Dynamic pricing and Time-based pricing (Time-of-Use Tariff) may emerge as the new reality in the power sector
Around the globe, electricity generation, transmission and the distribution landscape have been rapidly changing. The emergence of multiple sources of power, including renewable sources like solar and wind, enforces changes to the age-old practice of injection of power through limited points. Especially rooftop solar-power production necessitates multi-point power injection into the existing grid. Multi-point injection and withdrawal along with the intermittent nature of renewable supply necessitate efficient and smart grids. This means the aging grids need modernisation and automation to achieve multiple objectives of providing reliable, affordable, and uninterrupted power to domestic, commercial, and industrial consumers. Further, smart grids have been successful in minimising transmission and distribution losses in many developed countries. The European Union (EU) targets to phase out 80 per cent of existing electricity meters by efficient smart meters by 2020. It is estimated that smart metering and smart grids rollout could reduce emissions and household energy consumption to the extent of 9 per cent in the EU. Implementation of smart metering and smart grids in India could have a similar or greater impact.
Policy goals are critical in shaping up transformation and modernisation of the existing grid system in India. Acknowledging the changing dynamics, the Government of India developed ‘Smart Grid Vision and Roadmap (SGVR) for India’ in 2013. The SGVR intends to cut down transmission and distribution losses through large-scale implementation of smart grids solutions — which can help monitor, measure, and control real time power flows. The Smart Grid solutions are expected to deliver multiple benefits like greater renewable integration, improving supply of reliable and quality power, reduction in power purchase costs, and emission intensity. Under the SGVR, enabling programmes are designed to reduce Aggregate Technical and Commercial (AT&C) losses below 15 per cent, 12 per cent and 10 per cent by 2017, 2022 and 2030 respectively. As per UDAY dashboard, the current AT&C losses in the country, excluding Sikkim, Arunachal Pradesh, and Mizoram, stand at 20.51 per cent, almost 5 per cent lower than 25.48 per cent in 2012-13.
Under the National Smart Grid Mission (NSGM), 17 pilot projects, including 13 pilot projects with an evaluated project cost of Rs 939.65 crore with government support of Rs 340.88 crore, are under various stages of implementation across the country. On successful completion of the above projects, over a million consumers are expected to benefit.
Massive investment is required for renewable energy grid integration and smart grid development. Investment to the tune of Rs 22, 236 crore in green energy corridors and integrating schemes for Ultra Mega Solar Parks could address intermittency of renewable power integration to the national grid. The areas which need systematic investment include smart grids and energy storage, smart technology development, and capacity building through training. The Smart Grid Knowledge Center (SGKC) being developed by Power Grid Corporation with funding from Ministry of Power would address a training gap in the future.
Smart Grid requires deployment of Information & Communication Technology (ICT) and IT infrastructure to manage: advanced Meter Infrastructure, peak load, power quality measurement, power outage, micro-grids, and distributed generation. In the context of greater application of ICT &IT, cybersecurity would be critical to successful implementation and operations of smart grid in India.
Dynamic pricing and Time-based pricing (Time-of-Use Tariff) may emerge as the new reality in the power sector. Implementation of dynamic pricing means users may have to pay different prices for electricity consumed at different times of the day, subject to varying cost of supplying electricity. Therefore, educating customers may be a challenge. Further, the distribution companies (Discoms) must be sensitised to understand consumer response to dynamic pricing.
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