understanding the key technical and economic concepts prayas - egi skill-share workshop for...

Understanding the key technical and economic concepts

Prayas - EGI Skill-share workshop for Tajikistan and Kyrgyzstan Delegates

November 16-18, 2010, Pune, India

Prayas Energy Group

www.prayaspune.org/peg, [email protected]

Prayas - EGI Workshop Pune 2010

2

Interaction Plan Overview Operation & Planning Discussion


3

Overview Electricity is a key infrastructure

sector 6-7% steady annual growth Strong linkages with fuel, environment,

development Electricity sector is capital intensive

Large investment for construction and operation

Long lead times


4

Electricity is a key infrastructure sector – Strong linkages -1 Fuel

Fossil, non-renewable Coal, Natural Gas, Nuclear, Diesel Excavation, processing, transport/import, depletion

Large scale renewable ( > 10-25 MW) Big Hydro, Big Wind, Big Solar, Big bio-mass Bio-mass: Land & resource use competition with

agriculture Small renewable

Hydro, Wind, Solar, Bio-mass


5

Electricity is a key infrastructure sector – Strong linkages -2

Environment - Rehabilitation, Pollution, Ground water, Global warming Coal

Huge land and water needed leading to displacement and loss of livelihoods

Pollution: Ash, Sulphur Oxides The largest contributor for GHG emissions

Large hydro Submerges forests and villages Effect river flow and impact livelihoods Seismic impacts due to dams, reservoirs and tunnels

Nuclear Safety, waste disposal


6

Electricity is a key infrastructure sector – Strong linkages -3 Development - Catalyst to development

by meeting the social & economic needs Social needs

Household, Water pumping, Health, Education, Research

Strong link to quality of life Economic needs

Home industry, agriculture activities, manufacturing, service industry

Multiplier effect and hence linked to economic growth


7

Strong Linkages – 4: Correlation between HDI & Electricity

7

Source: Dr. Steve Chu, US Department of Energy


8

Strong linkages -5: Balancing act of the roles of electricity - commodity or development input Commodity perspective

Pricing as per market terms, No subsidy Short term financial viability is the key Electricity markets possible: complex to design &

operate; hard to achieve perfect competition Development input perspective

Multiplier effect for supply to agriculture, industry, commercial; Quality of life improvement for household, community services

Essential: Low demand – price elasticity Subsidy to supply to the poor Long term socio-economic return is key


9

Electricity sector is capital intensive

Capital and time intensive sector Investment

Approximate US$ 1million/MW for Generation, Equal amount for Transmission & Distribution Cost varies based on fuel, technology, size, location

Typical thermal power plant needs 3-4 years to become operational

Hence need to plan investments well in advance Generation planning and cost recovery

High capital investment and long pay back periods, uncertainty of fuel prices, etc

Operational cost Generation : 70%, Transmission: 15%, Distribution: 15%

Cost recovery: Fixed and variable charges

9


10

Operation & Planning – Generation, Transmission & Distribution


11

Operation & Planning – Electricity is special Cannot be stored Demand keeps changing with time

Generation to match demand at every instant Persistent mismatch -> grid failure and system collapse

Flows according to the laws of Physics, not commercial contracts

Travels at the speed of light Large geographical spread - Integrated Grid

operation Needs constant supervision and control

Generation Plant Control Transmission Load Dispatch Distribution Control


12

Operation & Planning – Electricity is special Supply and demand matching Grid management: frequency control, Load

Dispatch operation, grid failure Fast coordinated actions needed

Some without human intervention (protection, speed governor, capacitor switching ..)

Some by the operator (opening a line for maintenance, changing generation schedule, hierarchy ..)

System reliability is a common interest, though individual players may act in contrary fashion


13

Load Dispatch snapshot

13


14

Large mismatch between load and generation can lead to Grid Collapse

Pole= Generator

Tent weight = Load

Tent rope = Grid


15

Operation & Planning Planning

Long (5-30 years), Medium (1-5 years), Short (few hours to 1 year)

Demand Forecast Generation Planning

Base load, Peak load, Intermediate load Conventional centralised and Renewable

decentralised Firm and non-firm power (eg. solar or wind)

Integrating end use efficiency and development perspective into planning


16

Discussion: Complex electricity sector is crucial for development Technically complex, large investment, long

lead times, multiple linkages Many agencies involved and requires team

work of persons with diverse skills Technical Legal Finance Economic Environmental Socio-political Management


17

Discussion: Electricity sector and politics High political implications

Touches most lives Crucial for livelihood and quality of life Instances of political ‘storms’ based on electricity

issues Kyrgyzstan, many Indian States

High scope for corruption & inefficiency, with major decisions having big impact on common people

Power purchase contract: 1 c/Unit increase in generation tariff of a 1000 MW thermal plant = increase of annual power purchase cost by US$ 60m

10000 MW system, reduction of commercial T&D loss by 5% = Annual savings of over US$ 100 m (assuming cost of 6 cents/Unit)


18

Discussion: Good Governance in Electricity Sector Good governance in Electricity sector essential

To address development challenge To address climate/environment challenge To handle political issues To address corruption and inefficiency

Good Governance through developing processes and capacities to ensure:

Transparency: Systems and procedures to ensure complete transparency

Accountability: Of utilities and government to investors and public

Participation: Informed, meaningful public participation in planning and operation of the sector

understanding the key technical and economic concepts prayas - egi skill-share workshop for...

Documents

keyprayas egi workshop

hdi electricity

roles of electricity

key infrastructure sector6

big wind

big solar

developmentelectricity

big biomass biomass