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Home  /  Strategy  /  Feature  / A smart move | MAR 01 , 2014

Vishal Koul


A smart move
Tata Power Delhi Distribution is serious about getting its smart grid strategy right

Kandula Subramaniam

"We spend 50% of our time attending to localised complaints as simple as a tripping of the circuit board. With smart grids, we can pinpoint the fault and rectify it quickly" —Praveer sinha, CEO, TPDDL 

Quick, what is the link between Texas and California in the US, the Danish island of Bornholm and some 250 households in north Delhi? Give up? They are all areas that have installed smart meters and are part of a smart electricity grid initiative. The only difference (but it’s a big one): Texas and California are the top-ranking American states in smart grid deployment, investment and customer engagement; at Bornholm, the technology is so advanced that an electric vehicle not only powers itself from the island’s renewable energy sources such as the wind, its battery can also store excess renewable energy and feed the electricity back into the grid when needed. In stark contrast, at Tata Power Delhi Distribution (TPDDL), the project is getting off the ground. “The move to smart grid is a path-breaking initiative for our company,” says Praveer Sinha, CEO, TPDDL, which owns and operates distribution in north and northwest Delhi, an area with 1.3 million customers.

What’s significant, though, is that this is the first initiative in India in the private sector towards establishing a smart grid for power distribution. Even in the public sector, while several projects have been given the go-ahead (see: The power to change), little progress has been made on the ground. So, the TPDDL solution is going to generate more than just common interest. How does the company plan to transition to a smart grid? What challenges and opportunities lie ahead and how equipped is TPDDL to face these?

The power to change

Funded through the APDRP*, several pilot smart grid initiatives being undertaken in different states

Understanding the interest

First, though, just what is a smart grid? In a conventional system, the grid’s role is mechanical. The consumer turns on the power switch, creating a demand for electricity that is met immediately by the supplier. In a smart grid, though, devices ‘talk’ to the grid through the meter and usage can be timed for most efficient use of electricity, keeping in mind the demand on the grid and the available supply. There is communication between consumers and the power distributor, so they can track usage, know their billing in real time and manage consumption accordingly. Digital tools automate and run smart devices at every step of the grid, from the consumer end to the power plant. For the consumer, the benefits lie in lowered power bills (by taking advantage of off-peak hours to run appliances and machinery) and fewer or no outages (less peak load demand). For the power company, this is a way to optimise grid performance, introduce renewable energy sources into the grid and prevent outages (which means loss of revenue). 

The concept of smart grid, though, is an evolving one, as are the technologies it involves. “It’s something like the six blind men and the elephant — each person has their own interpretation of smart grid,” says RV Shahi, former power secretary, government of India. For example, for an IT person, a smart grid would mean how IT can be deployed to run a power grid. For someone with an interest in renewable energy, it would be about how to deploy more renewable energy; the interpretation would be still different for someone into demand-side management, and so on, he explains. “The difference is that unlike the blind men, where each had a very different interpretation of the elephant, in the case of smart grids, everyone has at least some knowledge of the animal they are dealing with.”

TPDDL certainly has. “It is essential to be consumer-centric, especially as we move away from a monopoly to a multiple supplier model, as is being envisaged through amendments to the Electricity Act,” explains Sinha. “Also, unlike in other products where if you sell more, you make more, in the distribution business, consumption comes down at the higher levels because of the differential tariff rates. In such a situation, it is important to have a mechanism to ensure customers consume more when rates are low and restrict peak demand of electricity.”

That’s not the only advantage.  The potential savings with a smart grid are immense, points out Sinha. “We spend 50% of our time attending to localised complaints that can be as simple as a tripping of the circuit board in a house. With smart grids, we can pinpoint the fault and rectify it quickly, saving time and manpower costs,” Sinha says. In 2002, when TPDDL came into existence through a joint venture with the Delhi government, it had a headcount of 5,600. That has been reduced over the years to the current 3,600. Going forward, the plan is to reduce employee strength by 100 people every year, which is where automation and the smart grid will come in. Over the next five years, the company plans capex of ₹1,000 crore to move towards a smart grid-based model. 

Power on

TPDDL’s interest in smart grids isn’t new. It first expressed an interest in moving to a smart grid more than four years ago, when it won approval from the Delhi Electricity Regulatory Commission (DERC) for a pilot implementing an automated demand response (ADR) system that rationalises power supply to high-use consumers. The ₹12.5-crore pilot has been implemented and involves putting in place at the distributor-end technologies such as automated meter reading (AMR), geographical information systems and outage management systems (OMS). 

The first step to a smart grid, though, is to ensure every power customer in the area is accounted for. TPDDL achieved 100% metering in its circle in 2008 — an achievement in itself, considering in other parts of the country, close to 30% of energy consumption still remains unaccounted for as there is no metering. 

The second phase of the smart grid project was launched in October 2013, when TPDDL announced it had selected IBM to support it in creating system architecture and adhering to international smart grid standards. While there is no commercial agreement with IBM, the US tech major will help TPDDL in integrating advanced metering and ADR systems with the grid’s existing applications. “Our global experience in smart grids should help TPDDL in its initiative. IBM, too, will benefit from this India experience,” says Rahul Sharma, executive director and partner, global business services, IBM India & South Asia. IBM aside, TPDDL is also partnering with other technology majors such as GE and Siemens for the smart grid project. 

In January 2014, DERC gave TPDDL its nod for the next pilot project — an end-to-end solution combining ADR with smart meters and AMI (advanced metering infrastructure). “The pilot scheme we launched is being done on a nominal cost basis. What would have cost ₹20 crore is being done for ₹5 crore as even some vendors are supplying equipment on nominal basis, not commercial rates,” adds Sinha. “Needless to say, as we scale up the model, the costs will go up.”

The project includes around 250 industrial and commercial consumers with load greater than 100 KW and a collective shed potential of 20 MW. The consumers are spread over a 100 sq km area, covering industrial and institutional belts such as Lawrence Road, Narela, Civil Lines, Naraina and Pitampura, and involves 100 11 KV feeders fed from 40 grid stations. How will it work? Thanks to smart meters, there will be two-way communication between the consumer and the utility, which will enable peak load shaving — reducing power consumption during periods of maximum demand by redistributing loads to different period of the day. With this, there is also substantial saving on peaking charges. A dedicated customer portal will allow consumers to set threshold values for load and power factor; they will receive alerts either through the portal or via SMS if these thresholds are breached. The smart meters will also provide instant information on outages, helping the company manage peak power demand and avoid buying expensive power to tide over shortages.

In the next phase, the project will be extended to another 800 high-use consumers, which will add another potential 20 MW. “Scaling this up can result in tremendous savings on creating additional infrastructure for the utility company,” says Sharma. Here’s how that could happen. If peak demand rises from the current, say, 10,000 MW to 12,000 MW, power companies have to prepare to meet this additional demand. Setting up 2,000 MW of power plants can cost anywhere up to ₹10,000 crore. But with a smart grid and peak shaving techniques that make customers shift their power requirements; this demand can be restricted to much lower than 2,000 MW. 

Tripping points

The TPDDL plan sounds great on paper, but there are several challenges in setting up a smart grid. While the company has overcome one of the biggest hurdles — achieving 100% metering, which reduces leakages in the system — it, like any other distributor planning a smart grid, has had to overcome the next hurdle of laying fresh optic fibre cable networks (separate from those laid by telecom companies) to ensure zero possibility of breakdowns. That means the additional burden of getting permission to lay cables (especially when the city was gearing up for the Commonwealth Games four years ago) as well as the additional expense involved. 

Remember, any capex made and approved by the regulator is recovered from retail tariffs, and consumers may baulk at paying extra for a smart grid — as it is, they have to bear the expense of installing the smart meter, which may cost up to four times as much as a normal meter. Sinha points out that in Tokyo, the plan is to shift 27 million customers to smart grids in three years. “We plan to shift just 300,000 high-end customers (consuming 600 units and more every month) in three years. And high-end consumers in India pay just 10 cents a unit, unlike Tokyo’s 30 cents. But motivating cost-conscious consumers is a huge challenge,” he adds.

How is TPDDL persuading customers to make the switch? Sinha says the key lies in demonstrating the commercial benefits of the transition and shifting non-essential electrical loads to off-peak times. For instance, in hospitals, the company’s marketing team suggested running just one lift instead of three during peak demand time, while ensuring essential services such as operation theatres and oxygen supply ran uninterrupted. Then, at the Britannia factory on Lawrence Road, TPDDL suggested baking — a critical part of the business — be shifted to off-peak time. The idea is to reduce peak demand at the factory by 10% from the present 10 MW — a saving of 1 MW. 

Peak shaving is only one element of the smart grid applications TPDDL is planning. Going forward, the company will also tap renewable energy sources to meet consumer demand during peak time. For this, starting 2015, TPDDL plans to encourage buildings and housing societies to install solar panels on rooftops. The electricity generated from these will be used not only for the consumers who installed the panels, but will also feed into the entire north Delhi grid, thus making the panels pay for themselves. Of course, the proposal will have to be approved by the regulator before it can be initiated. While the jury is still out on how the solar plans pan out, Shahi, for his part, has a different take on some of the initiatives being talked about in the country. “Many new ideas are being proposed to meet demand. Now there is talk of even telecom towers being run on solar power. The question is, how many of these ideas are really feasible?” he asks. For his part, Sinha is quietly confident about the company’s plans. “There is no other way solar panels can be a viable investment unless they are integrated into the grid,” he points out. 

Smart grids have proven their efficacy at Bornholm, Texas and California, but the idea is in its infancy in India. It remains to be seen if TPDDL will be able to prove this is indeed a smart move.

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