Recurring power underdrawal/overdrawal by States caused grid collapse
Northern Grid collapsed on 30th July, 2012, with subsequent collapse of Eastern and North-Eastern grids, it led to a complete black out situation which took more than 24 hours to recover. The Northern grid consists of nine states, such as Uttar Pradesh, Haryana, J&K, Punjab, HP, Delhi, Uttarakhand, Rajasthan and Chandigarh. This is the first time in the Indian Power Grid history that three grids have collapsed simultaneously.
Traditionally, all the Northern states have been power deficit, however, this year, the delayed and lower monsoon played spoilsport to worsen the demand supply mismatch. CARE Research believes that grid collapse occurred due to problems such as 1) continued under investment in generation capacity by northern states leading to acute power deficit 2) stagnant hydro capacity unable to address rising peaking demand and 3) recurring and excessive power overdrawal by states significantly beyond scheduled limits.
Table I: Power deficit situation worsened in the Northern states
Source: CEA, CARE Research
Table-I mentions the states, where the power deficit has worsened in July 2012 and during the quarter Apr-July 2012. States such as Haryana, Punjab, Rajasthan and UP have contributed to worsening power situation i.e. power deficit in these states increased sharply by 660bps, 570bps, 830bps and 710bps YoY to 12.6%, 7.1%, 8.9% & 15.3% respectively in July 2012.
Stalled capacity addition from states have pushed them to corner
The major structural reason for the grid failure stems from the fact that most of the states, which are overdrawing power from grid compared to the scheduled limits have hardly invested in capacity addition in the past few years. Please refer Table-II which discerns the following major trends in YoY capacity addition growth in June 2012 such as- 1) State generation sector of all of the major northern states (Except Delhi) have either added nil or negligible capacity to contain rising power demand 2) Most of the capacity addition has been from the private sector and 3) muted capacity build-up (such as hydro or gas) to address peak power demand.
Table II: Capacity addition break-up in the major northern states
Source: CEA; CARE Research
Additionally, the peak power deficit issue in these states was further accentuated by the diminishing reservior levels of the storage based hydro power plants due to current dry spell with most of the northern states receiving low rains this year. Table III illustrates the 70% reduction in power generation from hydro power as on 29th July 2012, which has added to acute shortage in peak power situation resulting into excessive power overdrawal by states such as UP and Punjab. Further, these agricultural states with current sowing season are yet to ration the water usage, which led to sharp reduction in water head levels in the dams directly impacting the power generation.
Table III: Reservoir levels and power generation from large northern hydel plants
Source: NRLDC; CARE Research
No investment in T&D, lacking grid discipline
Over the last decade, most of these state distribution companies remained in precarious situation with negligible reduction in AT&C losses (AT&C losses>35-40%), stagnant tariff vis-à-vis rising power purchase costs, irregular subsidy payments by states, high cross subsidization resulting into severe cash crunch. Recently, the distribution companies of the northern states such as Haryana and UP have even filed for debt restructuring. Thus, decade of under investments in T&D resulted in poor management of load forecasting abilities with 1) lack of accurate control over load management at feeder level to ascertain exact nature and behavior of demand and 2) lack of investment in T&D equipments i.e. under frequency relays which would have averted grid collapse by segregating the notorious load sections from the regional grid. Interestingly, these states are not even left with an option of buying power from open market as the state grid is overloaded with no spare capacity to wheel the power. Consequently, despite penalty mechanism introduced by the regulator in the form of Unscheduled Interchange (UI), it is cheaper for these states to overdraw power from the grid rather than buying power through other channels.
States such as Punjab, Haryana and UP are agriculture based with large dams playing vital role in irrigation of farmlands. Thus, agricultural pumping power load increases sharply in the Rabi sowing season. Due to lower monsoon this year, the northern states’ power demand remained at elevated level (~5GW peak deficit in July 12) leading to exacerbated power deficit situation.
Despite the current installed power generation and transfer capacities being stretched, northern states such as UP, Haryana and Punjab regional load dispatch centres excercised no caution and have continously overdrawn power from the regional grid (even when the grid frequency went below 49.5Hz) vis-à-vis their scheduled limits leading to wide variation in the system frequency slippage as shown in Table IV. This eventually triggred grid collapse on 30th July 2012.
Table IV: Deterioration of northern grid frequency
Source: NRLDC; CARE Research
Severe underdrawal led to Northern grid collapse on 30th July 2012 at 2.35 a.m.; the grids collapsed again the very next day with Eastern and North Eastern grids joining the Northern grid, this time because of excessive overdrawal by Northern states. The Northern Regional load Dispatch Centre (NRLDC) has filed a petition with central regulatory commission (CERC) and expressed its inability to take any punitive actions against the overdrawing states.
CERC has now issued directions to these states to strictly adhere and maintain grid discipline, detailing 1) the constituent states should not resort to any overdrawal when the grid frequency is below 49.5 Hz and comply with provisions of Grid code 2) the states should ensure that Under Frequency Relays (UFR) are kept in service all the times and feeders used for load shedding are different from feeders used for manual load shedding so that grid security is not compromised and 3) all users/ SLDC/SEBs/distribution licensee should comply with direction of RLDC/SLDC and carry out requisite load shedding or back down generation capacity in case of transmission line congestion to ensure safety and reliability of system.
According to Revati Kasture, Head, CARE Research-“CERC should ensure that the states to strictly abide by the Grid code and ask SLDC/RLDCs to devise a contingent plan, if the state draws power from grid beyond the stipulated overdrawal limits. Moreover, State Transmission Utilities (STUs), in addition of being transmission licesees, are also currently performing this function creating conflict of interest. Apropriate regulatory mechanisms and penalty structures to separate SLDC/RLDCs from states is required for their effective functioning.
The power sector has been facing various issues which has deteriorated its health over the past two years. D. R. Dogra, MD and CEO - CARE Ltd. Says- “The precarious situation of power sector can only be addressed through key structural reforms such as 1) Coal pooling mechanism to improve power generation from coal based plants 2) investment in hydel capacity (especially storage based or pumped storage power plants) to effectively manage peaking load 3)Allow open access to reduce regional deficits and 4) incentivise states to invest in T&D to curb AT&C losses and make the power distribution business model self sustainable.”
Source: CARE Research