Over the years, there has been large capacity addition in terms of distributed and renewable energy generation. The power grid, as it stands today, comprises multiple points of power injection and power consumption. With the target of 36 GW of renewable energy capacity to be achieved by the end of the Twelfth Plan (2012-17), further penetration is expected over the next few years. To accommodate this additional capacity, there is a need to move towards smart grids that inject smarter automation and IT into the grid. Smart grids are also needed for efficiently tackling power theft and managing peak loads. A smart grid is a transformed electricity transmission and distribution network that uses robust two-way communication, advanced sensors, and distributed computers to improve the efficiency, reliability and safety of power delivery and use.
In September 2013, the Ministry of Power released the national smart grid vision of quality power on demand for all by 2027. It had earlier (in 2010) constituted the India Smart Grid Task Force, an inter-ministerial task force for formulating policies and programmes for smart grids. It has also constituted the India Smart Grid Forum, a public-private partnership initiative that provides a platform to stakeholders for discussing smart grid implementation.
The Maharashtra government has constituted a Smart Grid Coordination Committee consisting of six working groups to expedite the implementation of smart grids in the state. It also serves as a platform for bringing together all stakeholders to design business cases and formulate regulations for smart grid projects. Another objective of the committee is to undertake the study of technological advancements in renewable en-ergy and the ancillary services for accommodating them into the grid.
Regulators and smart grids
Power regulators are risk-averse and set tariffs based on known costs and proven technology in order to insulate consumers from tariff shocks. Innovators, on the other hand, undertake capital investments to bring new technol-ogy into the market and reap the benefits of being early movers.
Regulators are responsible for keeping a check on tariff increases after the implementation of a smart grid, reducing aggregate technical and commercial losses, and playing the role of a catalyst in informing and strengthening the dialogue between stakeholders. There is a need for regulations that provide an interface for smart grid implementation but at the same time are not overly prescriptive in nature. The regulations should provide the flexibility to experiment with new technology while at the same time protecting the interests of prosumers.
A national-level technical committee has been formed for framing model draft smart grid regulations. Taking into consideration national- and state-level smart grid roadmaps, the regulations are likely to consider the provision of incentives for promoting smart grids and disincentives for not doing so. The framework should also provide guidelines for the approval of smart grid investments.
At the state level, there is a need for an institutional regulatory framework and a smart grid consultation committee that would serve as a nodal agency for implementing smart grid projects. The committee would assist the state electricity regulatory commission (SERC) in evaluating smart grid projects and then recommend these to the SERC for in-principle approval.
Such a committee would be based on a consultative approach and comprise licensee representatives, state load despatch centres, academic institutions, and other sector specialists. The project proposals for the implementation of a smart grid project would be submitted to the committee along with detailed project reports, cost-benefit analyses and any other information stipulated by the SERC.
Dynamic pricing mechanism
A utility’s typical load profile has peak hours in the morning and evening, during which time power is limited and hence, more expensive. There is a need to flatten the load curve in order to reduce the peak burden on a system.
One way to undertake load-levelling is by implementing demand-side management (DSM) measures that entail dynamic pricing programmes. DSM improves system efficiencies by incentivising consumers through a simple peak and off-peak tariff structure to shift the load from peak hours to off-peak hours. Some DSM measures are time-of-use tariff; critical peak pricing; real-time pricing; and variant and combination tariffs.
Under time-of-day (ToD) metering, electricity tariffs vary across time periods and are higher during peak periods and lower in off-peak periods. The Maharashtra Electricity Regulatory Commission (MERC) was the first regulator to introduce ToD tariffs when it did so for high tension customers in the tariff order for the Maharashtra State Electricity Board in May 2000.
Critical peak pricing (CPP) is another mechanism for managing peak loads, wherein a higher critical peak tariff is levied in addition to the ToD tariff for days on which the peak crosses a particular limit. Similar to CPP is extreme day pricing wherein a higher price is applicable for 24 hours on critical days. A combination of these is the extreme day CPP, which encompasses critical peak prices and lower off-peak prices on extreme days and no ToD tariffs on other days. Meanwhile, under real-time pricing, the tariff varies on an hourly basis throughout the year. The rates for the same are notified on day-ahead and hour-ahead bases. Another critical component in smart grid implementation is ensuring the protection of a consumer’s personal specific energy use data, along with other personal identifiable information. For this, strict adherence to cybersecurity standards is critical.
In sum, smart grid regulations are required to provide support across three broad dimensions: the economic aspect, safety and standards, and awareness and capacity building. At the same time, it is vital to formulate regulations that aid in managing peak loads through adequate incentives for making the grid robust.
Based on a presentation by Vijay L. Sonavane, Member, Technical, MERC at the India Smart Grid Week 2015
