Kerala State Electricity Board Ltd.

Empowering Kerala since 1957

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 SMART GRIDS :
INITIATIVES IN KERALA
POWER SCENARIO -
CHALLANGES

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 Remarkable Growth since inception

Installed capacity from 109.5 MW in 1957 to 2809 MW

in 2012
From one Hydel Project to 25 in 2012
Per capita consumption from 19 units(1957) to 502
units(2012)
Number of consumers increased from1,06,154 to 105
Lakhs.
Number of Domestic consumers increased from
99977 (1957) to 84 Lakhs
Currently consumption Growing at 7% Annually

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 Growth of Indian Electricity Sector

Installed capacity grown from 1362 MW in 1947 to

2,28,721 MW today
Electricity generation grown from 4073 MU in 1947 to
more than 8,50,000 MU today
Transmission & Distribution Lines increased from 23,238
km in 1947 to 79.5 Lakh km in 2011
Per capita consumption increased from 16 units in 1947
to 813 units as on 2011
Number of electrified villages increased from 3061 in
1950 to 5.37 Lakh in 2011
Currently consumption growing at 4% annually

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Indias Installed Capacity Today

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 Power Sector of the Southern Region

Tamil Andhra
Karnataka Kerala
Nadu Pradesh

Installed Capacity
16161 14227 14198 2822
(MW)

Maximum Demand
17497 18681 11258 3588
(MW)

Energy
109968 104529 67833 23354
Requirement (MU)

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 KSEB Ltd - Statistics
25 KSEB Hydel stations generating 2010.05 MW
5 Hydel IPPs & 2 Hydel CPPs (56.36 MW)
Total Hydel 2066.41 MW
2 Thermal stations (234.60 MW)- KDPP&BDPP
3 Thermal IPPs& 2 Thermal CPPs (560.71 MW)
Wind (KSEB 2.025 MW and 32.85 MW from private)
Total Inst. Capacity in Kerala 2896.595 MW
Today's peak demand is 3173 MW
Annual Energy consumption: 20758 MU
Required Annual Revenue: > Rs 10000 cr

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 Consumption pattern of Kerala

Keralas consumption is predominantly Domestic, which

accounts for 49% of the total consumption, which is only 22%
nation wide
Revenue from domestic consumers is only 30% of the total
revenue
Industrial consumption is only 30% in Kerala, while it is 45% at
the national level
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 Demand as per EPS and energy gap

Present availability from all sources is 3366 MW

Gap of 791 MW at present

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 Dependence on Import of Power including CGS

The energy availed

from stations outside
Kerala including CGS
during 2012-13 was
65% of the total
requirement, whereas
2013-14 Scenario

only 35% came from 3509

internal sources 8405

370 KSEB Generation
CGS
Thermal IPPs
Traders

8943

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 Evolving power market ..

Central sector generating stations had a significant role

and their generation was shared among states
85% power based on Gadgil formulae; 15% uallocated
quota distributed based on political decision of GoI
CGS power shared between regional constituents as per
Gadgil formula; Keralas entitlement around 8%
Allottees used to enter PPA with CGS, tariff was not a
consideration as both were Govt. entities

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 Gadgil formula and CGS share

Electricity Act 2003 allowed any investor to put up plants

without Govt. license
Allocation from the CGS to the States through Gadgil
formula is no more in place
After January 2011, utilities cannot buy power through
PPA route even from CGS, but only through tariff based
bidding

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 The share of IPPs

Role of private sector in power generation is increasing

Share of IPPs in the total installed capacity of the
country has increased from 13688 MW (11%) in 2005 to
72927 MW (32%) today
A large chunk of new infrastructure projects in power is
expected from private sector
DISCOMs are to source power through Case 1 bid from
such projects or DISCOMs can initiate such projects
through Case 2 bid and own the entire power from the
plant

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 DISCOM without CGS power

Without Gadgil formulae and CGS power, life of a

DISCOM is Vulnerable
However, KSEB has been exploring an opportunity
even in this threat scenario
Out of the total expenditure of KSEB, 70% is accounted
for power purchase/generation

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 Cost of CGS Power emerging trends

The tariff of recent CGS plants (Vallur, Simhadri and

Jhajjar) are in the range of Rs 3.80, 3.90 and 5.30 per
unit; average Rs 4.20 per unit
The indicative tariff of upcoming CGS (Kudgi,
Pudimadakka) are over Rs 5.50 per unit
In other words, CGS allocation need not mean power at
optimal cost

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 Concerted effort to source cheaper power

Medium term power procurement tied up from 2014 to

2017
400 MW tied up from two public sector power trading
companies
Average cost Rs 4.50 per unit
This is cheaper than new CGS on offer

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 Concerted effort to source cheaper power Contd

400 MW of long term power procurement tied up with

TATA Maithon and DVC
Procurement for 25 years from 2014
Rates determined by CERC
Cost of power works out to Rs 3.65 per unit

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Concerted effort to source cheaper power Contd.

Case 1 bid initiated for 450 MW from 2016 onwards

25 year power procurement
Encouraging bid participation from 24 bidders
Price bid to be opened within two months time
Rates likely to be lower than new CGS power

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 Concerted effort to source cheaper power Contd

A bid for further 400 MW invited

25 year period starting from 2017 onwards
Bid process to be completed by August
It is for the first time that bids are invited for the entire life
of the plant
KSEB has taken a strategic shift in tying up power
purchase through long term contracts
Long term contracts help a predictable cost over a long
tenure

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 Considerations for tariff policy

As of now, 70% of ARR is for power procurement

Short term power prices are highly volatile
The cost uncertainties reflected heavily on revenue
requirement and hence on the tariff
This strategic shift of making an opportunity out of
threat, by shifting to long term tie ups of 1250 MW
would enable KSEB to optimize on power procurement
cost

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 Power procurement cost vs other expenses

20% of ARR is salaries and pension

10% is on interest and finance charges and other
operational expenses
Even if establishment costs are slashed by 20%, the net
saving will only be 6%
Slashing 20% is also not realistic mandatory increase in
DA, statutory payments, committed finance charges and
optimal maintenance
More than this saving can be achieved through long term
power tie ups

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 Other attempts

Efforts initiated to right-size KSEB and professionalise at

various levels
IIM-K study progressing
Post corporatisation master trust being created for
pension payments
Possibility for swapping loans to be explored once
interests rates are reduced by RBI
Hoping to cover unbridged revenue gap in ARR in the
next 2 years
Need for a broad consensus on long term tariff policy with
moderate annual increase pegged to an appropriate level
of annual inflation

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 Why internal generation is important ?

Stable grid requires that sufficient energy is generated

within
Transmission of energy over long distances require huge
investment, which add to the cost
Insufficient transmission capacity shall always be a
concern to Kerala due its geographic positioning
Extraneous factors in remote locations should not hold
consumer to ransom
- Energy security requires that a reasonable share of the
demand is met from internal sources

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 Role of Hydel Generation in tariff

Keralas own hydro generation is to the tune of 6500 MU

Without this power procurement cost of KSEB would
have been still higher
Though capital intensive, hydro power is cheap as there
is no recurring fuel charge

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 Hydel and environment

Despite having projected potential of about 6000MW,

Kerala could develop only about 2050 MW of hydel
capacity so far
With increasing concern over environment, the trend is
shifted towards small and micro power plants
Even for SHPs issues of land acquisition, contract
management and environmental clearance (Mankulam,
Thottiar, Ankkayam)
Moreover generation from such plants are infirm and
more capital intensive

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 Significance of renewable sources

State is avowed to the development of renewable energy

sources to the fullest
Land being scarce, utilisation of waste land is a priority
for installing solar power plants
KSEB with NHPC plan to set up 50 MW solar project at a
marshy plot in West Kallada
Roof top solar shall be another ideal choice, for which
KSEB has many projects on the anvil
Despite the adverse terrain conditions in potential areas,
Govt. is taking all efforts in developing wind energy with
the help of private developers

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 Renewable sources - Grid connectivity

Grid connectivity is essential to the economy of small

renewable plants, especially solar
In spite of the imperfections of the LT grid, connectivity
shall be provided to plants developed as per relevant
CEA standards
Renewable energy technology at the present level,
without storage provisions, shall not be of much benefit
to the grid so long as it is not dispatchable

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 Renewable energy contd

A subsidy driven renewable energy program is neither

scalable nor sustainable
Case of subsidy driven roof top schemes
Flagship terrestrial JNNSM program has pegged the cost
of power at Rs 5.50 per unit plus Viability Gap Funding
Is this tariff for day time power affordable ?

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 Need for large capacity base load plant

The energy gap of 771 MW at present, which shall

increase to 2700 MW by 2022, cannot be filled up
without having large capacity base load plants set up
within the state
What options do we have?
- Hydro ?

- Coal ?

- Natural gas ?

- ???

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 Developing Projects in Kerala

Natural gas projects as peaking stations

Seek APM gas to reduce cost
These stations could be run as base load stations in
exigencies and serve as strategic capacity for the State
~ 1000 MW power could be absorbed in this manner
Brahmapuram (350 MW) and BSES (157 MW) have initial
advantage of existing pipeline
Kayamkulam Stage I (350 MW) conversion already in
progress
Kayamkulam expansion (350 MW share) may be considered
once pipeline is ready and other beneficiary States agree
Proposal for tariff pooling taken up with GoI
Utilizing Pet Coke only constraint is land availability

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 Developing Projects in Kerala contd

Possibility of getting back Baitarni Coal block is high in

the changed scenario
Project report for 2 X 660 MW ready
Environmental concerns are addressable
Will solve the issue of power availability in Malabar
region substantially
Need to be positioned as a initial step for comprehensive
development of one of the most backward districts
Tariff will be affordable and reduce total cost of power
procurement substantially

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Critical Bottlenecks in Transmission

360 MW

1500 MW

440 MW
NEW Grid S1 S2

Kerala

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 Critical Bottlenecks in Transmission Contd

The reason why we had to resort to load shedding in

recent times is mostly due to extraneous reasons with
transmission lines
There is a strong case to build up sufficient intrastate
and interstate transmission capacity
Local interests play against the construction of many
lines
A case in hand is Edamon-Kochi 400 kV line, which is
held up on petty interests denying the import of power
from Koodamkulam

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 Distribution an overview

Kerala is proud of its distribution network, which probably

links to every household
But longer LT lines inevitably add to more distribution
loss
Dispersed demography does not permit the ideal HT-LT
ratio of 1:1
Despite the above, the T&D loss of Kerala is well above
the national level

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 DSM measures in a subsidized energy market

Studies point to a scope of saving 10 to 15% of energy

through DSM measures
DSM demands for greater consumer involvement
In a subsidized energy market as in Kerala, consumer
rewards on conservation is not compensated in
economic terms
Inefficient KWA pumps, Petti-Para, Hi-mast street lights

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 Strategic shift of KSEB Ltd
Long term contract Renewable DSM

The important strategic shifts recently made in the

management of KSEB
- Focusing on long term contracts and curtailing short

term operations in energy procurement

- Maximum emphasis on renewable energy in line with

popular expectations and global thinking

- Better reaching out to the consumers through and for

DSM measures

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 SMART GRID - Introduction

Present grid system is facing many problems like:

1 Increase in demand.
2 Unavailability of funds.
3 Large losses incurred.
4 Difficulty in load management etc
Over the past 50 years, electricity networks have not kept

pace with modern challenges.

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 SMART GRID Introduction contd

Smart Grid would be the solution for the above explained

problems.
Solution for what distribution system can and should look
like in the future.
Provide full visibility and pervasive control over assets
and services.

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 SMART GRID Introduction contd

Convergence of information technology and

communication technology with power system
engineering.
Expected to emerge as a well-planned plug-and-play
integration of micro grids.
The expected distribution system of the future is as
shown below:

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 The following diagram depicts the foundation and layers
on which smart grid structure is built.

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 SMART GRID Definition

A smart grid is defined as a grid that accommodates a

wide variety of generation options, e.g. central,
distributed, intermittent, and mobile.
Smart Grids cannot and should not be a replacement for

the existing electricity grid but a complement to it.

The organic growth and evolution of the smart grid is

expected to come through the plug-and-play integration

of certain basic structures called intelligent (or smart)
micro grids.

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 SMART GRID Benefits

Outage improved customer service.

Loss detection improved network operation.
State estimation power flow on the distribution grid.
Consumer load management flattened load curve.
Self-healing.
Motivates & includes consumer.

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 SMART GRID Inference

Exciting yet challenging times lie ahead.

Smart grids will have advanced metering, robust
communications capability, extensive automation,
distributed generation, and distributed storage.
A technical advancement that our country should look
into so as to meet the energy crisis.

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 Folder for thought

Without more internal generation where we are heading

towards ?

Can we sustain without a large capacity coal based plant

in the coming 5 to 10 years ?

What does it mean to us that the future nuclear plants

shall be Thorium based and our sea shores are an
abundant reserve of Thorium?

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Thank You

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