India Must Leapfrog and Take the Path of Distributed Generation

By Rajabahadur V Arcot and Piyush Dewangan

The electric power industry in India must pursue the path of distributed generation or decentralized generation in

order to effectively address the massive challenge it faces in increasing its electric power generating capacity. The

current generating capacity, which is little over 160 GW, needs to expand by around 600-700 GW in the next 15

years to sustain the expanding economy. The total investment required for enhancing the generating capacity and

the matching transmission and distribution infrastructure will exceed $1 trillion. These assets will have to remain

productive over many decades. Therefore, it will be necessary for the industry to make an assessment about the

residual life of the technology that it adopts and the emerging technologies. It should seriously evaluate the

benefits of technology and leapfrog to protect its investments in the future.

Currently, the centralized generation infrastructure is de facto the norm in the electric power industry world over.

The centralized power generation served the purpose well when fossil fuels were abundantly available and became

the norm at a time when consumption centers were also in clusters. Since then, the situation has changed

dramatically. Increasing awareness about the environmental issues and escalating prices of conventional fossil

fuels has spurred the development of power generation from renewable energy. The cost of producing power from

solar, wind and other renewable sources has drastically fallen. It is almost certain that the future belongs to

generation of power from renewable sources. Therefore, India, which is in the nascent stage of taking a big leap in

developing its electric power industry, must become a stakeholder in the development and utilization of renewable

energy. Power generation from renewable sources, especially in a country such as India, would empower the

industry to adopt distributed energy management, produce power closer to demand centers, and manage local grid

to ensure power reliability and quality.

In India, it takes almost four years to construct a fossil-fired plant and almost 75 percent of the existing generating

capacity is thermal power based. Additionally, the country does not have adequate production capacity to

manufacture the required equipment, such as boilers, turbines, and ash and coal handling plants. Although there

has been a spate of new announcements in this regard, it will take many years before the situation is rectified. On

the other hand, the country has some world-class companies operating in solar and wind segments, such as Moser

Baerand Suzlon Energy.

Almost 40 percent of India’s population lives in remote villages with no access to electric power. Thus, ensuring

power of reliable quality will call for massive investments in the transmission and distribution infrastructure in

addition to generating plants. This calls for fresh evaluation of the traditional approach of generating power at
nodal centers and transmitting it over long distances. The futility of this investment to expand the transmission

and distribution network beyond a threshold point becomes apparent if we recognize that presently, the country’s

transmission and distribution loss is almost 30 percent. The country, as it embarks on massive expansion, has the

option to consider decentralized generation of power and not bank on constructing large centralized power plants.

Distributed generation and smart grid will change how and where we generate and distribute electricity, how we

meet peak demand, store, and tariff the customer. From India’s perspective, the key would be aligning

developments in distributed generation and smart grid together to prepare a roadmap for meeting the country’s

need for electric power. Therefore, the roadmap for the country’s electric power industry should include distributed

generation and energy management with smart grid, supported by distributed microgrids to ensure reliability and

stability while managing the complexity.

Scrutiny of the electric power industry in India reveals that it already has the necessary base to support this.

Diesel-generating plants dot the country. These and captive power plants provide the backup power to

manufacturing companies when failure occurs. Some of them are grid connected and sell the excess power they

generate. While this scenario may seem nightmarish, it has huge potential to transform the landscape, if the

industry accepts distributed generation and energy management as a strategic option. Additionally, the country is

rapidly expanding its capability to generate power from renewable energy sources, such as solar and wind power.

According to the present projections, the country may generate almost 20,000 MW of power from each of these

sources by the year 2020. The plans are ambitious but in the right direction. Additionally, captive and renewable

power plants can be set up quickly and at multiple locations simultaneously. Therefore, the country not only has

the option to consider decentralized generation of power, but has the basic structure to embrace distributed

generation supported by microgrid.

Microgrid connects a group of small power generators to cater to the needs of local demand centers and its

aggregate load. The generators connected to the microgrid may be solar plants, wind turbines, or any of a number

of alternate power sources. The advantage with such a microgrid is that it can operate in parallel or independent

from a centralized grid (macrogrid). The important point is that distributed generation with a suitable version of

microgrid can make electricity available to remote villages and industrial clusters quickly and incrementally. It can

come up even in places where national grid has not reached. It can be integrated any time later with the national

grid. Even when connected, it can isolate itself from the centralized distribution system during events, such as

faults and voltage collapses or other grid disturbances. In addition, it automatically disconnects itself from the grid
after utility grid returns to the normal operation. Therefore, microgrid not only ensures a secure and reliable

source of energy, but also allows consumers to sell electricity produced from their units to the utility grid.

Microgrid utilizing smart grid technologies is an effective alternative to conventional generation and distribution. It

requires relatively less time and investment to set up distributed generation facilities with microgrid, in comparison

with a conventional power plant. The successful implementation and full utilization of the potential of distributed

generation through microgrid requires deployment of latest technologies, which support such applications. Several

companies, such as ABB, GE, Invensys, Siemens, and others with their advanced technology solutions can help

in effective installation and management of such systems. However, suppliers may offer microgrid solutions that

meet the basic functionalities and are yet capable of being scaled up later to versions that are more sophisticated.

The distributed generation concept along with smart technologies will help the country to scale up power

generation and make it available across the country. It will improve the efficiencies of electricity generation and

distribution, manage the peak load demand, and above all contribute to achieving the national goal of making

electricity available to all.

Distributed generation with microgrid can help to scale-up generation through renewable sources and bring the

cost down, making it equivalent to conventional resources. Although the current cost of electricity generation by

renewable resources are almost 5-6 times more than by conventional sources, the decentralized generation or

microgrid saves investments in large transmission lines and transmission line losses. ARC believes that India

should take the path of distributed generation and reap the benefits of emerging technologies. The communication

industry in India has benefited immensely by adopting this bold approach.

We welcome your inputs, suggestions and comments on this topic. Please contact pdewangan@arcweb.com or

varshag@arcweb.com.