The start to the third decade of this century has seen the COVID-19 pandemic spreading like wildfire across the globe disrupting daily life as we know it.
The Indian power sector, which acts as a bedrock of livelihood in the country, is not immune to this force majeure event. Our Marketing Head, Mr. Yash Kulkarni shares his thoughts on the impact of COVID-19 on the power sector in India.
1. How difficult would it be for Utilities to maintain the same CAPEX budget?
After sitting at home for more than a month, personally, I feel the future looks bleak and unpredictable. India’s economy has come to a staggering halt and the IMF forecast for 2020 shows that India’s growth rate will be at 2% if we are lucky.
With all the factories and industries shut down, the demand for electricity has dropped by over 20% at the national level as per our internal studies. The electricity value chain to a large extent is a unidirectional system – barring the advent of new distributed systems, but that’s a topic for another day!
To ensure better governance and healthy competition, the Electricity Act, 2003 forced large monopolistic public sector companies to split into three major sectors. We have the generation sector that consists of large electricity generation stations that are typically located in remote locations. Then we have the transmission sector that serves as a highway to transmit the generated electricity from one end of the country to the other. And lastly, we have the distribution sector that supplies the electricity to its point of use, that is, to us consumers.
As we consume electricity, our energy meters calculate our usage and accordingly generate the power bills. Cash in the electricity sector flows in the opposite direction – from consumers to distribution companies to transmission companies and finally to the power generation companies. The complex electricity tariff structure also charges a higher rate to industries and commercial establishments than domestic consumers.
With industries now locked down due to Covid-19, the distribution sector that is already making losses will further choke up the cash flow to upstream companies, creating a domino effect. We are already seeing Utility companies planning a deferment of their planned CAPEX-heavy projects till the lockdown situation improves. However, while Utility companies are assuring everyone that they will proceed with regulator-approved projects at a later stage, the choked up cash flow may create issues and further delay these projects.
In my opinion, it is therefore up to the Ministry of Power and the Central Electricity Regulatory Commission (CERC) to make sure that there is enough liquidity and quick approvals to ensure business healthiness in the power sector. After all, a healthy power sector is critical for the revival and growth of the Indian economy.
2. If Utilities trim their CAPEX budgets, what would be the impact on the procurement of T&M instruments?
As mentioned in the above point, a slowdown in the procurement of components required for CAPEX-heavy greenfield projects is inevitable.
However, ensuring an optimally functional electricity grid is pivotal for the successful revival and growth of India’s economy. When industries reopen, and the demand for electricity rises again, the onus of ensuring that all power assets perform efficiently, will lie with experienced Operations Engineers of Utility companies.
One of the major reasons cited for the 2012 grid failure in India was a sudden inrush current at a high voltage transmission network that resulted in cascading tripping of Circuit Breakers and consequently damaged critical assets like power Transformers and Reactors.
India cannot afford a grid failure like the one in 2012 not only because of the immediate economic losses and electricity outage but also because of the choked global logistic sector on which replacements and repairs of assets depend the most. To ensure that the grid stays healthy and operational, Utilities will have to innovate and stay alert more than ever.
3. After this pandemic is finally over, what is the way forward for Utilities to ensure minimal human intervention for maintenance and testing?
I strongly believe that there will be an increased adoption of advanced technologies and automation solutions after the lockdown is lifted up.
While many Utilities have already made significant investments in automation and remote grid management solutions, vast areas of the network still remain that use legacy and outdated technologies.
Automation and remote management will bring in the much-needed visibility into the healthiness of the electric grid. Before the COVID-19 lockdown, Utilities primarily focused on Supervisory Control and Data Acquisition (SCADA) as an automation tool to monitor the flow of energy throughout the network and remotely manage the entire grid network to detect outages, isolate faults and restore electricity to healthy parts of the grid.
While investments in SCADA systems will continue, I think Utilities will also look at incorporating more advanced remote asset management systems like our partner OrxaGrid’s Asset Health App that offers advanced analytics and health predictions. Advanced remote asset management systems such as these provide early-warning alerts and actionable intelligence to grid operators to take preventive actions for preventing grid failures.
While the future is highly unpredictable today, we have to continue to stay at home and stay safe. I want to take this opportunity to thank our brave heroes working tirelessly on the front lines in hospitals and other essential services to ensure that India emerges victorious in this fight against COVID-19.
We must remember these days for they serve as a reminder of things we take for granted. While I emphasise heavily on the necessity of a healthy electricity grid network for growth and revival of the economy, I urge everyone to be mindful of the environmental damages the electricity sector causes through greenhouse emissions. As responsible citizens of India, we must ensure that electricity is consumed as a privilege and never wasted.