed, opening to private participation, but in T&D continued to require Licensing, opening it to part-privatization, but not allowing complete private ownership of assets.

• A Discom performs following core functions 1) sourcing of power 2) tariff filing and reporting to Regulators 3) various customer services like MBC etc. 4) distribution and fault management 5) and HR management.
• Out of above, sourcing of power & tariff filling and reporting are broadly considered as prerogative of Licensee only, and hence not kept in scope of Franchisee.
• The strength of private company is to handle customer relationship and bring operational efficiency, and hence remaining above activities including like MBC, IT, and Customer services, O&M, HRM etc. were made in scope of DF.

As Discoms are reeling under the high distribution loss and revenue deficit, the one way of improving the Distribution of electricity is to rightly involve private companies in the sector.

Q2) What experiences and challenges you see with operating franchisees?

A) Some key challenges which need overcoming for the DF model to grow:

• Secondary attention to Customer services: Franchisees by far start focusing more about revenue collection from day one, and quality customer services become secondary. This is primarily because still in Franchisee model, there is monopoly of the operator, and customers do not have any choice. Stronger checks and balances has to be put to increase timely answerability to the end-customers.
• Lower Transparency: Most franchisee operators have opposed to transparently sharing their performance with their Licensee. More trust and governance need to be in place for improved performance monitoring.
• Shallow pockets & experience: Tightening the tender document, with further stringent QR to involve only serious bidders with deep pockets and relevant experience. At this point of time, industry needs good performing DFs for model to stand and grow. Investors and promoters should have good intent and have patience for min. 5 years for useful returns.
• Resistance from Unions: There is atleast no unfair labour practices involved with PSUs including Discoms. Sometimes the private operators cut thin on this dimension, inviting resistance and tension in their employees and unions.
• Political buying: Both Discom and Franchisee needs to work closely to get this one important piece right, as otherwise it can thwart overall project success. One case study is of MSEDCL’s reduced AT&C losses, by convincing the stakeholders to allow proportionate load shedding in areas with more than 60% losses.

Q3) Currently there is monopoly in the distribution sector. Can competition be introduced in this sector in the near future?

A) It is a very valid and important question. The biggest problem that is faced is cross-subsidy. True competition cannot come unless cross subsidy is removed and everybody pays the same rate. But that is very difficult in India because we have a tendency to stick to the socialist philosophy. Unless this exists, and the regulatory framework does not change, true competition cannot be introduced in the electricity sector.

Q4) Is the government thinking of introducing power retail?

A) Although the government is thinking on it, I believe it would take nothing less than 10 years to make it a reality. The government should make tariffs equal for all and if subsidy is to be given it can be given directly to the consumer who needs it. We are still a little distance away from achieving that.

Q5) During the qualification of a bid can we allow partners consortium to ensure all relevant experience and resource for running Power Distribution system is present – Network/EPC/O&M; Metering & Energy Auditing; Finance and CRM/IT? What is your view in allowing this kind of consortium bidding with the pre condition that it is functionally relevant in running the entire distribution business?

A) This is a classical debate between consortium bidding and one big bidder. It is a difficult question and cannot have one simple answer. One rhetorical would be whether a movie with Salman Khan will become hit, or with 3-4 new heroes – both has their chances with right ingredients.

Q6) Where do you think is the distribution sector heading? Will competition come in this sector or not; do we need it or not?

A) Competition will come with privatization. According to me, privatization is when the consumer has a choice.  And the only thing that can subject itself to privatization is consumer services. We have to find out ways to get the consumer services out of the hand of the government and give it to the private sector. That is something on which we have to work as policy makers now.

Q7) A lot of generation capacity is stranded. Why don’t we have a target for load increase? Why is that not being pushed?

A) I agree with you that a lot of generation capacity is stranded, and that we need to push it. How do you push consumption when people don’t want to pay for consumption? Unfortunately, since we got independence, we have made people believe that whatever government gives is for free, be it electricity, water, roads or government hospitals. Since 50-60 yrs, people have got used to the idea that ‘paisa na bharne se bhi kaam chalta hai’. That has to change and is gradually changing. Unless this change occurs, there is no sense in increasing consumption. People must learn to pay.

Q8) There is no specific standard of performance given for customer satisfaction. There is no benchmark available. Do you see customer satisfaction being measured by a licensee, becoming a governance tool for the franchisees?

A) There is a great place in business for statistical tools for measuring satisfaction. But at the end of the day, customer satisfaction is the softer aspect of the business and you are trying to gain harder monetary aspect out of distribution business. It has a lot to do with the mindset of the person running the business. Measurement does have a lot of meaning, and this could be one paradigm change in attitude if the franchisee business is to go ahead.

Q9) Do you feel that setting up a measurement would drive that mindset change?

A) Yes it would. Definitely.

Q10) Is there any clarity in policy making forums on the way in which the franchisee affair can be included in Tariff and Fixation Regulation exercise?

A) Various models are being looked at. But every state should be allowed to find its own model. I feel that we should define the larger parameters and let the states innovate on other aspects. The only thing I am requesting the Government of India is that they finalize the QR by conducting a larger debate and let the states decide their own models.

Q11) What sort of support do you envisage that Discom could provide or add upon to further facilitate the scale-up of the Franchisee model? From your experience, what kind of support would further augment their service delivery?

A) Many people come to us to ask about the Franchisee model and I tell them very clearly that Franchisee is not a fashion statement. I advise them to get into Franchisee business only if they have the following three things: (1) You are truly and fully convinced (2) You have managed to a get the political support from your state, and (3) You are sure that you will take on your unions.

Full commitment of the utility is essential. It needs the time and effort of the number one man in the organization.

Bihar is one of the fastest growing States in the Country and has acquired considerable attention throughout the country and even abroad for its remarkable performance on the development front. The requirement for an enhanced Transmission and Distribution (T&D) infrastructure has ensured a firm commitment from the State Government, for transforming the present power sector scenario, in the form of assured finance through grants or various Government schemes and availability of resources in the region.

In order to expedite the reforms process, the management of the newly formed Bihar State Power Holding Co Ltd (BSPHCL) has organized a conference to update potential private sector participants on the developments in the T&D sector and understand the expectations of Developers, EPC Contractors and Manufacturers through the conference – ‘Destination Bihar: Opportunities in Bihar State’s Transmission and Distribution Sector’. The conference was organized by Feedback Infra Pvt Ltd in different cities of India with the top management of BSPHCL with the following Agenda:

• Overview of the new initiatives taken by Governments of Bihar in the Power Sector
• Update on reforms in the T&D sector through Government  support / investments through various Schemes
• Discussion on private sector investment opportunities in Bihar’s Power (T&D) sector
• Information for the  private sector  on Distribution Franchisee Model opportunities in the State
• Understanding the expectations of all stakeholders in order to create an investment friendly environment in the T&D sector

The dynamic team from the State sector was led by Shri. Sandeep Poundrik, I.A.S, CMD, BSPHCL along with:

• Shri Sanjay Kumar Singh I.A.S. (MD, BSPTCL)
• Shri Sanjay Kumar Agarwal I.A.S. (MD, NBPDCL)
• Smt. Palka Sahani, I.A.S. (MD, SBPDCL)
• Shri. N.K.P. Sinha (CE(RE), NBPDCL)
• Shri. S.K.P. Singh (CE(Comm.), SBPDCL)
• Shri. Y.K.Thakur (CE(Trans), BSPTCL)

The conference saw more than 130 delegates from 80 firms meet to discuss the issues that have hindered the sector’s progress in the State and suggest possible solutions and recommendations to the officials present. The conference also highlighted key initiatives that are being undertaken by Bihar State in the Transmission & Distribution Sectors. With more than INR 28,000 Crores of incoming funding in the next 4 years, opportunities abound for private sector organizations.

Please see below the conference presentation:

https://www.slideshare.net/slideshow/embed_code/24933975

Destination Bihar : Opportunities in Bihar State’s Transmission and Distribution Sector Presentation

Key excerpts from the presentation, focusing on Power Distribution opportunities are:

• Distribution sector are set to receive projects to the tune of INR 20,137 Cr. (including rural electrification schemes like RGGVY and RAPDRP).
• Approx 40 lacs electricity consumers across the 2 distribution companies, after unbundling in 2012, as per EA-2003.
• Demand of the state growing at a CAGR of 8%.
• Industrial and Domestic consumers contribute to about 50% of the total sales.
• Areas to come up for Distribution Franchisee are:
  • North Bihar
    • Bettiah – Motihari
    • Gopalganj – Siwan
    • Chapra – Hazipur
    • Darbhanga – Samastipur
    • Begusarai – Barauni
    • Purnia – Kathikar
  • South Bihar
    • Lakhisarai – Munger
    • Bihar Sharif – Rajgir
    • Arrah – Buxar
    • Sasaram – Dehri
• Above mentioned areas have AT&C losses in the range of 40%-78%.

Its a good initiative taken by Bihar Government & its Discoms, as part of their stakeholder engagement initiative to apprise of the potential opportunities in T&D in the State. Thanks to Feedback Infra team for sharing above presentation.

Noida Power Company Ltd (NPCL), a joint venture between the RP-Sajiv Goenka Group, a leading business house in India and Greater Noida Industrial Development Authority, distributes power in Greater Noida, near Delhi in Uttar Pradesh. The Company started its operations in December 1993 under a 30-year license from U.P. Government and is among the leading companies to use GIS technology with vast experience.pManifold team spoke to Mr. Rajiv Goyal, Head (Projects and Power Trading) and Mr. Vikas Gupta, Manager (GIS) to understand their experience in GIS implementation and the best practices adopted by NPCL. The below shared are the author’s personal views and not to be associated with any of his company’s and other associations.

Q1) What has been NPCL experience with its GIS implementation?

A)

• To make GIS successful, it should be a part of mandate in process life-cycle of utilities.
• The main problem that we face after Implementation is timely updation of data on periodic basis but we had overcome by making the process starting from Planning, Implementation and billing of any New Connection, Network Augmentation, Network Changes vetted with GIS Department before Implementation.
• We have formulated an end-to-end GIS solution for analysing and optimizing the power distribution network, initiating this project right from conceptualization phase and completed the same by integrating with other OSS (Operational Support Systems) systems like SCADA, billing systems etc. The scope of the GIS implementation included the creation of land base data, network mapping over the land base, data modelling, implementation of GE Smallworld software as a core GIS, Network Analysis tools for Load flow Analysis and finally, the integration of the GIS system with other OSS. The add-ons specifically developed by us for the Indian conditions might be of good value to other utilities.
• NPCL is amongst India’s first Companies to implement GIS within organisation. We have vast experience and rich technical expertise in implementing best of the updated technology on periodic basis.

Q2) What top venues to optimise GIS execution and save cost and time overruns?

A)

• Although in Utility GIS has lot of possible integrations with other systems, but basic fact is that, utilities deviate in their focus in maintaining Data quality by not making clear and mandatory processes for data updations, which is a prime important criterion for accurate results with any Integration.
• Since NPCL Licence Area, Greater Noida is one of the biggest emerging areas in terms of Infrastructure Development and population density. The future planning and Construction of 220/33 kV Substations is a continuous process which includes:
  • Planning of Network Development
  • New Substation Location Planning
  • Customer planning services for new connections
  • Analysis of performing/non performing areas using Satellite Imagery
• To achieve the same we would have to:
  • To maintain positionally accurate data as a repository to manage our assets digitally using high-end GIS software specially meant for utilities.
  • GIS is to be used as a decision making tool for further network planning, network augmentation, O&M Planning and commercial applications as well as new service connections, helps in managing deployment of resources in a cost effective manner.
  • Data in GIS will also be used in carrying out the Network Analysis like Load Flow Analysis on our feeders.
• NPCL started technology-aided utility mapping and utility locating solutions like GPS PDA’s for positional data collection. We have observed that utility mapping provides proactive, accurate solutions to aid in their construction and planning projects, without straining their financial resources and wasting their time and budget.
  • We are adhering to gathering accurate and real-time data in the form of digital maps.
  • Integrate GIS with SAP, OMS, SCADA and DMS. Perform technical optimization of network design as well as analyze real time data from SCADA/DMS for network performance /fault analysis.
  • Utilize GIS in daily asset management and other utility business processes.
  • Outage management System integrated with GIS to optimize call closure time.
  • Employ network tracing and supply re-routing information from GIS & OMS, respectively, to improve accuracy of Energy Audit at 11 kV/LT level.

Q3) What RoI to look from GIS implementation and integration? What commitments required from Utility operator to manage useful GIS implementation?

A)

• The GIS solution was envisaged in order to model their physical workspace into a digital workspace. An enterprise-wide integrated GIS solution was planned in order to maximise the benefits from various IT systems like SAP, IS-U CCS, SCADA, DMS, AMR and Network Analysis. The ultimate purpose was to help utilities solve business problems and achieve international level of customer service. Sustainable enterprise wide initiatives like GIS are dependent on obtaining senior management’s buy-in. This, in turn, depends on the performance evaluation of the investment. Return on investment (ROI) is calculated to evaluate the efficiency of the investment.
• The goal of the cost-benefit analysis process is to permit a fair determination of the worth of an investment in GIS technology. The cost-benefit analysis should cover the projected life-cycle or the portion of the projected life-cycle up until the pay back is reached, whichever is shorter.
• The GIS Costing Implies with in following line Items:
  • Software and Hardware Procurement: 25%
  • Implementation of Data Model/Customisation of Applications/Reports: 20%
  • Electrical and Landbase Data Creation/Updation, Consumer Indexing and Data  Ingestion: 35%
  • Customisation/Interface Development with other systems: 20%
• There are many benefits to implementing a GIS. However, it is understood that none of these benefits are real unless the products provided by the GIS in mapping and modeling the system result in a change in the operation of the utility. What this means is that if the map products delivered from the GIS are mirror duplications of the manually drawn product the project team has not tapped the potential for flexibility, accuracy, standardization, and clarity which a GIS offers. Also, modeling an electrical network for fuse coordination or phase balancing has no inherent value in and of itself. The model must be accurate and the changes must be implemented in the field before there is a quantifiable benefit. Assuming that the project team has accomplished their task of applying the GIS to all of its potential, there are really several benefits that the utility can derive. This includes:
  • Increased productivity in map updating and information handling.
  • Map accuracy which equates to crew safety and productivity.
  • One source data updates which mean fewer errors and less redundancy of effort.
  • Improved archiving and retrieval of information which improves utility responsiveness to the customer.
  • Accurate and timely information which is the basis for improving operations.
  • System modeling which is the basis for improved system reliability.
  • Company-wide accessibility to information.
• Utility operators will need a GIS-based view of their utility in order to make   the best decisions about key issues such as managing meters and customers, and incorporating renewable energy. Field crews will depend even more heavily on GIS for implementing an advanced metering infrastructure (AMI) and keeping current with data collection.

Q4) While all focus has been on GIS first data collection, very little has been organised around keeping GIS data updated, and integrable & useful for decision support to Asset Mgmt., O&M, CRM and other modules etc. What are best practices recommendations for Indian utilities here?

• After building the GIS, data maintenance is another major issue an organization needs to address. The questions that need to be asked are who, when and how to maintain the GIS data. Many organizations have existing data maintenance procedures for the CAD database. These procedures are good starting points. Because most CAD systems only allow single-user editing, one department in the organization normally handles all data maintenance. Because GIS provides multi-user access and has complex relationship rules, it is more efficient to decentralize the data maintenance responsibilities to multiple departments and maintain a centralized approval process.
• Beside GIS deployment and data maintenance, other issues also need to be addressed to ensure a thorough GIS implementation. These issues include: system integration, user training, data backup, future upgrades strategies, etc.
• In order for a GIS to adequately serve the needs of multiple departments, its design should also adhere to five basic principles, as appropriate:
  • The GIS should contain a complete and accurate inventory of the utility’s field-based assets.
  • GIS and Computerized Maintenance Management System (CMMS) integration is essential to obtain accuracy work histories / maintenance costs of each asset throughout their life-cycle.
  • The GIS should offer an accurate network model (i.e. able to trace Electrical networks upstream and downstream) and easily export data into modeling software packages supporting daily O&M activities as well as long-term planning projects.
    • As much as possible, GIS data layers should be cartographical adept (e.g. symbology, labeling, annotation) supporting (web) map production at multiple scales.
    • With time-enabled Software features, a possible emerging industry best practice is to consistently include an installation or acceptance date across all asset classes to give a correct historical viewing of the GIS database and integrated datasets.

Q5) With various organised and non-organised solutions and service providers around GIS solutions and services in Indian market, what best practices you would recommend in choosing right implementation partner(s)?

A)

• There are multiple players needed to make GIS happen. They are:
  • Hardware Vendors: Choose right system, servers as per requirement of software. There specs should meet the software requirement.
  • Software Vendors: Choose right software with five year Integration plan with other systems.
  • GIS Data Model Implementation Vendor: Freeze all your business requirements in conjunction with operation, commercial, projects and other departments and decide the field data collection templates.
    • Data Collection Vendor: To see the competence of vendor with earlier experience in Implementations in utilities and feedbacks.
    • Data QA/QC and Data Ingestion to GIS System.
    • Testing of all tools and Application working with this Data.
  • There are lots of tasks that can be outsourced…, but these task needs to be closely monitored also. This can include:
    • Coordination with the Data Model Vendor to correctly freeze and ingest all requirements.
    • Data Collection vendor Data to be monitored and Supervised by in house utility team.
    • QA/QC of Data to be done by random sampling of 3% of Data by in house utility team.
    • Testing of Application by in house team after Data Ingestion.
  • There are lot of utility specific GIS solutions in the market but one has to adhere with following requirements before taking decision. They are:
    • Open platform: Selecting GIS technology that is based on an open platform enables a utility to easily integrate asset location information with other systems.
    • Scalability: The utility should look for a system that is scalable within a single database instance, making it easier to locate, analyze, integrate and manage data with other legacy corporate information systems such as a CIS or enterprise resource planning (ERP) system.
    • Mobile capabilities: Field automation offers proven ROI across the enterprise. The ability to share the same visual image between engineering, operations and the field is a critical component of a complete enterprise GIS strategy.
    • Industry standards: When a system meets international standards, a utility can work with data from multiple systems and have the benefit of interoperability. An open architecture based on industry standards is the foundation for interoperability across disparate data sources, formats and systems. A system that supports Open Geospatial Consortium (OGC), Web Map Service (WMS) and other standards enables a utility to ingest spatial information from multiple systems and does not limit it to one vendor.
    • Ability to share data: A GIS-solution vendor should enable a utility to leverage the Internet to seamlessly share data with other departments, organizations and the public. A Web based GIS application is an ideal tool for the viewing and distribution of existing data to both internal and external parties. This provides quick and easy online access to real-time data in a user-friendly environment.
    • Security: An often forgotten component of GIS implementation…, any utility data should be handled as securely as possible. This is because the “data” not only contains spatial information but also complete asset details including end consumer details. The adherence of the GIS solution vendor to the utilities own security standards is of at most importance.

Q6) What changes in business model you see emerging to allow utility to have one integrated Managed service provider in GIS space? What will be an ideal GIS service partner to you for your utility operations?

A)

• In general, GIS departments are staffed with a mix of developers, system administrators, business analysts, data ‘specialists’ and so forth. Many utilities are now finding that more and more of these specialist spatial competencies (which involve core database skills, web services, a mix of industry software architectures and languages etc.) are difficult to come by and even harder to retain within their organisation.
• From a delivery point of view, we have found that a hybrid Service Management Organization (SMO) model for GIS support can successfully deliver value and service excellence to the GIS user community. If properly designed and implemented, the SMO can also provide value to the organisation through:
  • Cost management: Through the SMO model, services are delivered based on clear commercial contracts, that can be accurately budgeted for in financial forecast
  • Resource management: The SMO model allows peaks and troughs in business, and change in business requirements, to be absorbed by service providers, alleviating the need for a growth and/or reduction internal staff size
  • Quality control: Quality of service is rigorously monitored and measured to ensure service excellence with enforceable SLA’s providing leverage to negotiate service costs and performance expectations
  • Strategic positioning: the SMO allows the organisation to be flexible enough to align with future outsourcing or insourcing direction for services.
• When designing a GIS support infrastructure, an organisation ultimately needs to decide how to position its own resources – as an internal team specializing in GIS technology support, or a customer-focused team managing the delivery of services from a flexible menu of external service providers.

Asia Power Quality Initiative (APQI) aims to create and build awareness on issues related to Power Quality (PQ). APQI was ‘Power Quality’ partner to IUKAN 2014 earlier this year. The group continues spreading the essential message of PQ to various stakeholders, helping businesses and industries with improved understanding and insights.

Recently, they published a very interesting blog on ‘ARE DEVELOPING ECONOMIES AT RISK DUE TO POWER QUALITY ISSUES AND CHALLENGES?’

This blog underlines the importance of PQ in today’s fast growing power electronics and IT driven businesses. Developing economies like India continue to struggle for 24×7 power supply and are lagging in terms of their PQ expectations though striving hard for energy efficient economy. The blog focuses on the associated economic impact due to PQ issues and challenges borne by developing countries. Can we afford to ignore that risk by remaining ignorant!

For detailed blog, please see following link: http://www.apqi.org/blog/are-developing-economies-at-risk-due-to-power-quality-issues-and-challenges.html

The Ministry of Power’s financial restructuring plan has made the introduction of private participation in distribution as one of the mandatory conditions for availing the benefits of scheme (as a result of high AT&C losses, low IT involvement and huge financial losses). Whilst State Governments’ (except Delhi and Odisha) have not undertaken privatisation of Discoms, Distribution Franchisee (DF) model has emerged as one of the attractive options to involve private players for enhancing distribution operations.

The success of Torrent Power as a DF player in Bhiwandi in Maharashtra has fuelled the other states to adopt this model. Other operational areas include Agra (UP), Nagpur (Maharashtra), Aurangabad (Maharashtra), Jalgaon (Maharashtra) and Sagar (MP).

Currently, utilities are going for Input and Investment-based Franchise Model, under which Franchise takes the responsibilities for power supply to customers, collection of revenue, management, upgradation and expansion of distribution infrastructure.

The licensees’ functions are limited to power supply at input points and keeping a check of regulatory interface. Lately new DF models are emerging like Input-based Franchise with Incremental Revenue sharing (IBF-IRS). Generally, zones with high consumption and transmission and distribution (T&D) losses are given to the franchise.

A brief outline on different types of DF model based on 3 states Odisha, Jharkhand and Bihar are mentioned below:

Odisha DF

The Central Electricity Supply Utility of Odisha (CESU) has adopted the IBF-IRS model for franchising areas. Under this model, the incremental revenue realized beyond the baseline revenue per unit (RPU) is shared between the DF and CESU at a pre-defined ratio. Penalty is imposed for not realizing the base RPU on the DF and it is revised every year based on the tariff indexation formula.

In IBF-IRS, the input energy is free of cost in order to alleviate the demand and price fluctuation-related risks. The IBF-IRS is only for five years and all assets below the distribution transformer (DT) are too maintained by the IBF-IRS DF. Also, the IBF-IRS DF mandates the installation of smart meters and partial Capex on the meters is to be recovered by 40 months through monthly meter rent.

CESU allotted 15 divisions with 1.3 million customers accounting for 77% of utility’s customer base with AT&C losses ranging from 51% to 72%. These franchises are awarded to Enzen Global Solutions Private Ltd., Feedback Electricity Distribution Company Ltd (FEDCO), River Side Utilities Pvt. Ltd. And Sea Side Utilities Pvt. Ltd. with the responsibilities of distribution-related activities and the task of reducing AT&C losses by 15% over a period of 5 years.

In Feb 2013, FEDCO commenced operations as a franchisee in Puri, Khorda, Balugaon and Nayagad divisions in Odisha across an area of 9,000 sq. km. (covering 4,00,000 consumers). The company has taken several steps to improve distribution operation and minimise AT&C losses, like setting up customer care center, spot collection, developing ERP for billing, etc. These steps resulted in increasing the billing coverage to 88% from 75%, collection coverage improved to 70% from 56%, AT&C losses reduced to 54% from 61%.

Jharkhand DF

Jharkhand State Electricity Board (JSEB) adopted Input-based DF model in Jamshedpur and Ranchi and were awarded to TATA Power and CESC LTD respectively. Ranchi circle covered 257,000 consumers, AT&C losses stood at 42% required to be reduced to 9% over the next 15 years.  The key feature of Ranchi DF agreement is the provision of an independent audit for baseline, which is important as often the asset and loss figures stated by state electricity boards are not accurate. E&Y is about to complete such an audit in Ranchi.

Bihar DF

The recently unbundled distribution utilities in Bihar have taken steps to improve operations through appointment of franchisees. While North Bihar Power Distribution Company Limited (NBPDCL) has appointed Essel Vidyut Vitaran Ltd. as a DF operator for Muzaffapur, South Bihar Power Distribution Company Limited (SBPDCL) has appointed India Power Corporation Ltd. (formerly DPSC limited) for Gaya and SMPL Infra Ltd. for Bhagalpur.

India Power will serve over 1,00,000 consumers. The franchise area had registered energy sales of 125 MUs and T&D losses of 62% during the base year. The company has planned to invest 330 million in the first five years to improve distribution operations by investing in meter replacement, consumer indexing, installation of billing systems etc.

The Way Forward

To ensure success of the franchise model between licensee and franchisee, it is important to implement an effective monitoring process. Some modifications are required in the franchisee framework, especially in provisions related to regulatory monitoring, loss reduction and consumer benefits, Capex investment and supply guarantees by the licensee.

Please note: Above is the summary of the recent article on Power Distribution Franchisee model published in PowerLine magazine, Feb 2014.

India and most developing countries continue to struggle for 24×7 power supply, good Power Quality (PQ) environment, and Energy Efficient (EE) economy. See APQI earlier blog that tries to quantify economic impact from poor PQ environment – Are developing economies at risk due to power quality issues and challenges?

Another follow-up question will be WHO IS RESPONSIBLE FOR MAINTAINING GOOD POWER QUALITY? Answer to this is usually divided and depends upon whom we pose this question. Network Operator will blame his end-customers, Device Manufacturer will blame both the Network Operator and the end-customer, and end-customer usually has not much awareness, and believe that its supply problem from Network Operator.

In addition to above 3 key stakeholders, there are others like – Designers, Commissioning Engineers and Maintenance Engineers that also plays role in sustaining good PQ environment.Commissioning Engineer play the role in ensuring the quality of installation based on certain design standards.

Good installation is one of the necessities to maintain power quality during operations and to minimize voltage drop, sparking, overheating, etc. Maintenance engineers are subsequently responsible for preventing any glitches in operations which can result in power quality issue. For ex. loose connections lead to sparking;poor quality of wires results in voltage drops at customers premise, etc.

Further on, we shall focus upon 3 key stakeholders – Customers, Network Operators and Equipment Manufacturers.

INTER CONNECTEDNESS OF OUR GRID AND PQ

Simply put, Power Quality is a measure of quality of power supply on the grid. A PQ disturbance occurs in case of any deviation of voltage and current waveforms from the ideal. Voltage disturbances commonly originate in the network and affect the customers. On the other hand, current disturbances originate at a customers installation and affect the network components and other installations. Therefore, VOLTAGE QUALITY is considered to be primary responsibility of the network operator, while CURRENT QUALITY is primary responsibility of the end-customers.

Because of interconnected grid, PQ disturbances are caused both by upstream and downstream elements. Across various PQ disturbances, it is observed that customers are responsible for roughly 70% of the PQ problems, while the remaining 30% come from the network. One study by LPQI for 25 European Union countries in 2005-06, reported following % distribution of poor PQ electrical manifestation – transients and surges (29%), voltage dips (23.6%), short interruptions (18.8%), long interruptions (12.5%), harmonics (5.4%) and others (10.7%). (See European Power Quality Survey Report)

‘CUSTOMERS’ AND PQ INTERCONNECTION

Today’s customers are highly dependent on digital technology and power electronic devices, with increasing use of various types of electronic appliances, ballasts, variable speed drives, etc. These devices when used produce current distortions in the network due to their non-linear operating characteristics. These disturbances then travel upstream because of insufficient isolation of each customers from the grid. This increase current in turn causes additional energy losses in the system and also pose increased demand of apparent power to individual customer and also entire network faces the risk of premature aging and failure.

Some of commonly reported PQ complaints from end-customers:

Equipments affected by poor PQ	External  Manifestation of poor PQ	Electrical Manifestation of poor PQ
IT equipments	Computer lock-ups and data loss	Presence of earth leakage current causing small voltage drops in earth conductors
Variable speed drives, telecom equipments, arc furnace, welding equipment, relays, static converters, security and access control systems, etc.	Motors and drives malfunctioning, computer screen freeze, loss of data	Capacitor bank failure, shocks due to neutral voltage, Flickering of lights, noise in telecom lines
Motors and process devices	Malfunctioning of motors and process devices. Extra heating, decreased operational efficiency and premature aging of the equipments.	Presence of voltage and current harmonics in the power supply
Relays, circuit breakers and contactors	Nuisance tripping of protective devices	Distorted voltage waveform because of voltage dip
Sensitive measurements ofprocess control equipment	Loss of synchronization in processing equipment	Severe harmonic distortion creating additional zero-crossings within a cycle of the sine wave

Table 1. Customers reported problem due to poor PQ Environment (Source: 2. Sharmistha Bhattacharyya and Sjef Cobben, Technical University of Eindhoven)With increased awareness, Customers can take below precautions to support building healthy PQ environment:

• Maintain power factor within prescribed limits to reduce reactive power demand, which in turn will balance the voltage in their premise and also overall network
• Reduce harmonic currents while using more energy efficient equipments at their premise
• Keep a log of faced power disturbances at premises, which may come handy in finding effective solutions

‘NETWORK OPERATORS’ AND PQ INTERCONNECTION%

The Network Operators design and maintain key network characteristics like feeder length, number and sizing of Distribution Transformers (DT), DT load balancing etc. which in turn determine grid impedance and that influence the PQ level in the network. With high impedance in the network, PQ issues (mainly flicker and harmonics) become more prominent. Further, DT winding configurations and earthing problems also add to the harmonic behavior and voltage dips in the network.

Thus, technical Loss reduction and fixing PQ environment are strongly interrelated, and could be addressed though same investments. The main network components which get affected in terms of faster wear and tear through PQ disturbances are:

• Transformers
• Cables
• Power-factor correction (PFC) Capacitors
• Protective Devices, Digital Relays
• Revenue Meters

The Network Operator can streamline its loss reduction initiatives with improving PQ environment in following ways:

• Controlling voltage level at customers point of connection by reactive power management and take appropriate steps at the broader network level.
• Maintaining load balance at Feeder and DT level, and reduce current losses. This will ensure increased power availability.
• Doing regular PQ Measurements with advancement in technologies like SCADA, Smart Metering, etc. and designing relevant dashboards to facilitate timely actions
• Isolating customer loads and their variations from main grid through use of Capacitor banking. Different variants like automatic power factor correcting devices, switched capacitors, Statics VAR compensators, dynamic voltage regulators etc. are available.

‘EQUIPMENT MANUFACTURERS’ AND PQ INTERCONNECTION

Organized and branded Equipment Manufacturers usually specify PQ immunity (EMI/EMC) of their equipment in terms of harmonic current emission and other parameters, as applicable under some Standards. However, in a real life situation, the network voltage is already distorted (and is non-sinusoidal) because of harmonic current emissions from other loads and customers in the network. This can result into distortions from their devices exceeding the ‘compatibility level’ of the system. The optimum performance of Equipment Manufacturers’device is not guaranteed when the supply voltage is distorted. Experiments show that devices produce higher harmonic currents when the supply voltage is distorted. Below table compares total harmonic current distortions (THD) of some households’ devices under sinusoidal and distorted supply voltage condition.

	THD with respect to the total RMS current drawn by the device
	Under clean voltage condition	Under distorted voltage       condition (THD = 6%)
TV	48%	55%
Personal Computer	87%	89%
Refrigerator	10%	18%
CFL	72%	79%

Table2. THD of devices under clean and distorted network voltage conditions (Source: 2. Sharmistha Bhattacharyya and Sjef Cobben, Technical University of Eindhoven)

The device manufacturer, however, cannot be blamed directly for such a situation as he is not responsible for his devices’ operations under a distorted supply voltage condition. But at the same time the manufacturers also need to ensure the immunity of equipments they manufacture against Electro Magnetic Interference (EMI) and specify the tolerance limits for same.

Question is should Manufacturer built in this isolation into its equipments, with resulting price hike, or should customer take collective facility isolation from main grid interference? While answer to this will be driven by market and regulations, still Manufacturers together with their installation teams could start giving weight to PQ issues during their installations and checking some basics like – capacitor bank, cables with larger neutral conductors, adjusting under voltage relays, etc.

CO-CREATING AN ECOSYSTEMFOR BETTER PQ MANAGEMENT

As we saw, poor PQ environment is caused by Customers, Network Operators and also Equipment Manufacturers. At the same time, poor PQ impacts all of them negatively – Network Operator has to face high losses, customers has to face increased break-down of equipments and higher bills, and Equipment Manufacturers has to face increased warranty costs. Therefore, to implement PQ mitigation, a systematic approach needs to be followed starting with to identify the responsibilities of each stakeholder in the network. (A good detailed ‘Decision making flow-chart’ on PQ solutions is shown in report ‘Consequences of Poor Power Quality – An Overview’)

Below figure illustrates the mutual responsibilities sharing among various stakeholders in the network.

Figure 1. Mutual responsibilities among various stakeholders in the network (Source: 1. Sharmistha Bhattacharyya)

With growing complexities both on the on end-customer side (via increasing usage of electronic appliances) and Network Operator side (via higher adoption of smart grids, smart meters etc), it is important that each stakeholders understand their contribution and impact from PQ, and take appropriate measures. End-Customers have to become more aware and demanding in their procurements of both power and also equipments, as at the end, it is them who pays out for these in-efficiencies. In US and Europe, there are clear SLAs for voltage supply and harmonics emission at the point of supply between the Network Operator and end-customers. Improved Regulation, policies, standards and end-customer awareness and reinforcement will play key role in guiding market for optimum equilibria for good PQ environment.

References

1. Sharmistha Bhattacharyya, “Power Quality Requirements and Responsibilities at the Point of Connection”
2. Sharmistha Bhattacharyya and Sjef Cobben, Technical University of Eindhoven, “Consequences of Poor Power Quality – An Overview”
3. A. de Almeida, L. Moreira. J. Delgado, ISR – Department of Electrical and Computer Engineering, “Power Quality Problems and New Solutions”
4. Ministry of Power, GoI, “Strategic Blueprint”
5. Central Electricity Authority, “Regulations for Grid Standards”

Asia Power Quality Initiative (APQI) aims to create and build awareness on issues related to Power Quality (PQ). The group continues spreading the essential message of PQ to various stakeholders, helping businesses and industries with improved understanding and insights. pManifold is supporting APQI team in content generation and wider sharing of message.

The Uttar Gujarat Vij Company Limited (UGVCL), a second largest state discom in Gujarat serving almost 2.9 million customers, has its network spread across an area of 49,950 Sq. Km. It was the rated the second best state power distribution utility, by the Ministry of Power (MoP), with due recognition to its excellent performance in the financial front, and ensuing operational improvement and consumer-friendly practices.

The discom is forefront in taking effective steps to improve operational efficiency and provide better services to customers. Some of the steps taken have been the introduction of system strengthening schemes, expansion of metering coverage, installation of special design transformers that help in peak load management, an insurance policy to compensate for crops destroyed by fire due to electrical line faults and launch of a photo billing system.

Through these, the utility has been trying to control its rising aggregate technical and commercial (AT&C) losses but also help in peak load management through the installation of advanced metering infrastructure.A brief outline on different types of steps taken by the discom are mentioned below:

Operational performance

The utility’s AT&C losses have been increasing since 2010-11, when these stood at 6.63%. The losses touched 10.12% in 2011-12 and 14.07% in 2012-13; with increase in losses being attributed to low metering coverage of agricultural consumers, which only accounts for 36.75% in 2012-13, as compared to 28% in 2008-09, out of the total 100% metering provided. To address this issue, the utility

• Releasing all new agricultural connections at metered tariffs. In 2013-14, it released 22,278 new agricultural connections and additional load of 201 MW for existing agricultural connections, by installing 3000 km of HIgh Tension (HT) lines, and 55 agricultural feeders, following bifurcation of existing agricultural feeders
• Launched a state sponsored scheme viz., Jyotigram Yojana, introduced in 2006, which ensures 24×7 three phase quality power, the utility supplies electricity to scattered farm-houses, through feeders with specially designed Jyotigram transformers
• Installs AB conductor cables in theft prone areas, undertaking mass anti-theft drives and replacement of electromechanical meters with static meters to bring losses below 20% for feeders with higher losses
• Ensures timely and accurate billing in order to reduce losses by initiating photo billing system for 0.2 million consumers, sending billing information to consumers by SMS, and installation of radio frequency (RF)-based single phase meters to avoid human intervention in meter reading
• Ensures energy conservation, cost efficiency and reduction in distribution transformer losses, the utility has introduced special design transformers – pilot advanced transformers (PATs) which provides single-phase power supply to farmers after the eighth hour; and this concept won the utility the ‘India Utility Knowledge and Networking Forum (IUKAN) 2014 – Best Practice Award‘ under the “Innovations and Others” category.

Smart Grid Pilot

UGVCL is one of the utility short listed for smart grid initiative under MoP. The project is being undertaken in two districts – Naroda and Deesa. The Rs. 487.8 million pilot project will cover about 375 substations across these districts. The scope of the project covers AT&C loss reduction, peak load management, developing advanced metering infrastructure (AMI), optimisation of unscheduled interchange charge, reduction in meter reading cost, outage management, load forecasting, demand side management and demand response, introduction of asset management systems and power quality management.

Five consortiums were shortlisted for proof of concept (PoC) in March 2014 for demonstrating their AMI connectivity solutions with 300 meters each. On basis of evaluation of PoC and bid price, the contract for the project will be awarded in September 2014. Few challenges faced by UGVCL at tendering stage includes interoperability issues, limited expertise of Indian companies, and absence of mechanisms to test imported technologies in India.

Future Plans

In a nutshell, the utility’s future plans are aimed at strengthening and upgrading its grid infrastructure through various initiatives like adding distribution lines at 11kV and LT levels, including the smart grid pilot. Loss reduction measures and ensuring consumer satisfaction through quality power supply are its top priorities, going forward.

Please note: Above is the summary of the article on Power Distribution Franchisee model published in PowerLine magazine, April 2014.

The Electricity (Amendment) Act, 2014 has envisaged separation of carriage (distribution network licensee) and content (electricity supply licensee). Rationale is to bring multiple supply licensees to increase competition and choice to end-customers, and drive improved efficiency and customer services. The network will be owned and managed by one preferably State agency, and will be regulated.

However there are many questions which still need to be answered clearly, and how do we reach to this new proposed state from existing state. We don’t have answers to all questions, and neither does anyone at this point of time. It has to be evolved, and what better than trying to visualize how this evolution might look like.

In our pictorial representation below, we have assumed base case of one State Discom utility, running one Input based Distribution Franchisee model in its one town, and how it might evolve. This is hypothesis, and idea is to invite expert comments to further improve this base view, and arrive at may be some kind of common visualization, as how our electricity distribution market will evolve, and in what time horizon.

Since, Electricity requires physical carrier (wire), it is recommended to not go for strict separation of wire and retail businesses between different entities. The last mile ‘Retailer’ (also referred as supply licensee) will be required to also play role of last mile ‘Network O&M’ agency. The Distribution Licensee can own all Network, with its responsibilities and investments limited till 33/11 KV sub-stations.

We look forward to good discussion on what you agree and don’t agree in above depicted evolution path

The Indian Power Distribution landscape is changing rapidly and going through various developments and reforms. In addition to high AT&C losses, the sector is struggling with increasing share of power purchase costs and financial constraints. Further, unforeseen shortages of fuel and poor planning by power distribution companies (discoms) has led to a steep rise in the power purchase costs – the key reason for widening the gap between discoms costs and revenues.

Power purchase cost is the major portion (in the range of 70%-80%) of the total cost of supply and are outside the direct control of most distribution utilities in India.To add to woes, the financial position of the state electricity distribution sector has been a concern for over a decade.

The financial restructuring plan announced by government is expected to bail out the sector temporarily but in the long-term functional autonomy of discoms, reforms at the distribution level and investments to augment capacity is required to supplement the restructuring plan. Hence, power procurement cost reduction forms the strategic priority for most distribution utilities.

The current sources of power procurement are also a mix of sources from Central, State and Private sectors for most distribution utilities. The typical energy mix for Discoms is 80% Coal, 15% Hydro and the rest from other sources like Wind, Solar, etc. Short-term power purchase transactions contribute a very small fraction for most utilities.Some of the key reasons for increase in power procurement costs include,

• Rise in generation costs, primarily because of hike in fuel prices
• Transmission charges – inter and intra state

In addition to above, discoms has been facing challenges in assessing/forecastinginput energy demand due to the uncertainty of weather, T&D losses, changes in policy and other economical factors that drive industrial consumption. Most discoms uses mixed methods (trend analysis, in-house built tools, etc.) for load forecasting however, there is a need for national level demand side datasets to be made available for improving load forecasting. Although power purchase guidelines exist, discoms needs to be better equipped to deal with estimation of demand forecasting and scheduling.

Good load forecasting tools will help discoms manage variability in power procurement, which is a major challenge as of today. The demand for reducing power procurement costs is being driven through regulations and also due to the viability concerns for the discoms themselves. Hence, in order to reduce the power procurement costs, regulators continue to consider various policy level initiatives like driving O&M efficiencies of state generating plants, reduction in transmission charges, availability of imported coal at affordable costs and others.

Summarizing, given the high priority for power procurement cost reduction, the discoms need to undertake interventions like lowering of AT&C losses &hence quantum of energy procurement for same amount of revenue collections, use of load scheduling, power trading and banking, increasing renewable mix in power procurement (to mitigate rising fuel prices hike).