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Failing Monsoon: Impact on Power Supply and Remedial Measures, Shri R V Shahi, Former Secretary, Ministry of Power

India is faced with, in recent years, one of the worst monsoon rains this year. Already almost half of over 600 Districts of the country have been declared drought hit. In this brief paper, we would discuss the limited issue of the adverse impact of drought on electricity generation, particularly in the hydro electric plants, and also deliberate on some suggestions to mitigate the situation. As of 20th August, 2009 the average decline in water level in the various river basins, compared to last year, is almost 33%. Last year, these river basins had more than 88 billion cubic meters of water, and this year it is only 59 billion cubic meters. The live capacity of the storage at FRL is about 152 billion cubic meters. Even if we take the normal storage, as an average of last 10 years, which would include good, bad and normal monsoons during this period, it is over 79 billion cubic meters. This year's reserve is hardly 74% i.e. 26% less than the normal. The Table below gives the basin-wise details of current storage and status of the extent of reduction as compared to normal:

Water Level on August 20 (in billion cubic metres) Source: CWC

River Basin This Year Last Year Normal (10-Yr Avg) % Departure from normal
Ganga 5.46 12.31 9.34 -41.50
Indus 5.13 12.96 9.50 -46.20
Narmada 6.95 6.97 5.48 +26.58
Tapi 2.26 2.80 4.30 -47.57
Mahi 1.36 1.8 2.14 -36.36
Sabarmati 0.18 0.24 0.26 -29.77
Kutch rivers 0.27 0.27 0.33 -33.83
Godavari 2.33 3.94 6.5 -64.08
Krishna 18.14 24.28 21.26 -14.65
Mahanadi & Eastern Rivers 3.82 8.65 7.13 -46.39
Western Rivers of South 8.37 8.49 8.67 -3.50
Total 59.06 88.25 79.25 -25.97
Source : Business Standard, August 27, 2009

It may be seen from the above Table that in some of the river basins the water level is very adverse. Godavari is the worst at 64% departure from the normal. Similarly Indus, Tapi and Mahanadi have around 46% departure from the normal. In the remaining part of the rainy season, it is unlikely that the situation would improve significantly.

For the year 2009-10 the target of electricity generation is about 790 billion units. Though the installed capacity of hydroelectric plants constitutes about 25% of the total capacity, since the Load Factor on these plants ranges between 40 to 50% only, the power generation from these plants constitutes only about 15% of the total power generation. A 26% decline in the availability of water would mean that at the most the hydro power generation would affect the total generation by about 3.5 to 4%. Though, this impact appears somewhat low, the problem gets accentuated because the supply is already about 8 to 10% less than demand on average basis and the shortage is about 14% during peaking hours. Therefore, the diluted impact of reduced hydro generation has to be seen in the context of a severe shortage situation which we are otherwise also facing, and would have faced, even if we had a normal or better than normal monsoon. We also need to take note of the fact that a large number of hydro power plants - whether run-of-river or storage - are expected to generate power to support peak demands during morning and evening peak hours. The merit of hydro plants is, therefore, rightly judged not by the overall generation of electricity that it delivers but by the support that it provides during the peak hours when the demand throughout the country is more by about 30% of the average, and more than 50% of the minimum load. Thus, while it would be right to say that a 25% reduction in rains and, therefore, availability of storage would only have a marginal impact on availability of power, it would be wrong to say that we would afford this and could manage it easily. Infact, we need to take due note of the situation and prepare well in advance, so that we are able to minimise the impact of this problem throughout the year. At this stage, I also consider it relevant to mention that the supply problem is likely to worsen not only on account of lesser availability of water, but also it is likely to be compounded because of the increasing trends in demands for power. It is in this context that I would like to make a few suggestions as Action Plans to mitigate the likely hardships.

  1. It has been generally experienced that in situation of shortages, the hydro power plants are asked to generate even when the reservoir levels are low, throughout the year, to meet the crisis situation. And, as a result, when the crisis further deepens, there is practically no availability of water. The temptation to use whatever is available leads to extreme shortage at a time when it is needed most. It is, therefore, suggested that each hydro power generation plant should make a comprehensive plan of action for the whole year till the next monsoon, analyse the demand pattern for the whole year, and balance consumption of water and conservation of water, so that whatever is available is used in the most optimal way. In this plan, of course, due care has to be given for the demands that would be placed for drinking and irrigation. As mentioned earlier, the drought situation in half of the country would obviously lead to pressures for use of water for these purposes.

  2. Even in normal situation, we have been experiencing the shortage of supply of coal from various domestic coal companies. Number of power stations holding critical and supercritical stocks have been on the increase. No doubt, coal companies are steeping up production, yet when we need to generate more during the year from our coal plants to mitigate the problems arising out of failing monsoon and at the same time on account of new capacity additions, the requirement of coal will be even higher and the domestic supplies may not be able to cope with such increased requirements. Right from the year 2004-05, Indian power sector has experienced increasing gaps between the requirement of coal and ability of domestic coal companies to fully meet the requirement. Initially there was a lot of reluctance even on the part of several power generating utilities to import coal and match the gaps. I understand that such reluctance, though substantially diluted, continues even now. Perhaps one of the reasons is the procedure of procurement and also some of the problems that got associated with such imports leading to investigations and enquiries against concerned officials. While the pressure on coal companies should continue, any cold hearted approach on the part of generating utilities for importing coal, where needed, will not be desirable. Power utilities must recognise that if generation can be stepped up and Plant Load Factor can be improved, no other issue should stand in the way to meet this by import of coal. If the power sector imports 7 to 10% of coal required, it would be possible to achieve what we want to achieve. It is true that when our demand for imported coal increases, it does have an effect on the price of coal. But what we need to appreciate is that from the existing plants any additional generation based on imported coal, which can be blended with domestic coal, is achieved only by marginal cost of fuel, because the fixed cost of the power plant, in any case, is the sunk cost. In our regulatory dispensation also, the additional burden on account of higher cost of imported coal is a pass through and rightly so because, as mentioned earlier, the additional generation so achieved has mainly the burden of fuel cost. Increased amount of import of coal, however, brings with it the issues concerning adequacies in ports and the evacuation arrangements from beyond the ports. I recall, in the year 2005 when we were trying to increase the import of coal from 15 million tonnes annually to 20 million tonnes, we needed to interact with various ports through Ministry of Shipping and Transport for augmenting the handling facilities and with Ministry of Railways for onward movement from ports to power plants. During last few years, definitely these capacities would have been enhanced. But, there would be a need for a thorough reality checks on various aspects, so that mismatches, if any, are identified well in advance and necessary actions taken to meet the requirement of needed imports. Ministries of Power, Railways and Transport and Shipping together with generating utilities need to work out a Detailed Action Plan based on the likely supplies of coal from domestic sources and the gaps that might exist keeping in view the demands. Sensitivity analysis may also be done, so that if there are any shortfalls from the assured supply from domestic coal companies, these are met through enhanced imports. This would need to be not only planned, but regularly monitored. Experiences of the past have demonstrated that for variety of reasons the sector has lost generation in the coal based plants, because domestical coal was not sufficient and the required quantities of import could not be effected in time.

  3. Though the gas based combined cycle power plants constitute less than 10% of the total installed capacity, during the current year, to tide over the problems caused by inadequate rains, their contribution could be very meaningful. In the past, these plants could be operated only between 60 to 65% Plant Load Factor on account of shortage of gas. Now that the KG Basin Gas is being produced, we may ensure that the utilisation in these plants improves. The gas that has been allocated will no doubt, enable these plants to operate much better than they were able to do in the past. But, the allocation will not allow them to perform at their potentials. These plants could definitely be expected to perform at 95% Plant Load Factor, if not more. Ministry of Power may take up the matter with Ministry of Petroleum that if not on a regular basis, atleast during this year, to address the monsoon linked problem, they enhance the allocation in all the gas based plants corresponding to atleast 95% Plant Load Factor. However, for any reason if this is not done, we may not leave the matter just there. We need to adopt the second strategy of matching the gaps with imported LNG. Here again, the caution is that there could be reluctance on the part of power generating companies because of higher cost of LNG. The fact that needs to be appreciated is that from the existing generating capacities, whatever additional electricity is produced, the cost would be mainly of fuel. The trade off, therefore, has to be worked out properly.

  4. Another potential source of supply to handle the situation would be the captive power plants. This route has always been available. But, where we have failed, in many cases, to tap this source of supply, is because of lack of advance planning and more importantly lack of appreciation of commercial stands of the involved parties - the generator and the buyer. What would be needed to smoothen this process would be a proper administrative intervention to facilitate this and also a regulatory support, so that any commercial uncertainties are eliminated.

  5. Combined Heat and Power Systems of different modules, which have very short gestation period to be established, could also be an effective solution. I understand that these systems, which could be operated on city gas distribution network of gas, can be set up in less than six months in a modular way. Even on open cycle their efficiency is expected to be more than 45% and on combined cycle more than 50%. It is reported that their sensitivity to partial load operation or to ambient temperature is significantly less than Combined Cycle Frame Machines. With the increased allocation of gas for city gas distribution system as also due to the higher production of gas in coming months, it should be possible to quickly set aside certain quantities which could be allocated to such Combined Heat and Power Systems as also to these engines which may be operated as combined cycle power plants.

  6. In all the above cases, there would be a need for a proper appreciation of various actions by Regulatory Commissions. If hydroelectric power, as stipulated in the annual revenue requirement of distribution utility, is not fully available and it has to be substituted by power procured through other sources, as mentioned above, there has to be an in principle consent from the Regulatory Institutions that necessary adjustment will be allowed during the year as an additional component of the retail tariff. This is being emphasised because in the past many Regulatory Commissions have not only been indifferent to solving such crisis situations but were totally unable to take timely decisions on these commercial issues. As a result, many distribution utilities did not come forward to take advantage of a potential additional generation which could have been made available.

  7. The problem of power shortage this year may perhaps lead to a very major initiative which has not been put in place so far as a national initiative to price peaking power both at bulk level and retail level significantly higher than the average price. This has, therefore, not facilitated the management of peaking load in an effective manner. Either the Forum of Regulators generate consensus to price peaking power atleast 30 to 40% costlier, so that Demand Side Management helps in mitigating the problem, or the Government of India brings a Supplement to the Tariff Policy to effect this arrangement. Unless at consumer level there is an appreciation that power could cost significantly higher during the peak hours, power purchase through Trading or through Power Exchanges at rates of Rs. 10 per kwhr or more will not be able to effectively handle the peak load problem.

  8. Energy efficiency and energy conservation have always been relevant and they will continue to be so. Bureau of Energy Efficiency under the Ministry of Power has been bringing out a number of initiatives. Implementation at State levels needs to be intensified. Perhaps the problem of this year could be profitably used to bring home the point and inspire the State Energy Departments and other concerned agencies about the urgency of the situation. This would definitely make its visible contribution to partly solve the power shortage that could be created on account of reduced hydroelectric generation and also on account of increased demand.

A well co-ordinated and orchestrated Action Plan initiated by the Ministry of Power and Central Electricity Authority, with full involvement of State Energy Departments, generating utilities, distribution utilities and Regulatory Commissions (Forum of Regulators), prepared well in advance, with appropriate mechanism for periodic monitoring, will be able to address the situation that has been caused, and that may perhaps accentuate, on account of the unprecedented shortfall in rain this year.