“Privatization will be key to ensuring profitability and operation efficiency for the power distribution sector.”
I feel major reforms need to be initiated in the power distribution sector to address the challenges facing the power sector. Privatization of the sector will be key to ensuring profitability and operation efficiency for the sector. The recent announcement privatizing the DISCOMs in Union Territories was a significant step in this direction. Increased private sector participation in power distribution will not only help DISCOMs deal with the growing financial stress but also enhance the quality of services, says Jaideep Mukherji, CEO, Smart Power India, an arm of The Rockefeller Foundation, in an exclusive interview with Manu Tayal, Associate Editor, Energetica India. Mr Jaideep discussed in detail about various topics including role of mini-grids in Covid-19 scenario, their significance in rural India, possible solutions for Discoms financial distress etc. Here're the edited excerpts
“What is the motive behind formation of Smart Power India, its vision, and achievements so far? Shed some light on it in brief.”
Smart Power India, a subsidiary of The Rockefeller Foundation, was established in India in 2015 with the aim of extending power to those without sufficient access to reliable and quality electricity. Our vision is to drive economic progress by ensuring reliable electricity is accessible for all, especially among the underserved communities in rural India. In order to achieve this goal, SPI is working to build and nurture ecosystems that promote sustainable and scalable models for delivering reliable electricity. We have been working very closely with a wide range of stakeholders to develop the ecosystem needed to conceptualise, catalyse, develop, and scale up the Distributed Renewable Energy (DRE) mini-grid sector in India.
Our efforts and interventions in ensuring reliable and quality electricity have led to the following positive changes in the rural communities:
• Providing electricity to 321 villages in India across the states of UP, Bihar and Jharkhand, impacting over 250,000 people
• Serving over 237 electricity-based micro-enterprises which have been directly incubated by SPI across these 321 villages
• SPI has also supported mini-grid sector’s policy engagement to align narratives between government, investors, and energy service companies.
• SPI is also now working towards improving the quality of on-grid electricity supply and services in rural areas in collaboration with the state governments and DISCOMs.
“How do you see the current state of electricity access in India? What will be your suggestions to achieve 24x7 power for all?”
I strongly feel that Government initiatives such as DDUGJY, UDAY, SAUBHAGYA schemes have helped us in achieving significant strides in bringing 100 percent village and household electrification in the country. However, with improved electricity access, it is also important that there is an enhancement in quality of supply in a sustainable manner. While many states have managed to create a financially healthy distribution system, some states still lag behind in this area. Therefore, to ensure uninterrupted quality and reliable electricity access, there is a need to focus on the demand side problems, especially, poor customer service and inadequate distribution network.
Decentralized distributed generation: The government could introduce Decentralized distributed generation. It will bring in innovation to rural remote areas and help in providing affordable and reliable electricity to all customers, through off-grid and grid integration models.
Smart Grids and Smart Metering: The government could also start promoting Smart Grids and Smart Metering, which will bring in investments in technology & innovation that will contribute to providing affordable and reliable electricity to all customers. Smart Grids and Metering ecosystem will also introduce transparency through real-time monitoring of electricity supply thus enhancing customer service.
Distribution Franchisees: Currently, different models are being followed for appointment of Distribution Franchisees across states. This has led to mixed outcomes of success and failures of the franchisees. Thus, building upon past learning a robust framework may be formulated, comprising of a standard set of models and bidding documents for distribution franchisee. The performance monitoring parameters of Distribution Franchisees should also be clearly laid out in the guidelines, to enhance electricity supply and customer service.
“How mini-grids played a role at village level in India so far? What scope could you see in near future?”
I believe mini-grids play a crucial role in ensuring reliable electricity for both lighting and productive use in rural India where grid-connected electricity is found to have gaps. In the last 5 years, we have been able to set up more than 300 renewable energy mini-grids cumulating to 9.2 MW of capacity across Bihar, Uttar Pradesh, and Jharkhand. The electricity from these grids is transforming the lives of more than 2,49,777 people, by not only providing electricity for lighting but also powering fans, electric pump-sets, appliances, and motors for productive uses.
As per the World Bank estimates mini-grids have the potential to provide reliable electricity to as many as 500 million people by 2030. I believe in a geographically vast country like India where grid-connected electricity has not reached many remote regions yet, mini-grids could play a critical role in providing reliable power to the households and micro-enterprises. Over the past decades, the cost of mini-grid services has declined significantly with a substantial increase in service quality. Further, the integration of mini grids into the national grids will strengthen the mission of providing reliable power for all. The changing scenario of rural electrification in India has provided SPI an opportunity to diversify its strategy beyond mini-grids and conceptualise and develop models that can contribute to the government’s priorities of expanding the grid infrastructure enabling electricity access and power for all. This will help SPI leverage its know-how of last mile connectivity and customer service and support government initiatives.
“What impact have you seen of Covid-19 on the operations of mini-grids in India? Any case study to share?”
As lockdown affected the grid-connected electricity supply, mini-grids provided reliable power. Even though mini-grid services remained disrupted in areas under containment, consumer satisfaction continued to be high. Despite the services, MGOs suffered major losses in revenue collection as many customers could not pay their electricity bills on time. The revenue collection in April was only 25% of the MGOs usual monthly average. We were fully aware that lack of employment and subsequent shortfall in income will definitely affect the customers’ ability to pay the electricity bills. As a result, all ESCOs deferred their bill collection during lockdown period and communicated with the consumers through their registered mobile numbers. Moreover, unlike the grid-connected distributors, mini-grid operators have a strong customer connect and customer care service system in place. As a result, they are able to address the customer grievances in a time-bound manner, issue new connections quickly and ensure reliable power supply at affordable rates.
“In your view, what are the biggest challenges for the power sector currently? What will be the possible solutions for the same?”
Power generation and transmission sectors are doing relatively well. A major part of the problem currently lies with the distribution sector. Therefore, I feel major reforms need to be initiated in the power distribution sector to address the challenges facing the power sector. Privatization of the sector will be key to ensuring profitability and operation efficiency for the sector. The recent announcement privatizing the DISCOMs in Union Territories was a significant step in this direction. Increased private sector participation in power distribution will not only help DISCOMs deal with the growing financial stress but also enhance the quality of services and foster healthy competition, giving consumers multiple options to choose the right distributor-based on performance.
“What will be your key suggestions to improve the financial health of the distribution companies (Discoms) in India?”
India in recent years has emerged as one of the leaders in providing access to electricity to its citizens, almost doubling the access rate in the past 20 years from 59.4% to extending grid connections to 100% households in the country. This has been made possible through a multitude of efforts, including enhancing power generation to reduce supply deficits, strengthening the backbone of the electricity supply infrastructure, and ensuring last-mile connectivity for different customer segments. However, impediments to providing reliable and sustainable power supply across the country, still exist, impacting the financial viability and operational efficiency of Distribution companies (DISCOMs).
The following reforms, I believe, can bring about improved financial performance for DISCOMs:
A) Improve the organizational efficiency
In order to improve reliable electricity access and create preference among end users, DISCOMs first need to plug the existing gaps such as inaccurate billing, and lack of awareness among customers around collection processes. For example, infrequent billing often leads to accumulation of unpaid bills. Customers find it difficult to pay the accumulated bills later. This in turn affects DISCOMs’ collection efficiency, affecting the financial performance of DISCOMs. The new electricity connection process needs to be further simplified for household and non-household customers. Currently, the average time it takes to get a new connection in rural areas is 65 days. This can be brought down and be made customer- friendly with minimal documentation requirements. This will not only improve customer satisfaction but also have a positive effect on DISCOMs’ overall performance and demand for new connections.
B) Strengthen customer engagement and grievance redressal
It is critical to have an effective grievance redressal mechanism to safeguard customer’s interests and provide high quality services. Areas such as billing and collection, complaint redressal, and customer services need special attention from DISCOMs which, if worked upon, can dramatically increase customer satisfaction. Standardized customer interface processes, customer engagement/relations department, enforcement of Standards of Performance established by the State Electricity Regulatory Commission, and increased social media interface can help DISCOMs improve their engagement with customers and promote adoption of new connections among rural customers.
C) Speed up technology upgradation
The next phase of growth in the distribution sector should be led by innovative technological solutions that will not only enhance quality of services and ensure reliable power supply, but also help reduce DISCOMs’ losses. Smart Grids and Smart Metering ecosystem will further introduce transparency through real-time monitoring of electricity supply and improve operational efficiency and bill collection processes of DISCOMs.
D) Implement data-driven planning for all future investments in distribution infrastructure, with a focus on improving reliability and quality of supply
New infrastructure plans should include reaching 100% coverage of customer and system metering. This will enable utilities to monitor energy consumption and losses at various voltage-level areas. System metering would include installation of boundary meters, feeder meters, and DT meters. To improve the level of power reliability and quality they deliver, utilities must now focus on the capacity and condition of their infrastructure. Each utility should have a detailed infrastructure investment plan based upon the intraday load pattern, load flow analysis of individual circuits, and infrastructure capacity. Also, utilities need to conduct a cost-benefit analysis for each component of their infrastructure investment plan.
“How do you see the road ahead for India’s ambitious plan for ‘One Sun, One World, One Grid’ (OSOWOG)?”
It was a great initiative by the Prime Minister to connect the world to ‘One Grid’ and build an ecosystem of interconnected renewable energy resources. But recently, the Union Ministry of New and Renewable Energy (MNRE) has put requests for proposals for this initiative on hold till further notice. Under the current geopolitical circumstances and COVID-19 pandemic, the road ahead looks uncertain for the initiative despite the noble intention behind. But I feel that India should continue to lead the discussions with other like-minded countries and iron out the existing differences to see the initiative through.
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