CESC Limited, the integrated Utility, which serves Consumers in Kolkata and Howrah and also has four Distribution Franchisees, is betting big on Technology. From Digital initiatives like Chatbots, Self-healing Networks, AI and ML enabled Predictive Analytics and Internet of things (IoT)-based real-time Condition monitoring, the Utility is working towards implementing Smart Metering in its Distribution areas as well as preparing its Network for the rising demand of Electric Vehicles (EVs). In a recent interview, Debasish Banerjee, Managing Director (Distribution), CESC Limited, shares his views on the state of the Power Distribution segment in India, CESC’s performance and its recent initiatives and future plans…
How has been the operational performance of CESC’s distribution business in Kolkata in the past one year?
Improving Operational Efficiency, thereby Optimising the Cost and Priming Revenue both tariff and non-tariff, are the fundamentals of our Strategy. With more than 3.3 million Customers currently spread across 567 square km of our licensed area in Kolkata and Howrah, along with adjoining areas, CESC added around 78,000 Customers during 2018-19. More than 90 per cent of the new connections were provided within 24 hours through 100 per cent Online Application.
Demand and Consumption: Demand for power is quite elastic, with the company registering a maximum demand of 2,337 MW in the peak of this summer and a lean demand as low as 465 MW last winter. The total System Demand during 2018-19 was 10,729 MUs, of which 93 per cent came from own generation. Through prudent network planning and value engineering, we have been able to reduce faults, fusing and thereby, Customer outage by almost half in the last five years. The addition of more Command Stations at strategic locations nearer to Load density enabled quicker response, thus the restoration time for high tension (HT) faults has come down significantly compared to last year. System-based monitoring and prompt rectifications of temporarily restored low voltage (LV) faults have drastically cut down pendency, thus enhancing Safety and power restoration.
Introduction of technical solutions like Coaxial cables, Anti-theft Pillar boxes, busbar protecting paints and armour cast tapes coupled with Social inclusiveness have been very successful in bringing down theft considerably in loss-prone areas and sustaining the lower loss levels.
Digitalisation: Digitalisation has been at the core of our Operational Strategy. Currently, 100 per cent new customer applications are online, reflecting the value our Customers place on such Digital Services that they enjoy at the tap of their mobiles from the comfort of their homes and offices. Almost half of our Customers pay their bills online. Further, CESC launched its Chatbot “eBuddy” in March 2019 on its website (www. cesc.co.in). The Chatbot assists Customers in availing of e-services and handles queries and complaints along with service requests. It reduces Customer anxiety and wait-time considerably by providing real-time solutions, making online interactions hassle-free and delightful. In the past six months, more than 5 lakh Customers have interacted with “eBuddy”. The Chatbot is equipped with Artificial Intelligence (AI), Machine Learning (ML) and Natural Language processing capabilities, and can also escalate the queries to call centre agents if required. It supports speech recognition and speech-to-text capabilities. It is being integrated with CESC’s Mobile App and also with other platforms such as social media, Google Assistant and Amazon’s Alexa.
Customer Relationships: Now, CESC has successfully created a face for its customers. We are reinforcing the trust element with our Customers by deploying adequate Key Account Managers (KAMs) for Premium and High Value Industrial and Commercial Customers. Our KAMs make proactive outreach and provide a personalised touch for effective resolution of Customer queries, while cementing our relationship with our valued stakeholders.
What is the status of smart metering deployment in CESC’s licensed areas?
Starting from 2015, the company has been carrying out technology trials in Advanced Metering Infrastructure (AMI) for Smart meter deployment. We already have SIM card-based Automatic meter reading (AMR) in all our HT and LT CT-operated meters and SIM card-based Smart Meters for VIP customers since 2009. Currently, we are adopting radio frequency (RF) mesh canopy-based AMI meters. Almost 9,000 AMI meters have been installed at a premium locality, where we derived multiple benefits like automated complaint registration and proactive resolution in the event of an outage, enabling Customers to monitor their consumption online along with remote billing. Similar numbers of RF-enabled Smart Meters have been installed at a loss-prone zone, which is bolstering our loss reduction initiatives by real-time performance monitoring of the loss reduction measures in a closed loop dynamic action plan process.
A business model is being worked out for leasing out city-wide RF-mesh network, which can be utilised by external agencies in gas, water, pollution for online meter data acquisition.
What are some of the system modernisation and strengthening initiatives being implemented by CESC?
CESC is at the forefront of deploying advanced technologies and innovations to provide better services to its customers. Some of the key initiatives carried out during the year were:
- Continuous Network redundancy building and Capacity augmentation pose a challenge in getting space for Network infrastructure. Several measures were implemented to optimise the space requirement and enhance cost efficiencies in infrastructure upgrade projects including pre-engineered building technology for new substations and multi-winding power transformers.
- Self-healing networks were commissioned for faster restoration for 33 kV distribution stations with auto-restoration time of less than 1 second; 6 kV Ring Main Unit with auto-restoration time of less than 10 seconds; and LT changeover with auto-restoration time of less than a second.
- We have embarked on IoT-based digitalisation projects in co-creation with original equipment manufacturers. The solution offers a Mixed Reality Application by creating a remote Digital Twin of the Protection systems, Dashboards on the move for Disturbance Recorders/Fault Analyser of HV and extra-HV circuits. This will help in online decision-making with faster power restoration in the event of a large area outage.
- Development of fault prediction tools for underground HT cables using AI and ML techniques for ensuring Just in Time (JIT) Capex with better RoI and lower unplanned outages.
- Real-time condition-based asset monitoring and IoT projects for remote monitoring of assets.
- Installation of Electric Vehicle (EV) Charging Stations (EVCSs) for charging EVs in Public Spaces and Parking lots inside Buildings.
- Deployment of Drones fitted with high resolution cameras/thermal cameras for better surveillance of Transmission lines and outdoor EHV substations.
- We are working on several models in Grid and Load level Energy storage system applications and expect to come up with economically viable business solutions in the near future. This will help us in peak shaving, capex deferral, and power purchase cost optimisation.
What is your perspective on the current state of the power sector, particularly the distribution segment?
In the past few years, there has been significant improvement in the power supply situation with adequate power availability. As a country, we have almost bridged our demand-supply gap, clocking only 0.5 per cent energy deficit and 0.7 per cent peak power deficit as of July 2019 (Source: Central Electricity Authority [CEA]).
The demand for power in India has been growing at a stable rate of 6 to 7 per cent. This is despite the proliferation of Energy Efficient technologies such as LEDs, Star Rated Appliances and Captive Off-grid Solar capacities.
- For the UDAY states, the Aggregate Technical and Commercial Losses have reduced from 22 per cent to 20.4 per cent, and the ACS-ARR (average cost of supply-average revenue realised) gap has improved to Re 0.25 per unit (Source: UDAY dashboard).
- We have made significant progress in Rural Electrification – 99.99 per cent of the 214 million households in the country are electrified; with only less than 19,000 households pending electrification (Source: Saubhagya dashboard, September 2019).
Possible challenges from the proposed Electricity Act Amendment 2018 Separation of carriage and content will necessitate the desired recovery mechanism of appropriate cross-subsidy surcharge to protect subsidised class of customers from any tariff shock and adequate surcharge for the recovery of sunk investment (Fixed Cost).
What should be the key priorities of policymakers for the distribution segment? What is your wish list from the new government?
- The Distribution franchisee (DF) model has had a mixed success. We need to move to the Licensee model from the DF model to encourage private sector participation. Since DFs already have a term of contract for 20 years, it would be better to go with the licensee model with 25 years of contractual period to enable higher success rates in improving Distribution Business and Customers’ Satisfaction. Examples of success stories of private Licensees are the Discoms in Delhi, Mumbai, Kolkata, Ahmedabad and Surat.
- Need a policy shift to “Net Billing” or Gross Metering, which is close to the current reality and far more encompassing, instead of “Net Metering”. This will enable better Revenue and Fixed Cost recovery for the Distribution Utility, while passing on the benefit of reduced solar power purchase cost to all the customers and this has been proposed by the Forum of Regulators in April 2019.
- Time-of-day and time-of-use (ToU) tariff is a useful tool for Demand-side management and peak flattening. This is more realistic, where the marginal cost pricing can be applied with a high degree of accuracy and a different price is charged for different time intervals. Smart meters will assist customers in managing their consumption as per the ToU tariff plan, while helping utilities to flatten their peak demand and reducing the gap with average demand.
- Mandatory Online Payment of electricity bills, excluding the subsidised class to enhance online payment towards the digitisation drive, in line with the government’s initiatives.
- Economic business models to attract private Discoms for promoting EV public charging stations are needed as large-scale EVCS penetration can result in demand spike in the local network. The upstream and downstream network has to be designed adequately and maintained efficiently for ensuring high quality and reliability of Power to other Customers on the same Network. Discoms are best suited for the optimal usage of the network. An amendment in regulations will be required to provide for the requisite recovery of capex in a regulated mode for such development, as the tariff impact is marginal.
What trends do you see in the power sector in the near term?
The electricity demand in the country is expected to grow at a compound annual growth rate of 7.1 per cent between 2016-17 and 2021-22 as per the CEA, driven primarily by industrial demand, which is expected to pick up owing to the government’s “Make in India” initiative. Demand for electricity is expected to increase with growing population, deeper penetration driven by rural electrification and rising per capita usage.
Urbanisation in India will be driven by an influx of about 200 million people in the next 15 years. This will drive demand significantly for Rapid and shared Electric Mobility. It is estimated that around 70 per cent of the commuters in Kolkata will use public transport by 2025.
EV battery charging stations can provide a huge consumption demand driver and hence, revenue opportunity for Discoms. As per Energy Efficiency Services Limited, Discoms could earn as much as Rs 420 billion per year by 2030 from electricity sale to charging stations, if India achieves the target of converting 30 per cent of its fleet to electric by then, which will be around 70 BUs of electricity consumption.
Electric Mobility through electrification of cab aggregators, use of mass transit systems like metro railway and hyperloop will have a significant impact on the pace of Electricity consumption.
As the mercury is rising due to inevitable climate change, air-conditioning systems will drive consumption to around 600 BUs by 2030.
What are the opportunities that CESC is exploring in the power sector?
- New distribution franchisee/distribution licensee business.
- Conversion of gas/wood/coal-based cooking to safer, cleaner and more convenient electric cooking will throw up an opportunity of conversion of about 10,000 Roadside eateries along with other larger Restaurants, Clubs, offices and Industrial Canteens to Electric Cooking.
- Tailpipe emissions of internal combustion engine vehicles contribute to more than 20 per cent of air pollution in Indian cities. Adoption of pollution-free EVs is the way forward. We are taking several initiatives to drive this movement.
- Plug and socket arrangement at parking lots of residential buildings: EV charging in off-peak period.
- EV for our captive usage.
- Setting up of public EVCSs beneath flyovers in collaboration with KMC.
- Setting up of infrastructure for Charging Stations in Bus Depots/Garages.
- Data monetisation: Helping some of the leading banks, non-banking financial companies, fast-moving consumer goods and e-commerce players in their marketing campaigns to reach their target customer groups.
- Asset monetisation: Utilising captive optic fibre network for fibre-to-the-home-based delivery of TV content in partnership with the internet broadband service providers and Real Estate Developers.
What is your outlook for the power sector for the next two to three years and what are the prospects for CESC?
India’s per capita electricity consumption is slated to grow from around 1,200 kWh in 2017 to 4,500 kWh in 2040. Distribution is the likely growth engine. The nation-wide smart city roll-outs need extensive grid modernisation and reliability enhancements.
- Air-conditioning load is expected to be a major driver of consumption. CESC has enabled the ease of installing AC at every household, resulting in a spurt in consumption and Customer delight.
- New load segments of clean electric cooking and EV charging is expected to contribute around 72 BUs and around 70 BUs respectively by 2030. We have launched a campaign, #LiveFreeBreatheFree, and have been successfully collaborating with the concerned stakeholders for the reduction of air pollution, largely caused by vehicular tailpipe emissions and conventional cooking fuels, to improve the quality of life in a metropolitan city.
With multiple assets getting stressed, the power distribution segment is undergoing consolidation and more state Discoms will start getting privatised. CESC will look for opportunities of distribution franchisee and licensee business. We already operate three DFs in Rajasthan and have recently acquired the Malegaon DF.