ENERGY AND SUSTAINABLE DEVELOPMENT

1. ENERGY AND SUSTAINABLE DEVELOPMENT By A. Anantha GM, REC

2. Sustainable Development Sustainable Development means ‘Development that meets the needs of the present day without compromising the ability of future generations to meet their needs’

3. Background In the last 50 years • Global GDP grew around fourfold • Despite high population growth rates in developing countries average per capita increase by about 30% • Adult illiteracy and infant mortality in developing countries cut by half

4. Concerns • Growing social stresses due to conflicts and inequality, poverty etc • Environmental degradation For Next 50 years • The global economy may grow further more than four folds • Poverty may reduce considerably

5. Govt. Attention Needed • To reduce poverty • Maintain Growth • Improve social cohesion • Protecting Environment

6. Energy Consumption worldwide India is 5th largest energy consumer. Per Capita energy consumption is very low. Source: BP Stats 2005

7. Energy Consumption in India Consumption by energy type in 2003 Source: BP Stats 2005

8. Energy Challenges Improve access to energy which is • Sustainable • Reliable • Affordable In order to • Alleviate poverty • Promote energy savings • Promote renewable and sustainable technologies

9. Energy Challenges for Sustainable Development • Tackling climate change • Promoting environmentally sound energy • Use of efficient technologies • Meeting growing energy needs • Capacity building

10. Energy Efficiency and DSM • Energy efficient technologies • Compulsory energy audit annually • End use efficiency • Demand Side Management measures like peak saving, time of the day metering etc

11. Energy Needs • For Urban areas- High Demand • For Rural areas- Varies from life line to medium demand

12. Sources of Energy In rural Areas (villages) • Fuel wood, biomass, biogas, kerosene etc • Decentralised electricity generation locally • Electricity supply through grid

13. The status of village electrification in India as on 31.03.2004 • Total No. of census villages – 587556 • Total No. of census villages electrified –474982 (81%) • Balance villages to be electrified – 112401 * (19%) * As per the new definition of village electrification (effective from 2004-05) total no. Of un-electrified villages is estimated to be 1,25,000 The status of household electrification in India • Total No. of households – 13.8 Cr. (2001 census) • Total No. of household electrified – 6.02 Cr. (44%) • Balance household to be electrified – 7.78 Cr. (56%)

14. Rajiv Gandhi Gramin Vidyutikaran Yojana (2005) • Create Rural Electricity Backbone • Wire villages/hamlets • Power to all BPL families – last mile connectivity • Electrify public places • Develop franchisees

15. Policy Targets As per Rajiv Gandhi Grameen Vidyutikaran Yojna, April 2005. in 5 years…. • Electrify all villages and habitants • Provide access to electricity to all households • Give electricity connection to Below Poverty Line (BPL) families free of charge. Through creation of : • Rural Electricity Distribution Backbone (REDB) with at least one 33/11 kV (or 66/11kV) sub station in each block. • Village Electrification Infrastructure (VEI) with at least one distribution transformer in each village/habitation. • Decentralised Distributed Generation (DDG) system where Grid supply is not feasible or cost effective.

16. Work in hand States 22 Districts 196 Villages 51,284 unelectrified + 74,615 electrified Households 72,78,758 As on 31.03.06 Additional 10,000 villages electrified under RGGVY (05-06)

17. Electrification of Villages (Projected) 38

18. Achievements/ Targets • 10,000 villages electrified by March 2006 • 40,000 villages targeted to be electrified by March 2007 • Additional 25,000 villages targeted for intensive electrification • Funds required Rs. 7500 crores i.e. about Rs. 600 crores per month

19. Challenges • Timely flow of funds • Holding price line of equipments • Creation of viable franchisees • Availability of reliable power

20. AT&C Losses-Present status (All India AT&C loss ) Source: MOP site/Power Finance Corporation / * State Electricity Regulatory Commission

21. AT&C Losses-Present statusAll India AT&C loss (contd..) Source: MOP site/Power Finance Corporation / * State Electricity Regulatory Commission

22. AT&C Loss % of various states(based on 04-05 figures)

23. Projections for Electricity requirement by MOP Source: Draft Integrated Energy Policy document 10

24. Source: Draft Integrated Energy Policy document 11

25. Household Energy Consumption in India (July 1999- June 2000) Source: Derived from NSS 55th Round, (July 1999- June 2000 data, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India 12

26. % of Rural Households Unelectrified The Current Situation • Large parts of rural India not electrified • Poor service levels – 12 to 15 hour power cuts common in several large states • Erratic voltage and rampant breakdowns • High AT&C losses

27. Illustrative Cost structure of SEB Supply (P/kWh) • Delivered cost to consumer = 662 P/kWh • AT&C loss of 48% • Distribution cost of 60 P/kWh • Transmission cost of 20 P/kWh & 7% losses • Cost of generation for servicing incremental load considered • Imperative that economic and fiscal policies should address the core issue along with the reduction in other underlying costs Distribution Cost & AT&C Loss Tr. Cost & Loss Generation Fuel Expense Generation Capital

28. Franchisee The Energy/ Electricity distribution and collection models should be on the basis of franchisees for a sustainable development

29. Indian Energy Scenario • Revenue Collection problems • India- 17% of world population, 4% of primary energy • Present pattern- predominantly fossil based • 56% of households unelectrified • Linkage between energy services and quality of life

30. Power Generation Options Power Generation Centralized (Grid Connected) Decentralized Distributed Generation (Isolated/ Grid interconnected) Cogeneration ( Export) Demand Side Management (Solar water heater, passive solar, Energy Conservation etc.)

31. Typical Village Load Profile Source Prof. Rangan Banerjee, IIT Mumbai

32. DDG- Issues • Execution at mass level • To contain tariff within affordable limits • To pursue/encourage private companies and local bodies • Local/ Consumer participation • Inconsistent SEBs policy • Mapping of energy resources • Low load factor • Standardization of units

33. Combination Of Grid And Off Grid Operations • DDG also to support grid power as a supplement • Minimum guarantee of supply hours to be given by the States/ State utilities at normal rates • Balance hours supply through DDG at DDG’s determined tariff • Average cost of supply through grid and off grid to be reasonable and affordable • To improve the PLF, if required, Power may also be exported to the grid or third party by paying wheeling charges, wherever applicable

34. Regulatory Issues - DDG • As per the Electricity ACT 2003 no license requirement for stand alone generation and distribution in notified rural areas • Interconnection with grid may bring State Regulatory Commissions in picture- Matter needs to be addressed • For stand alone system the tariff can be fixed by the operator, regulatory commission has no jurisdiction in such areas notified as rural • Private operators of DDG systems must follow certain guidelines to be notified by the Govt. of India regarding periodicity of increasing the tariff and the basis of increase • Safety regulations to be followed even for DDG as per the Electricity Act 2003

35. DDG- Policy Interventions • No Customs or Excise Duty to be charged • Income tax holiday for 10 years • No Electricity Duty or other levies

36. Talukas as Rural Economic Hubs • Talukas are manageable • Talukas can be self sufficient with local resources • Talukas may be converted to Rural Economic Hubs • DDG can meet the supplementary energy needs of the Talukas • Employment generation in Talukas would reduce migration to cities • Decentralization would work well for developmental goals and against economic deprivation • Give equal opportunity to all Talukas • Rural industries will get a boost • It will be sustainable

37. REC LTD. SHOULD BE THE APEX AGENCY FOR RURAL DEVELOPMENT AND REFINANCING BEING ALREADY SPREAD ACROSS THE COUNTRY AND BEING CONSIDERED FOR NAVARATNA STATUS

38. Way Forward….. • Need to improve Rural Energy Delivery systems • Encourage DDG as supplementary power option • Framing of Decentralised Distributed Generation Policy at National level • Develop talukas/ blocks as rural economic hubs for sustainability • Utilise RGGVY infrastructure for feeding power through DDG as supplementary power to protect the investments made under RGGVY • Priority to energy efficiency and DSM measures • Investments to be made in T&D sector to cut down AT&C losses drastically • Concrete efforts required by all stakeholders for sustainable development

39. Conclusion Growing energy demand and shortage of resources call for the urgency to focus attention on energy efficiency and demand side management besides reducing AT&C losses. Energy generation to be more decentralised also for meeting local needs through grid or off grid. Investments have to be made now with a vision for sustainability. All energy options to be exploited to the extent feasible

40. Thank You