3defendus2 Epw

A End -Use-Oriented
Development-Focused
Electricity Scenario for Karnataka
Amulya Kumar N Reddy
Gladys D Sumithra
P Balachandra
Antonette DWSa
The recent efforts at electricity planning in Karnataka, in particular the May 1987 report of the Committee
for preparing a 'Long Range Plan for Power Projects in Karnataka 1987-2000 AD' (LRPPP), are clear-cut ex-
amples of the failure of the conventional consumption-obsessed supply-biased approach to energy planning. This
paper presents an alternative scenario for Karnataka's electricity sector on the basis of the development-focused
end-use-oriented (DEFENDUS) paradigm.
The DEFENDUS scenario for energy demand and supply focuses on people-based development through the
promotion of energy services, identifying technological opportunities for better utilisation of energy through a
scrutiny of the end-uses of energy and adhering to a least-cost approach to the mix of energy supplies. Even though
the DEFENDUS scenario involves the illumination of all homes in Karnataka, an emphasis on employment-
generating industry, the energisation of all irrigation pumpsets up to the limit imposed by the groundwater poten-
tial and the establishment of decentralised rural energy centres in villages, it comes out with energy and power
requiremiients in the year 2000 which are only about 38 per cent and 42 per cent respectively,of the LRPPP demand.
[This paper has been published in two parts. The first part appeared last week.]
LEAST-COST PLANNINO Al'tROACH 1T0

through an alteration of the historical until such imports are found to be unavoi-
MEETING ELEC TRICITY DEMAND) OF)
growth rates for the connections of dif- dable. The potential contributions that (a)
DEFENDUS SCENARIOS ferentcategoriesof c6nsumers-(12,626 efficiency improvements and electricity
GWh), substitutionand (b) new supplies can make
Development of a 'Frozen Efficiency' (FE) (2) the end-use orientation resulting in ef- towards meeting the energy demand are
Scenario for Energy Demand ficiency improvements and electricity tabulatedin.Table19aand 19b respectively.
THE contribution of efficiency improve- substitution (8,642 GWh), Rankingof All the EnergyTechnologiesAC-
ment and carrier substitution measures to (3) a lower base year demand (unrestricted cordingto IncreasingUnit Cost of EnerU
the reduction of demand can be identified or restricted,i e, withoutand with power
cuts, in the DEFENDUSscenario(4,424 A separate study" has been carried out
by estimating what would be the energy re-
in orderto rank 15energytechnologiesrele-
quirement had there been no efficiency im- GWh), and vant to the Karnatakaregion (includingthe
provements during the entire period span- (4) correctionof computationaldifferences technologies of efficiency improvement,
ned by the DEFENDUS scenario. This de- (3,857 GWh). electricitysubstitution,decentralisedgenera-
mand based only on the developmental
The relativecontributions to the reduction tion and centralisedgeneration) according
focus has already been termed the 'frozen
of demand (relativeto a 9 per cent growth to increasingunit cost of energy (Rs/kWh)
efficiency' (FE) scenario. It can be arrived
scenario)of the developmentaland end-use and unit cost of installedcapacity(Rs/kWh).
at in a very simple way by taking the spread-
factors are shown in Figure 16. Further,the The resultsare presentedin Figures19and 20.
sheet for the DEFENDUS scenario and set-
contributionof efficiencyimprovementsand
basedon a Cost-Supply
electricitysubstitutionto the savingof 7,044 Least-Costapproach
ting the energy saving per connection (for
different categories of consumers) equal to Curve for Energy
GWh/year(being the differencebetweenthe
zera According to the FE, scenario, the
FE and DEFENDUS centralizedscenarios) The least-cost-supplycurve to reach the
energy demand on the consumption side for
is shown in Figure 17, and the savings ex- energy requirement accordingto the centralised
the year 1999-2000 would be 21,690 GWh versionof the frozen-efficiency(FE) scenario
pected from each consumer category are
corresponding to a generation requirement
shown in Figure 18. for Karnatakais presentedin Figure21. The
ot 26,613 GWh and a generation capacity of curve shows that
5,562 MW. Estimiation of the Potential Contribution (1) a mix of technologies of saving and
The yearly variations of the energy-de- thut Energj Saving and, Generating generationis the least-costwayof supply-
mand in the LRPPP, FE, and DEFENDUS 7ec hnologies Can Make to wards Meeting ing the FE energyrequirement for the year
(centralised and decentralised) scenarios are the Energy Requiremrlent 2000 AD,
shown in Figure 14. The energy requirement As pointed out earlier, the energy that (2) thoughmeasuresfor savingalonewill not
envisaged by the DEFENDUS demand could be saved in the case of an efficiency permitattainmentof the FE requirement
scenarios corresponds to a tremendous improvement or a electricity substitution of energyin the year2000 AD, they can
reduction relative to the 1999 energy require- measurecan be estimatedby computingthe contributeabout5,642GWhwhichwould
ment of 47,520 GWh demand projected in differencebetween the values of the energy be 43 percent (i e, abouttwo-fifth)of the
LRPPP Report and of 39,238 GWh on the demand in the FE and DEFENDUS scena- exmt 13,154GWhrequiredto reachthe FE
basis of a 9 per cent growth of the rios corresponding to the specific end- goal of 26,613 GWh,
DEFENDUS 1986 base demand of 10,431 use/activity/consumer affected by that (3) among the generationtechnologies,the
GWh (Figure 14). Considering the centralis- measure. In the case of an energy genera- least-costset involvesa mix of centralis-
ed DEFENDUS scenario, the reduction of tion technology, the energy that can be ed and decentralisedtechnologies,
29,549 GWh is due to the following four fac- generatedcan be estimatedfrom-theregour- (4 overal,theleast-costscenarioforthe supp-
tors (Figure 15):54 ces that areavailablein the region-the ques- ly of the additionalenergyrequirement
(1) the development focus introduced tion of imports of energy can be deferred (overand abovethe baseenergydemand)
Economic and Political Weekly April 13, 1991

is a mix of efficiencyimprovementand respectively(Figure22) whichmeansthat, ference in the areas of the two curves gives
electricitysubstitution(43 percent),decen- though the contribution of centralised an estimate of the capital that would have
tralisedgeneration(51 per cent) and cen- generationcomes down from the present been squanderedby an improperchoice of
tralisedgeneration(6 per cent) 100percent to 54 percent, it stillacounts energytechnologiesand by not adoptingthe
(5) the mix of efficiency improvementand for half the total energy requirement. least-costapproachto the planningof energy
electricity substitution, decentralised Theseconclusionssuggestthat the least-cost supplies. The areas under the least-costand
generation and centralised generation approach based on cost-supply curves for 'maximum-costcurvescorrespondto annual
technologiesin the totalenergy-and not energyis likelyto be much cheaperthan the expendituresof Rs 884 and 2,357 crore per
merelyin the extraenergy-would be 21 conventionalapproachbased exclusivelyon year ($0.618 billion and $1.648 billion)
per cent, 25 per cent and 54 per cent energysupplies,in particular,on centralised respectively required to sustain the
energysupplies.To confirm this suggestion, DEFENDUSenergygoal of 26,613GWh/year,
TABLE 19A: POTENTIAL CONTRIBUTION OF it is necessaryto makea rigorouscomparison i e, the 'maximum'costcurve is 2.67 the an-
EFFICIENCY IMPROVEMENTS AND CARRIER of the costs of the DEFENDUSsupplyscena- nual cost of the least-cost curve. If the
SUBSTITUTIONS TOWARDS THE 1999-2000 LRPPP goal of. 47,520 GWh/year is c6nsi-
rios for Karnataka derivedfroma least-energy-
ENERGY REQUIREMENT
cost mix of efficiencyimprovementand elec- dered,a much higherannual expenditureof
End-Use PotentialSaving tricity substitution,decentralisedgeneration Rs 4,669 crore or $3.265 billion per year is
and centralised generationtechnologiesandthe required(Figire 24).
GWh/ GWh/ MH
costs of the conventionalsupplyschemepro-
Year Year Least-CostApproachBased on Cost-Supply
posed in the LRPPP Reportwhich is based
Non-AEHCF 737.00 exclusivetyon centralisedenergy supplies. Curvesfor Power
AEH CF 331.00 Fortunately,this comparativecosting can Just as cost-supplycurvesnavebeen con-
CL CF 139.20 be done easily-the total area under any structedfor energy,it is possibleto construct
TotalCF 1207 272 cost-supplycurverepresentsthe total annual cost-supply curves for power (installed
Motors(HT) 1647.80 cost of the mix or portfolio of technologies capacity). The procedureis quite similar:
Motors(LT) 165.90 involved in that curve because the rec- (1) estimation of the potential contribution
Motors tangular area under the step for any that technologiesof savingor generating
(non-AEH) 155.20 technologyin such a cQst-supplycurveyields powercan maketo meeting the demand
Motors(aeh) 310.40 the total annual investment in for installed capacity-this involves
Totalmotors 2279 513 [(Rs/kWh)*(GWh/year)j = [107 * (a) estimating the power that could be
SWH 892 201 (Rs/kWh) * (kWh/year) * (1/10)] = (1/10) saved in the case of an efficiency im-
IPSETS 1112 250 * Rs crore per year required for that provementor electricitysubstitution
Sub-total 5491 technology. by estimating how much installed
Non-AEH When a cost-supply curve corresponding capacity can be avoided through the
other 38.80 to the centralisedtechnologies of the supp- energysaved,the latterbeing obtain-
AEH other 77.60 ed from the difference between the
34.80 ly scheme proposed by the LRPPP Report
CF other values of the energy demand in the
706.20 is plotted along with the least-cost supply
HT other FE and DEFENDUS scenarios cor-
LT other 71.10 curve of the DEFENDUS supply scenario,
IPG 625.00 it is clear that the least-cost DEFENDUS respondingto the specificend-use/ac-
Sub-total 1553 supply curveis lowerthan the LRPPP cost- tivity/consumer affected by that ef-
Grandtotal 7044 1236 supply curve which may even be a 'maxi- ficiency improvement or electricity
mum'costcurve(Figure23). In fact, the dif- substitution, and
TABLE 19B: POTENTIAL CONTRIBUTION OF DECENTRALISED AND CENTRAI ISED GENER \TION
(b) estimating the power that can be
TO THE 1999-2000 ENERGY REQUIREMNENT
generatedin the case of a generation
technology,
MW MW GWh/YEAR (2) ranking of all the energy technologies
relevant to the region (including the
1986 position 2530 10324 technologies of efficiency improvement
VII Plan - Varahi 230 1283 and electricitysubstitution,decentralised
VIII Plan Schemes generation and centralised generation)
A: Large hydel according to increasing unit cost of
power (Rs/kW) computed as the life-
Mani dam 9
32
cycle cost of a technology per kilowatt
Ghataprabha of installed capacity, and
Kali (11 stage) 330
240 (3) definition of the mix of technologiesby
Gersoppa
115 startingwith the cheapesttechnologyin
Sharavati
726 4051 terms of unit cost of power (Rs/kW),
Total large hydel
B: Coal based thermal moving to the next costlier technology
Raichur TPS (II stage) 420 2079 when the powerpotentialof the previous
C: Small hydel technologyis exhausted,and continuing
Mallapur 9.00 with this process of 'climbing the cost-
Sirwar 1.00 supply staircasefor power'until the de-
Kalmala 0.40 mand for power is reached.
Ganekal 0.35 In the case of cost-supplycurvesfor power
Kengodu .04 (installed capacity), it is necessary to meet
Harangi 18.60 both the base-load and peak-load require-
Nagu 2.50 ments.Further,some energytechnologiesare
Total small hydel 32 179 more appropriate for meeting one or the
Total VIII Plan Schemes 1178 other of these requirements.Thus, techno-
Sugar cogeneration 246 1379
logies have to be classified into base-load
Biogas/producer gas 681 3712
and peak-loadtechnologies.This classifica-
Small hydel 195 1089
tion is important for technologies of effi-
984 Economic and Political Weekly April 13, 1991

ciency improvementand electricitysubstitu- Figures25 and 26. In these curves, the unit two-fifths) of the extra 3,032 MW re-
tion also because,for instance,the introduc- cost of hydroelectricpower has been com- quiredto reachthe FE goal of 5,562MW
tion of compact fluorescent lamps saves putedon the basis that the costs of compen- in the year 2000 AD) even though effi-
peak-load power in contrast to efficient satory afforestation58and resettlementand ciency improvement and electricity
motors in industry which reduce the re- rehabilitationcompensation are ignored. If substitution alone are inadequate to
quirementsof base-load installed capacity. they are included, the step correspondingto meet the future requirementsof install-
Hence, it is necessary to construct separate hydroelectricitywill shift upwardsslightly. ed capacity,
cost-base-loadand cost-peak-loadcurves.In Figures25 and 26 can also be combined (3) among the generationtechnologies, the
this construction, into a single cost-installed capacity curve need for a mix of centralisedand decen-
(1) a formula56similarto the LRPPP for- (Figure 27) in which, starting from 2,530 tralised technologies,
mula has been used for the conversion MW (the 1986or base-yearinstalledcapaci- (4) overall, the importanceof a mix of ef-
of energy saved into power (installed ty), base-load technologies are identified ficiency improvement and electricity
capacity)avoidedirrespectiveof whether first to meet the base-loadgoal, after which substitution, decentralised generation
base-loador peak-loadtechnologiesare peak-loadtechnologies are invokedto meet and centralised generation teehno-
being considered, and the total goal for installedcapacity.Likethe logies-this mix for the particularcase
(2) separate requirements-7of base- load cost-supply curves for energy,these figures under consideration turns out to be 41
and peak-load capacities must be used show per cent, 38 per cent and 21 per cent,
in the construction of the cost-supply (1) the necessity of a mnixof technologies of respectively,of the additionalcapacityre-
curves for power (installed capacity). saving and generation, quired, and
The cost-base-load and cost-peak-load (2) the significantcontributionthat efficien- (5) the mix of efficiency improvementand
curvesto reachthe requirementsof base-and cy improvementand electricitysubstitu- electricity substitution, decentralised
peak-loadaccordingto the frozen-efficiency tion,can make (as much as 1,236 MW generation and centralised generation
(FE) scenario for Karnatakaare shown in which would be 41 per cent (i e, about technologiesin the totalcapacity(Figure
FIGURE14: DEFENDUS AND LRPPP SCENARIOS
28)-and not merely in the extra
capacity-would be 22 per cent, 21 per
( GENERATION) cent and 57 per cent respectivelywhich
G 50000 means that, though the contributionof
<
Lu 50000 C centralisedgenerationcomes down from
CENTRALIZED
the present 100 per cent to 57 per cent,
0 DECENTRALIZE 8281 it still accountsfor morethan half of the
I_ V LRPPP28 total capacity requirement.
a
040000 V 9% GROWTH Figures29 a and b show the contributions
FE of the above options towards meeting the
total base-loadand total peak-loadgoals. In
Z 12626 addition, the technologies of efficiency im-
provementand electricitysubstitutioncon-
tributeabout48 percent to meetingthe extra
uJi30000 -1 peak-load capacity and thereby decrease
the peak-load as well as smoothen the
load curve-a vital contribution to load
642 management.
LUo
The total life-cycle cost of such a least-
>_ 20000 cost scenario for installed capacity can be
computedeasily.The total areaundera cost-
GE supply curve for power (installed capacity)
LU p representsthe total life-cyclecost of the mix
z (5 ~~196
LUi 1919418 or portfolio of technologiesinvolvedin that
10000 __ _ _ curvebecausethe rectangularareaunderthe
1986 1990 1994 1998 step for any technologyin such a cost-supply
curve yields the total life-cycle cost of that
Note: Comparison of the (generation) energy requirement (in GWh/year) according to the technology in [(Rs/kW)*(MW)] a [107 *
DEFENDUS scenarios (decentralised and centralised versions), Frozen Efficiency, a 9 per
cent growth rate projection of the DEFENDUS base demand 10,431 GWh/year) and the (Rs/kW)*(kW) * (I/104)I = (1/104) * Rs
LRPPP projection. crore.Actual computations of the areas in-
FIGURE 15: DEMAND REDUCTION FACTORS dicate that the life-cyclecost of the install-
ed capacity required for the DEFENDUS
LRPPP- DEFENDUS= 29 549 GWH/YR) scenario would be about Rs 9,405 crore
($6.577 billion) in comparisonwith the 2.44
times larger figure of Rs 22,986 crore
($16.074 bilfion)59for the supply scheme
DEVELOPMENT FOCUS
envisagedby the governmentin its VIII Plan
X
proposals (Figure 30).
EL & CS
ENVIRONMENTAL IMPACT OF VARIOUS
29
%I
( _5 X DIFFERENCE (RESTRICTED BASE ) ENERGY PLANNING APPROACHES
Just as cost-supply curves were con-

18 %) CORRECT COMPUTATION
structedto meet the demand for energyand
D O:FE RE NC E for power, it is also possible to construct
L(15X}
%IUNRESTRICTED
BASE) impact-supplycurvesin which the environ-
mental impact is quantified by an indicator
Note: Factors responsible of the reduction of the 1999 generation energy requirement from the
LRPPP projection of 47,520 GWh/year to the centralised DEFENDUS scenario require- such as CO2 emissions/kWh or deforesta-
ment of 17,971 GWh/year. tion/kWh. The procedureis quite similar:
985
(1) estimation of the environmental case' until the demand for energy is the centralised, large-scalesupply projects
impact6W that technologies of saving or reached. of the LRPPP plan are 194 times (roughly
generating electricity have as a side- Alternatively, environmental impact- two ordersof magnitude)moreenvironmen-
effect apart from their electricaloutput, supply curvescan be plotted for the supply- tally harmful (from CO2 emissions, and
(2) ranking of all the energy technologies mixes of the DEFENDUS scenario and the thereforeglobal atmosphere,point of view)
relevant to the region (including the conventional plans. Figure 31 shows that than the components of the DEFENDUS
technologies of efficiency improvement what has been describedas the 'maximum! scenario.
and electricitysubstitution,decentralised cost plan require;the deployment of coal- Another conclusion is that whereas the
generation and centralised generation) based thermal power plants-this would low-energyrequirementDEFENDUS scena-
according to increasing environmental result in 2.401730 million tonnes of CO2 rio permits the environmentally risky
impact per unit electrical output, and emissions per year which is 152 times the technologiesto be avoided,the high-require-
(3) definition of the mix of technologiesby 0.015796 million tonnes of CO2 emissions ment LRPPP plan cannot do without these
starting with the technology with the per year of the DEFENDUS scenario. The harshtechnologies.Thus, as the energyand
least impact per unit of electrical out- greater environmental impact of conven- power requirementsdecrease,the necessity
put, moving to the technology with the tional plans also comes out from a com- of invokingthe environmentallymaligncen-
next higher impact when the energy parisonof the DEFENDUSscenarioand the tralisedtechnologies also decreases.On the
potential of the previous technology is LRPPP plan (Figure 32)-they would lead other hand, as the energy and power re-
exhausted,and continuingwith this pro- to d.015796and 3.057010million tonnes of quirements increase, the freedom with
cess of 'climbingthe impact-supplystair- CO2emissions per year, respectively.Thus, respectto the choice of energytechnologies
diminishes, and it becomes imperative to
FlOURt 16: DEVELOPMENTFocuS AND END-USE ORIENTATION choose the harshertechnologiessuchas coal-
(CONTRIBUTIONSTO DEMANDREDUCTIONvs 9%GROWTH) based thermal and nuclear power plants
(Figure 32).
25000 -- --
GESTATION PERIODS OF VARIOUS ENERGY

ix ~ ~ DF _
PLANNING APPROACHES
<20000 --_ __-----|41
The methodology underlying the con-
41% structionof cost-supply and impact-supply
curves can be further extended either to
15000 --_ devise a least-gestationsupply approachor
to evaluatethe gestation periods that would
be requiredby various energy planning ap-
proaches.For example,the 'maximum'cost
plan involving naturalgas-based and coal-
based thermal power plants and nuclear
powerplantswould require(Figures33a and
b) about ten yearsto supplythe extraenergy
of 13,154GWh/year.This must be compared
with the nine years that the least-cost
0- DEFENDUS scenario is expected to take if
0 as o - u
X v 0 e t- O 0a a
0 Xa 0 0 a a, a, a) a} a) the conservationmeasuresare implemented
after a five-yearpreparationperiod, and the
six years if they are implemented straight
Note: Contributions of the developnment-focus and the end-use-orientation (efficiency im- away. Thus, the DEFENDUS scenario
provements anidcarrier substitutions) to the reduction of 21,268 GWh/year in generation
energy demand for the year 1999 according to the centralised DEFENDUS scenario (17,971 would start yielding results more quickly
GWh/year) with respect to the 9 per cent growth rate projection (39,239 GWh/year). than the conventional approach.
FIGURE 17: EFFICIENCY IMPROVEMENTS AND CARRIER SUBSTITUTION FIGURE18: CATEGORY-WISE SAVINGS
(Saving=7044
OWh/Yearj m HT
E MOTORS
AEH
E3CF
lPS 9 ? _ f \ X 2l~~~~~PS
/< __ r _ 3% # M NONAEH
~7N _ 5 ; 32% = =E C)OTHER
_ SWH CLT
LPG
WB -32%-
CL~2
3%
1%
I ra % _ _z _IT F lT
iiiiiH
Note: Contributions of various efficiency improvements and carrier Note: Contributions of various consumer categories to the reduction
substitutions to the reduction of 7,044 GWh/year in (consump- of 7,044 GWh/year. in (consumption) energy demand estimated
tion) energy demand estimated for the year 1999 achieved by the for the year 1999achieved by the centralisedDEFENDUS scenario
centralised DEFENDUS scenario (14,646 GWh/year) with respect (14,646 GWh/year) with respect to the Frozen Efficiency scenario
to the Frozen Efficiency scenario (21,690 GWh/year). (21,690 GWh/year).

The shorter gestation period also means sequence with which the technologies are associatedwith the modernisationof power-
that, beforethe 'maximum'cost plan reaches implemented. intensiveindustry to achieve the best inter-
the energy goal, the DEFENDUS scenario nationalenergy-consumptionnormsprevail-
has already generated46,971 GWh extra in SocIo-ECONOMIC ADVANTAGES OF ing today.Thus, the DEFENDUSelectricity
the nine-year gestation period case (and DEFENDUS SCENARIOS scenario proposed here is also a massive
71,185 GWh extra in the six-yeargestation employment-generationprogrammein ad-
period case) as determined from the dif- A Massive Employment-Generation and dition to being an asset- building, and in-
ference in the areas under the curves of Industrial Modernisation Programme dustrialisation process.
Figures 33a and b. The implementationof the measuresen-
In these 'time-supply' curves, it is taken visagedin the DEFENDUSdemandscenario Rural Development
for granted that all the technologies con- requiresthe initiation and maintenance of The establishmentof about 26,000decen-
stituting the mix will be ipitiated a large.numberof new activities. For exam- tralised rural energy centres (with biogas
simultaneouslyat the commencementof the ple, consideringonly the activitiesassociated plants and/or wood gasifiers with dual-fuel
implementation of the energy scenario or with the 1986-87consumers, it is necessary engine-cum-generatorsets) envisagedin the
plan. This statement only reiterates the to manufacture/constructand install about decentralisedversionof the DEFENDUSde-
earlierassertion that the cost-supply curves 11.7 million compact fluorescent lamps, mand scenario, will not only result in a
are meant to define the mix of technologies 498,000 solar water heaters, 535,000 fric- transformationof the lives of rural people
necessary to reach the energy or power tionless foot-valvesand HDPE piping-sets. through piped drinking water,electric illu-
equirement;they are not meant to derinethe In addition, there are all the 'activities mination, ruralindustries,etc, but also lead
to the generationiof a great deal of rural
FIGURE19: VI1.T COSTOF ENERGY employment and the strengtheningof the
_ 2. 5 - aniT rW Dfor CentoiSore)
CX|1? X H
OEX'nVr
self-reliance of villages through their
energisation.
People-Orien ted Development-Focused

0010
Energy Scenario
r .0 D Despite the dramaticimprovementin the
~~~~~~~~~~~~~~~~~~~~N 0. qualityof life of the people envisagedby the
< 0.505 DEFENDUS scenario,it comes out with re-
w~~~~~~~~~~~~~~~ quirementsthat are far less than those of the
LI'
0~~~_' . W-_
conventional plans. Thus, it takes more
O ~~~~~~~~~~~~
I) energy,power,time, moneyand environmen-
j tal degradation to ignore the energy needs
U,
IL
a.~~~J
Z< - -
c9.'-O 8 - ( ) of the poor than to address them directly.
0 -
I 0 0 U The DEFENDUS scenario providesa pers-
0 pective for the energy sector that is, not
U merelyblindedby the lureof indiscriminate.
growth, but focused on a sustainable
Note: The unit cost of electrical energy saved or generated (in 1986 Rs/KWh at the rate of 12
per cent nominal discount rate) from various efficiency improvementand electricitysubstitu- developmentdirected towards the satisfac-
tion measures (replacement of inefficient motors with efficient motors, ordinary irrigation of the energy needs of people, parti-
tion pumpsets with improved ones, incandescent bulbs with compact fluorescent lamps, cularly the poorest, in a manner that is en-
electric heating with solar ponds and electric water heaters-with solar waters), decentralised vironmentally sound and economically
sources (small hydroelectric plants, cogeneration frontibagasse in sugar factories, wind- viable.This, then, is the overwhelmingcase
farms and biogas-, producer-gas- and disel-based generator sets) and centralised sources for people-oriented development-focused
including transmissionand distribution costs (naturalgas-source and 800 km from source,
coal-at pithead and 800 km from pithead, hydroelectric plants with and without com- energy planning.
pensatory afforestation and rehabilitation, and nuclear power plants (8-year construction
time without waste disposal costs and 10-yearconstruction time with waste disposal costs).
SOME DATABASE ISSUES
FIGURE 20: UNIT COST OF POWER
(IncludingT and D for Centralised
Sources) Notwithstanding all the developmental
advantages in respect to costs, gestation
90000 - ~~~~~~~8000-C
times and environmentalimpacts as well as
the basic needs of people,the basic question
6000 w arises regardingthe implementabilityof the
60000 - ? proposedDEFENDUSscenario.In this con-
N,
nection, there are two sets of problems
relatedto (1) database issues and (2) policy
questions that merit discussion.
w
0 ~~~~~~~~~~~~~~~~~~~~~2000
Lu
z
Lu Estimation of Past or CurrentDemand
0 oo
In a situation where consumption is not
w rat
L
(nt UL Iw w
constrained by supply, demand is a
0sk
measuredquantity and is equal to the con-
wVteTh4ntlf-ylees0feetialisaldepeiysvdo0eeatd(n18
sumption. When, however,there are 'power
0 ~~~~~~U-J z -J00j cuts' and supply constraints, demand is
0' 0 <W + 4 greaterthan consumption. In this situation,
demand can only be estimated with the aid
NoeTh ntlf-yl cost o elcria intle caaiysvdo eertd(n18 sk
atte aef1 pe ce nomia dicon rae fro th sam efiiec imroemn of assumptions; it cannot be measured.
If, for instance, the assumption is that
demand is equal to entitlement, then the
implicationis that consumptionwill always
and electricitysubstitution measures, decentralisedsources and centralisedsources including rise to equal the entitlement. It is known,
transmission and distribution costs as those listed under Figure 19. however,fromperiodswhen(and fromstates
Economic and Political Weekly April 13, 1991 987

'where)therewas no powercut, that industry electricityauthoritiesshould be to makethe tities. The difference, viz, (kWh purchased
(because of other constraints such as estimation of demand in the base year a -fromKPC + net imports-kWh gengrated
finance, raw materials, labour shortages, transparentprocess? 60? by making the by KEB-kWh sold by KEB) is due to five
etc.)has not been able to achieve100percent assumptions explicit and by revealing the categories:
capacity utilisation. Thus, equating the computational procedure. (1) T and D losses,
demand to the entitlement exaggeratesthe (2) non-meteredconsumption by IPsets,
demand and boosts the projection. Estimation of T and D Losses, Irrigation (3) free supply to KEB employees,
Since the demand estimate is invariably Pumpset (IPset) Consumption, etc (4) illegal sales, and
used as the base for projections,the assump- The energy purchasedby the Karnataka (5) thefts of electricity.
tions underlyingthis estimation must be ex- ElectricityBoard(KEB)from the Karnataka Since, five 'unknowns' cannot be deter-
plicil. Unfortunately,these assumptionsare Power Corporation (KPC), the energy mined from one equation, it is difficult to
not made explicit even though they deter- generatedby KEB itself in the few powersta- avoidconcludingthat a completelyarbitrary
mine the basis of all official pro- tions that it operates, the net imports and procedure is being adopted. According to
nouncements. Hence, the first task of the 1be energy sold by KEB are known quan- this procedure, the free supplies to KEB
employees,the illegalsales and the theftgare
FiGURE21: KARNATAKA CURVE
COST-SUPPLY not reportedin the Annual Reports,but are
included in the first two categories thereby
2. 5 -1 0.20
NUCLEAR boosting them. Further,though there are
waysof researchingthe T and D losses and
the non-meteredconsumption by IPsets, it
2.0 --- appearsthat each of thesecategoriesis being
given a totally arbitraryvalue on the basis
of. prevalent attitudes in the electricity
(.l15 --COAL0 5 establishment.
803/PG NGHYDEL 0 10 In this process, it is difficult to achieve
consistency.Thus, a plot of kWh/IPset vs
0 i.o 0 year (Figure34) shows alinear relationship
D as long as the points correspondto numbers
~~~~~~SUGAR based on metering;but the graphgoes crazy
5 CF AV. KEB PRICE 0 05 when the arbitrarily assigned values of
0*5 ==-SLM A___H
kWh/lPset are used. Obviously, when ar-
MOTORS
lipsN bitrarynumberswerebeing assigned, it was
FE GOAL =26613 GWH not anticipated that such plots would be
0 ~~~~~
~~I'I I ~ J_ _ 0 made; otherwise, why would there be low
10000 20000 30000 40000 consumptionin droughtyearsand highcon-
GWH /YEAR sumption in good rainfall years?
Thus, the second task for the authorities
Note: The mix of energy technologies (efficiency improvement and electricity substitutioi is to disaggregatethe five categories listed
measures, decentralised sources and centralised sources) necessary to reach the Frozen above and not compute more than one (or
Efficiency goal of 26,613 GWh/year from the cost-supply curve for energy.
two) categories as residues.
FIGURE 22: CONTRIBUTIONS TO TOTAL ENERGY GOAL
(26,613 GWh/Year in 1999-2000)
Contribution of VariousConsumer
Categories to the Load Curve
The primary requisite of load manage-
(25 %) ment is a detailed understanding of the
structureof the load curve.The utility (i e,
AO Karnataka Electricity Board) must know
_ I111.
,_
what categoriesof consumers,and moreim-
portantly,what end-use devices, contribute
(21%) to the total system load at any particular
hour of the day. Only then will it be pos-
sible to devise strategies for managing the
load, for example, smoothening it by load-
shedding. Unfortunately,this knowledgeis
lacking today, and without it, a rational
policy of load managementis not possible.
There seems to be some evidence that the
type of load-sheddingfrequentlyresortedto
has little effect in peak reduction.Thus, the
thirdtask for the electricityauthoritiesis to
promote researchto disaggregatethe load
curve and identify the contributions of the
S4 ~~~~ElI&CS variouscategoriesof consumersto the base
and peak demand.
[_ijDECENTRALI7ED FrequencyDistribution of the Availability
(54%) of Installed Capacity
5/ CENTRALIZED Therehavebeen periodswhen the system
has not beenable to supplyabout 2,000 MW
when there was about 2,500 MW of instal-
Note: The total contribution of efficiency improvement and electricity substitution measures,
decentralised sources and centralised sources to the mix of energy technologies necessarv led capacity; hence, more than 20 per cent
to reach the Frozen Efficiency goal of 26,613 G\Vh/year. of the generating capacity was 'out of

action',i e, was unavailableThus, the fourth SOME POLICYISSUES significantenough to encouragehim/her
task for the electricityauthoritiesis to make to think about implementing such im-
public the operational status of the state's Policy Instrumentsfor ImplementingEffi- provementseven though the energysav-
electrical generation system. For instance, ciency Improvement and Electricity ings fromthese improvementsmay be ex-
the annualreportscould includea frequency Substitution Measures tremely important to society at large.
distribution plot of the number of days in Efficiency Improvements and Electricity The above categorisationof the causes of
the year for which variousvalues of genera- Substitution Efficiency improvementsand consumer rejection of efficiency im-
tion capacity were available. electricity substitution have to be im- provementsalso suggestswaysof motivating
plementedby a largenumber(which can be consumer acceptance.
Energy-Planning Methodology millions in the case of some categories) of The obviousapproachto overcomingcon-
Since roughlyone-quarterof plan expen- electricityusersat the consumptionend. For sumer ignorance about improvements is
dituresis consumed by the powersector,the that reason, they are often dismissed or re- through education involving information
case for such largeoutlaysdeservesthe most jected on the grounds that packages, media publicity, demonstration
carefulscrutiny.In the ultimateanalysis,the (I) consumers are ignorant of the and other communication apprdaches.
basis for the proposed expendituresis the improvements, The difficulty experiencedby consumers
projections of energy requirementsand in- (2) these improvementsinvolveinvestments to put up the initial/front-end costs can be
stall-edcapacities in the future. Hence, the that consumers cannot'afford ('When a solved by a simple innovation in rinanciiig
assumptions and the computational pro- consumer is uced to paying Rs 6 for a that electrical utilities in the industrialised
cedures underlying these projections must 60-watt 1,000-hour-life incandescent countries are practising. This innovation
first be made transparentand then be made bulb, how can he be expected to pay consists of the capitalcosts of the efficiency
public-this is the fifth task for the elec- Rs 51 for a 20-watt 6,000-hour-life improvement being advanced to the con-
tricity authorities in the matter of its tubelight?'), and sumer by the utility/electricityboard which
database for energy planning. (3) the consumer's energy costs are not then recoversboth the principaland the in-
terestthroughthe regularmonthlyelectricity
FIGURE23: PLANNINGAPPROACHES
(h4a,dum.Coi VsL.ag.-Cei PIauu,ma
bills. This recoveryis facilitatedby the fat
that the lower electricity consumption due
2.5 I 0-20
NUCLEAR _ I
to the efficiency improvementsmakes the
electricitybill of the consumeractuallylower
in spite of the inclusion of the loan re-
2.0
3I ~ ~ I_ I 1 0 Q51 paymentsin that bill. Instead of selling the
_ _ _ I
device for efficiency improvementand elec-
S21357 CRORES/IRY COAL |____ tricity substitution to the consumer, the
~1.5 utility/electricityboardcan retainownership
cx BG /P~.. HYDL N of the device and lease it (for example, a
0 10
compact fluorescent lamp) at a small
monthlyleasingchargewhich is less than the
consumer's savings in his electricity bill.62
Thus, the principlefor innovativefinancing
is more energyservices for less expenditure
Even though such credit and financing
facilities are available,consumerAmay still
not be sufficiently motivated to take the
12500 17500 22500 trouble of doing the paper-work,securing
27500 the requisite credit, negotiating with the
,GWH /YEAR suppliers/erectorsof the improved equip-
Noi. Comparisonof the least-costand "maximum"~cost ment/devices, and getting the equipment/
approa hes to the planningof energy devices installed. In this situation, it is
suppliesto meet the FrozenEfficiencygoal of 26,613GWhyar.
FIGURE 24tt!-SCOSl |CURVE FORLRPPPPLAN
necessary to implement other mechanisms
for motivating consumers to conserve
0 0~~~~~~~~~ energy.
Prices are the favourite mechanism in
I UGARRI CF NUCLEAR marketeconomies-in fact, they have been
responsibleto a significant extent63for the
major reductionsin the energyintensitiesof
1250 000 SUGAR17500 I 22500 27500O the industrialisedeconomies. But, electricity
IYRCLEA prices in Karnataka (and other states in
RS8B4CRORS/Y/ ,GWH ;9CR 13WHH
/YEAR RESIYR
India)areno reflectionat all of the realcosts
of generating energy and the true costs to
GUR FORce cetaie-sucs
measures,decentralisedURV LRPP ePLANyt ec h RP society (Figure 21)-they include large
CC5
supplies to mene HYDELYEL elements of subsidy.As a result, manycon-
targe
O ~~~~GP
0f4,2 HMthe
W/yaFrozen rmteco20pl
LLHDEL g mlof26,613
NG HYDEL
0Efficiency urefrtet
GWsttuio
*
0 R4J9IE sumers do not 'feel the pinch' of energy
prices, and the electricity consumption of
these consumers tends to be largely un-
MOTORS
01
j ~~DEFENDUS
ILRPPP1
GOAL=266I1 GOAL=47520
affected by small increases in the price of
electricity.
This is why it has been arguedthat prices
10000 20000 30000 40000 50000 should be determined, not by the average
Tcostsof cheap supplies established in the
GWH/YEAR
W*e:The mix of energy technologics~elceryinipgvemnent- -Andelectricitysubstitution past, but what it will cost to generateelec-
measures,decentralisedsourcesand centralisedsources)necpssaryto reachthe.LRPPP tricity in the future.What mattersis-not the
target of 47,520 GWh/year from the cost-supply curve for enery.. sunk cost of the previouskilowatt but how
Economic and Political Weekly April 13, 1991 989,

much it will cost to generate a kilowatt in increasing electricity prices must not be price mechanism. Other measures are
the future.That is, prices should reflect theunder-estimated.Ah importantguidelineii, necessary.
long-runcost of producingthe next unit of this contextis that consumersare-morecon- In this context, Karnataka'sexperience
electricityin new generatingstations-what cerned about their expenditurethan about showsthat the introductionof shortages-in
the economists call long-run marginal cost prices.This means that price increasesmust the form of power cuts-has had the
pricing-because that is what the electricity only be implementedalong with efficiency unintendedresult of bringing about energy
boards will have to pay to set up facilities improvementso that the decreasein expen- savings.Of course, the shortages haveto be
to deliver this next unit. Incidentally, the diture brought about by the efficiency im- of a small enough magnitude that the main
cost-supply curves for energy and power provementmore than compensates for the activity of the consumer is still possible in
(Figures21, 25 and 26) providea clear idea increase in expenditure due to the price spite of the shortage. Most consumerscan
of how the unit cost of energy and power increase. easily tackle about 20 per cent power cuts
increaseswith increasingenergy and power There is, however,a cass of consumers with simple house-keepingmeasures(turn-
consumption. They also show that the whose resistanceto implementingefficiency ing off unnecessary lights and fans,
implementationof efficiency improvements improvements arises principally from the regulatingboilers, plugging leaks in steam
and electricity substitution, and.decentra- fact that electricity is only a small com- lines, improving mechanical couplings,
lised technologies leads to lower long-run ponent of their total expenditures.Forthese avoiding wastage, etc). This shortage-
marginalcosts than if therewerean exclusive consumers, electricity costs are not worth inducedefficiencyimprovementis an impor-
reliance on centralised generation botheringabout even though the total elec- tant instrumenteven though it is relatively
technologies. tricity consumption of this group may be unknown and little discussed in the in-
Attemptshave to be made to move in the significant from the point of view of dustrialised market economies.
directioti-oflong-runmarginalcost pricing, Karnataka.The resistance of this class of The governmentcan also promoteenergy
but the political obstacles in the way-of consumerscannot-beovercomeeasily by the savings by means of regulationsregarding
those appliances(boilers, furnaces,pumps,
FIGURE 25: COST-BASE-LOADCURVE
(Karnataka) lights,etc) that are primarilyresponsiblefor
90000 NUC 7500 poor energy efficiencies. The regulations
could, for instance,be implementedthrough
manufacturersby means of standardsregar-
6000 ding the efficienciesof appliancesmanufac-
turedby them. It should be made obligatory
y 60000 XHQYDE3
for manufacturers to label all these
0~~~~~~~~~~40 appliancesso that theirenergyperformance
can be readby prospectivepurchasersof the
appliancesand become a factor in decision-
0~ 3000 0 making. Thus, there are supplementary
v 30000 l U F mechanisms-shortages, regulations, stan-
dards, labels, etc-for consumers who are
SMALLH0DEL 1500 awareof efficiency improvementsand who
MW
havethe funds to makethe necessaryinvest-
FE GOALi3069
ments, but are neverthelessreluctantto con-
0 I I 0
O serve energy.
1500 2000 2500 3000 3500 4000 Some very general ideas have been out-
BASE- LOAp CAPACITY(MW) lined here regardingpolicy instrumentsfor
promoting the efficiency improvements
Note: The mix of energy technologics (efficiency improvement and electricity substitution discussedin the previoussub-section.What
measures, decentralised sources and centralised sources) necessary to reach the Frozen is necessary,however,is an understanding
Efficiency goal of 3,069 MW of base-load capacity from the cost-supply curve for power. of the barriersthat arise at through various
FIGURE 26oSiT-PEAK-LOAD CURVE levels-consumers, end-use-equipment
(Karnataka)
manufacturers and suppliers, utilities,
60000- 4000 financial institutions, governments, and
international and multilateral funding
___ ___ BG/PG- __
NGI institutions-as well as the developmentof
3000- measuresto overcome these barriers.Also,
it is necessary to elaborate appropriate
40000 packagesof policy instrumentsfor each type
of efficiency improvement. Such device-
specific policy packagesarecrucialbecause,
2000 for example, the replacementof incandes-
0 cent bulbs with compact fluorescentlamps
0 will require a different mix of policy in-
0 20000 t strumentsfrom,say,the large-scaleintroduc-
1000 tion of solar water heaters in all-electric
homes.
CF "w
SWH 0 Modern i.suion of Industry vs Supply
I S rtEGOAL= 2503M1W
Increases
750 1250 1750 2250 2750 Industry and commerce have hitherto
been natural allies of the supply-sidedap-
PEAK LOA1DCAPACITY (MW) proachto energyplanning.In fact, however,
Note: The mix of energy technologies (effieienxy (mpreement and electricity substitutionr there are two sections of industry and
measures, decentralised sources and centraliseci sources) necessary to reach the Frozen commerce-a suppliersection that is involv-
Efficiency goal of 2,503 MW of peak-load capacity from the cost-supply curve for powet. ed in the generation, transmission and

dcistribution of electricity, and a con- the efficiency with which the same (or even cheaperand quickerto improveefficiencies
sumesection that requireselectricity as an less) electricity is used. than to increasesupply capacity,i e, to save
input to its operations. Whereasthe vested Since efficiency improvements(involving kilowattsthan to generatekilowatts.(Forex-
interestsof the formermay lie with increases methods other than better housekeeping) ample, Motor IndustriesCo Ltd, Bangalore,
in electricitysupplycapacity,the interestsof require capital investments, industry and has shown that by installingefficient motors
the consumer section of industryand com- commerce may currentlybe of the opinion for compressed air generation, annual
merceare in increasingthe services(process that they can protect their interestsonly bysavingsof electricalenergyof 363,435kWh/
heating, motive power, lighting, etc) that lobbyingfor electricitysupplyincreases.But, vear can be achievedwith an investmentof
electricity provides for their operations. It the costs of incorporating efficiency Rs 10,58,470 spread over five years. Dis-
has been argued here that the services that improvementsin industrialoperations can countedcash flow analysisrevealsthat these
electricityprovidescan be augmentedin two also be compared with the costs of increas- savings correspond on the generation side
ways-either by continuingto use inefficient ing the state'selectricitysupplieswithoutim-to a cost of Rs 0.42/kWh (at a discountrate
devices/processesand ensuringan increasing prov-ingthe present lcvels of efficiency of of 12 per cent) which is about one-thirdthe
consumptionof electricity,or by improving cnergy uSe in industrv. Invariably, it is approximatelyRs 1.25/kWh for hydroelec-
FIGURE 27: COST-CAPACITYCURVE tricity and Rs 1.42/kWh for coal-based-
BL GOAL = 4071 MW thermal electricity.) And, if indeed this is
900001v 8000 generally the case with industrial energy
conservation, it makes more fiscal and
economicsenseto use scarcepublicresources
to finance the modernisationof electricity-
6000 using end-use devices in industry (than to
260000 3500 L -0 squander these resourceson the relatively
HYDEL I HYE
I T I (N.
costlier process of capacity expansion).
1-% I N
~~~~~~BG/PG __ Paybackcan also be ensured by recovering
4000 the loans to electricity consumers through
their electricity charges.
0. ~~~~~~~~~~~~~~~~~~~~~~0~
An exclusivelysupply-sidedapproachim-
0 ___SUGAR __
plicitly argues for all the investments on
u 30000I
power to be directed solely to increasing
supply whilst starving industry of capital
and allowingit to remainbackwardwithout
investmentson modernefficiency improve-
ments. In contrast, if a balanced approach
towards demand management and supply
expansion is adopted for industrial con-
sumers,then both industrialmodernisation
and bridging of the electricity supply-
demandgap can be achievedin one shot. In
FIGUE
2: CNSTRIUTONLTD CAPACITY
TA GMWL addition, there is scope for the burgeoning
of two new categoriesof industriesdevoted
to efficiency improvementsand electricity
substitution and to decentralised energy
(5,562 MWin 1999-2000) generation. Vested interests in these new
(21%) industries-mustgrow and counter the tradi-
tional vestedinterestof the electricalsupply
industry.
Transformation of Electricity Boards into
Energy Service Companies
Notwithstanding the requisite policy
changes to promoteefficiency improvement
measures,certain institutionalchangesmay
be necessarybecause of the special charac-
teristics of these mneasures.
It is easy for a consumer to purchase
specified quantities of particular energy
carriers like oil or electricity. Well-tested
economic systems exist for making such
transactions;the quantities exchanged are
,easy to measure; and both producer and
consumerunderstandthe valuesof the com-
modities involved.
\ L
jDE
< g ECENTRALIZE This is not the case for investments in
energy savings. The marketing of energy
enid-useefficiency is inherentlymore com-
plicated than the marketingof energy sup-
(57%) plies or conventionalend-use technologies.
One must be concerned not just with pro-
Note: The total contribution of efficiency improvement and electricity substitution measures, ducingnewenergy-efficientdevices,but with
decentralised sources and centralised sources to the mix of energy technologies necessary the full spectrum of relatively novel
to reach the Frozen Efficiency goal of 5,562 MW of installed capacity. marketingproblems:

(1) diagnosis of the individual consumer's ciency improvementusually requiresin- they should be concerned not just with the
needsfor obtainingenergyservicesin the creased first costs; production of the hardware involved but
most cost-effective manner-which will- (4) after-purchaseservicing;, with all the needed supporting'software as
often lead to the identificationof needed (5) monitoring of performancein the field well.
technical changes; to ascertainactualsavings,with feedback There are various ways in which such
(2) consumer education as to the need to that can be used to modify energysavingcomprehensive, marketing of efficiency
make these changes-a task made dif- strategies as needed in light of this improvements and carrier substitution
ficult becausethe expectedsavingis often experience. measuresmight be achieved.But one impor-
ambiguous; To effectively promote energy end-use tant mechanism is through the conversion
(3) the financingof any new devicesor con- efficiency across a broad range of energy of energysupplyagenciesinto energyservice
tractor work that may be required-a services, policies should address all such companies, that is, companies that rc.arket
problemthat arises because energyeffi- aspectsof the marketingof conservation,i e, energy services (heating, cooling, lighting,
etc) in muchthe samewaytheytodaymarket
FIGURE 29a: CONTRIBUrIONS TO TOTAL BASE-LOAD GOAL energy carriers.If energy supplierswere to
(3,069 MW in 1999-2000) evolve in this way, they would come to play
a role originally envisioned for them by
(15%) Thomas Edison when he invented the in-
candescent bulb; he proposed that utilities
sell illumination, thereby giving them a
financialinterestto providethis illumination
in the most cost-effective way.
The electricityboardsand gas utilitiesare
good candidates for marketingthe services
required for such an effort. Already a
numberof the more progressiveutilities in
the industrialised countries have initiated
energy conservation programmes that
include:
(1) providing advice on investments in
energy efficiency;
(2) offering to arrange for contractors to
carry out such work;
EI CS (3) financing such investmentswith low or
zero interest loans; and
(4) providingrebatesto consumers for the
7-
68%) S DECEINTRALIZED purchaseof energy-efficientappliances
and/or to appliance dealers for pro-
moting their sales.
11711CENTRALIZED Accustomed to handling large quantities
of capital, electricity boards ,are well-
positioned to direct these resources to in-
-FIGUR,. 29b: CONTRIBUTIONS TO ToTAl PEAK-LOAD GOAL
vestmentson efficiencyimprovements.Also,
(2,503 MW 1n999-20(X))
they have an administrativestructure for
channelling the capital to essentially all
households and businesses. Moreover,the
electricity boards billing system offers the
opportunity for customers to invest on
efficiency-improvementdevices with loans
from the board and pay off these loans
through their electricity bills.
In the case of autonomous electricity
boards that are publicly-regulated, the
regulatorscould play an important role in
creating effective programmes. Instead of
simply requiring the board to establish
energy efficiency programmes, regulators
should considermodifyingthe rewardstruc-
ture to give the board a financial stake in
exploiting opportunities for cost-effective
ipprovementsin energyefficiency.One pro-
mising approach would be for the govern-
rtientto allow the utility to treat efficiency
programmecosts as operatingexpensesand
grantfinancialrewardsfor electricitysavings
447%) 11 CENTRALIZED actually realised or financial penalties for
failure to meet established goals.
In some instances, electricityboardsmay
Note:The total cnntributionof efficienqynimprovement and electrjcjtysubstitution measures1 be unwillingto create and implement elec-
decentralised sources and centralised sources 10 the mii at energy lechnologies necessary
to reachthe FrozenEfficiencygoals of (a) 3,069MWof base-loadcapacityand (1,)2,503 tricity conservation programmes. For
MW of peak-loadcapacity. example, a board may have sufficient
992 Economic and Political Weekly April 13, 1991.

generating capacity that it sees no need to
help its customersuse energymoreefricienty. FIGURE 30: CAPACITY PLANNING APPROACHES
(Maximum-Cost
vs Least-CostInstalledCapacity)
In such circumstances, government could
stimulate the creation of independent new 90000 C 8000
NUCLEAR BL0AL-
companies that would market energy effi- 401M
ciency improvements,e g, by making loans
-or grant assistance available to customers.
RS 22,986 CR000
Policy Instrumentsfor Imnpletmenting Decen-
L
tralised Generation 80000 HYDEL
The DEFENDUSscenariosrequireseveral
policy changes in Karnatakawith regardto N I ~~~~~~~~~B,/GING_
the decentralisedgeneration of electricity.
I ~~~~~~~~~40000
I I 0
For instance, the Karnataka Electricity
(Taxation on Consumption) Act of 1959 30000 SUGAR 450 ___ - - OD
stipulates that factories with cogeneration
plants have to pay a tax on the generated SMAL HyDE 2000
electricity. Fortunately, after noting the
beneficialvalueof cogeneration,the govern- IS9,O5C?9
MOTOR I IP MW I__0
ment of Karnatakaabolished the tax with IC~~GOAL=5562
effect from April 6, 1985.64 0
2500 3500 4500 5500 8500
However, under the Industrial Policy
Resolution of 1956, the generation and INSTALLED
CAPACITY
(MW)
distribution of electricity is included in
Schedule A consisting of industries reserv-
Note: Comparison of the least-cost and "maximum'"cost approaches to the planning of power
ed for the publicsector.This effectivelypro- supplies to meet the Frozen Efficiency installed capacity goal of 5,562. MW.
hibits decentralisedgenerationand distribu-
tion. Not only are ruralenergy centrespro- haveavoided.The utilities are also required for power,and appeals to industryto set up
hibited from generating and selling elec- to sell powerto the smallproducersat a non- generationfacilities,and in return,promised
tricityto consumersin the villages,but small discriminatoryrate. that energyshortageswill continue.In other
hydroelectricplants and sugar factories,for The PURPA law has had a tremendous words, the conventional approachesare no
instance,are preventedfrom exportingelec- impact in creating a cogenerationindustry. longersolutions;they areexercisesin futility
tricity to the grid. As a result,cogeneration'sshareof US elec- and profligacy.
Even if this law is amended and such ex- tricity supply is expected to increase from In contrast,the DEFENDUS scenariofor
ports are encouraged,therestill remainsthe 3 per cent in 1980 to some 15 per cent in energydemand and supply, by focusing on
question of the price that the Electricity 2000. Additionally, incentives might be people-based development, id'entifying
Board will pay for the electricity received directedto getting electricutilitiesor special technological opportunities through a
from decentralised generation. The Elec- subsidiariesof utilities directly involved in scrutinyof the end-usesof energyand adher-
tricity Supply Act of 1948 restrictsthe rate cogenerationprojects,a possiblenew roleof ing to a least-cost approachto the planning
of returnto 11per cent per annum and per- utilities as 'energy service companies'. of energysuppliesis as promisingas the con-
mits a depreciationof only 4 per cent per ventional plans are gloomy. In particular,
annum based on a plant life expectancyof CONCLUSIONS even though the,DEFENDUS scenario in-
25 years.Such terms are likely to be wholly volves the illumination of all homes in
unremunerativeto the decentralised units. Therehas been a growingrealisationthat Karnataka, emphasis on employment-
Karnatakais not unique in this negative the conventionalsupply-obsessedapproach generatingindustry,energisationof irriga-
attitude to decentralisedgenerationof elec- to energy planning is failing on economic tion pumpsetsup to the groundwaterpoten-
tricity.Cogeneration,for example,has long and environmentalgrounds. It is provingto tial and the establishmentof decentralised
been discouragedthroughout the world by be impossiblyexpensiveand environmentally ruralenergycentresin villages, it comes out
electric utilitieswho haveseen cogeneration ruinous. The utilities and the local govern- with an energyrequirementin the year2000
as a threat to their businesses. Utility ments have to depend increasingly on which is only about 56 per cent of the
resistanceto cogenerationhas been manifest external agencies for capital. And, a large LRPPP demand. To meet this demand, the
in policies ranging from refusal to allow section of the population is deprivedof the DEFENDUSsupplyscenarioinvolvesa mix
cogeneratorsto hook-up to the utility grid benefits of electricity.Thus, in addition, the of efficiency improvementand electricity
to unfavourablepricing arrangements for conventionalapproachis underminingself- substitution, decentralised generation
cogeneratorsthat are allowed to hook-up. reliance and bypassing the needs of the technologies and conventional centralifed
For instance, the Qogeneratorsare charged poorest sections of society. generationtechnologiesin an approximately
extraordinarilyhigh ratesfor back-uppower All these features of the conventiona 21:25:54ratio.And, the environmentallyun-
and offered in returnvery low rates for the approach to electricity planning are excel- forgiving technologies are avoided. The
purchaseof powergeneratedin excessof the lently illustrated by the official plans of overallbill for the DEFENDUSscenariohas
cogenerator's needs. Karnataka.The LRPPP plan, for instance, been estimatedto be only about 40 per cent
Policies providing fair treatment in the demanded that the state spend an astrono- of the cost of the conventional approach.
market for cogenerators are needed. New mical sum of about Rs 25,000 crore($17.483 The DEFENDUS scenario also involves
laws are required.One possibility is along billion), develop better transmission lines, muchshortergestationtimes becauseit does
the lines of a law-the Public Utilities coal transportation linkages, railway not dependonly on centralisedtechnologies
Regulating Policies Act (PURPA)-passed facilitiesand other infrastructure,construct that will deliver energy and power after
in the UnitedStatesin 1978.Sincesmallelec- massive centralised power generation about a decade (if all goes well!). Finally,
tricity producers are in fact saving the facilities (super-thermalcoal-based power the DEFENDUS scenario is far more en-
utilities from havingto investin extrainstal- station and nuclear power plant), and raise vironmentallybenign.
led capacity, PURPA requires that the the mind-bogglinginvestmentsrequiredfor The DE1ENDUS scenario is therefore
utilities hook-up cogeneratorsto the utility all this through aid from the World Bank cheaper,quicker,more equitable, more en-
grid and buy the surplus power from the and the Centralgovernment,diversionof at vironmentally sound and promotes self-
small prQducersat the cost that the utilities least 25 per cent of KarnatakaState's Plan reliance. It is so obviously superior tlhatit
Economic and Pblitical Weekly April 13, 1991 993

Appendix 1
THEDEFENDUS ENERGY
UNDERLYING
CALCULATIONS FORKARNATAKA
SCENARIO
Consumer Category Non- AEH IPS LT HT CL Total

AEH
Derivation of the 1986-87 Base Demand Assumed by LRPPP Projection

1986-87 Consumption 577 1273 1266 794 3420 224 7554
Share of consumption 7.64 16.85 16.76 10.51 45.27 2.97 100.00
1981-82 to 1986-87 growth rate 9.48
T and D losses 39.2 10.6 36.95 32.43 21.02 48.86
T and D losses contribution 2.99 1.79 6.19 3.41 9.52 1.45 25.35
Availability (generation side) 949 1424 2008 1175 4330 438 10324
Actual power cut .00 20.40 .00 19.52 50.29 25.00 33.40
Requirement (generation side) 949 1789 2008 1460 8711 584 15501
Derivation of the 1986-87 Base Demand Used in the DEFENDUS Scenario
Requirement (consumption side) 577 1599 1266 987 6880 299 11607
Proposed power cut 0 20 0 9.5 10 25
Demand (consumption side) 577 1279 1266 893 6192 224 10431
DEFENDUS Scenario I (Centralistedl

Year-by-yearderivation of demand on the basis of efficiency improvement and electricity substitution measures
Proposed El and ES Measure IB CF Other IB- CF -SWH -LPG Other FFV+ Conservation
H.DPE
Consumption subject to
conservation x 106 kWh 335 242 179 371 230 499
1986-87 connections x 106 * 2.39 2.39 .50 .50 .50 .50 .54 .18 1746 .42
1986-87 households (HH) x 106 $ 7.13 7.13 7.13 7.13 7.13 7.13 7.13 7.13 7.13 7.13
Total no. of feasible wells x 106 1.54
1981-82 to 1986-87 growth rate per cent 8.26 8.26 17.16 17.16 17.16 17.16 10.00 10.35 5.05 13.50
1981-82 to 1986-87 growth
rate (HH) per cent 2 2 2 2 2 2 2 2 2 2
Projected 1990-91 connections x 106 * 3.29 3.29 .94 .94 .94 .94 .78 .27 2126 .70
Projected 1990-91 households x 106 7.71 7.71 7.71 7.71 7.71 7.71 7.71 7.71 7.71 7.71
Consumption norm (old) kWh/conn/yr 140 101 360 745 462 1002 2366 4974 3546342 533
Projected 1990-91 consumption x 106 kWh 460 332 337 699 434 940 1854 1324 7541 372 14293
1990-1991 share of consumption 3.22 2.33 2.36 4.89 3.04 6.58 12.97 9.26 52.76 2.60
Years for efficiency
improvement 5 5 5 5 5 5 5 5 5 5
Saving per connection kWh/conn/yr 96 25 214 577 404 250 710 746 886585 80
Consumption norm (improved) kWh/conn/yr 44 76 146 168 58 751 1656 42282659756 453
1991-92
Old connections x lI06(ex.ht)* 2.63 2.63 .75 .75 .75 .75 .63 .21 1701 .56
No. of households x 10 7.87 7.87 7.87 7.87 7.87 7.87 7.87 7.87 7.87 7.87
Consumption of old
connections x 106 kWh 368 266 270 559 347 752 1483 1059 6033 297
Replaced connections x106(ex.ht)* .66 .66 .19 .19 .19 .19 .16 .05 425 .14
Consumption of replaced
Growth rate in connections per cent 20 20 10 10 10 10 8 2 2.5 13.5
New connections x 106 * .66 .66 .09 .09 .09 .09 .06 .01 53 .09
Consumption of new
connections x 10" kWh 29 50 14 16 5 71 104 23 141 43
Total consumption of all
connections x 106 kWh 426 366 311 607 364 964 1846 1307 7305 403 13898
1992-93
Old connectibns x 106* 1.97 1.97 .56 .56 .56 .56 .47 .16 1276 .42
Consumption of old
Replaced connections x 106* 1.31 1.31 .38 .38 .38 .38 .31 .11 851 .28
New connections x 106 * 1.45 1.45 .20 .20 .20 .20 .13 .01 108 .20
Consumption of new
connections x 106 kWh 64 110 29 33 , 148 216 45 286 91
1993-94
Old connections x 106 * 1.31 1.31 .38 .38 .38 .38 .31 .11 851 .28
Consumption of old
Replacedconnections x 106 * 1.97 1.97 .56 .56 .56 .56 .47 .16 1276 .42
connections x 106 kWh 87 I50 82 95 33 423 778 675 3393 190
(Contd)
994~ Economic and Political Weekly April 13, 1991

Appendix I (Contd)
Proposed El and ES Measure IB CF Other IB- CF -SWH -LPG Other FFV+ Conservation
HDPE
Consumption of new
1994-95
Old connections x 106 * .66 .66 .19 .19 .19 .19 .16 .05 425 .14
No. of house holds x 106 8.35 8.35 8.35 8.35 8.35 8.35 8.35 8.35 8.35 8.35
Consumption of old
Replaced connections x 106 * 2.63 2.63 .75 .75 .75 .75 .63 .21 1701 .56
Consumption of new
1995-96
Old connections x 106 0 0 0 0 0 0 0 0 0 0
No. of households x 106 8.52 8.52 8.52 8.52 8.52 8.52 .8.52 8.52 8.52 8.52
Consumption of old
connections x!O6kWh 0 0 0 0 0 0 0 0 0 0
Consumption of new
1996-1997
Cbnsumption of new
1997-1998
connections x 106 &Wh 145 249 137 158 55 705 1297 1125 5655 316
Consumption of new
1998-1999
New connections x 106 * 4.24 4.24 .58 .58 .58 .58 .67 .05 464 1.22
Consumption of new
1999-2000
New connections x 106 * 4.39 4.39 .61 .61 .61 .61 .78 .05 529 1.48
Consumption of new
Total con1sumlption1
of all
connection.s x 106 kWh 338 582 225 260 90 1162 2594 1345 7053 988 14646
Share of consumption per cent 2.31 3.97 1.54 1.77 .62 7.93 17.71 9.18 48.22 6.74 100.00
(Contd)

Appendix 1 4Conid) DEFEND)US Scenario
II
fDecentralisedp
ConisumerCategory Non-AEH_TConsumer categoryNnAE p

Urban Rural IPSg Urban Rural
1986-87 connections x 10 *1.27 1.12 .54 Replaced connectionsx10*1.4 .5 .7
1981-82to 1986-87 growth rate per cent 8.26 8.26 10 Consumption of replaced
Projected 1990-91connections x 106 * 1.74 1.54 .78 connections X 106 kWh 209 0 0
Consumption norm (old) kWh/conn/yr 241 241 2366 Gowth rate in connections per cent 2 2 8
Projected 1990-91consumption x 106 kWh 420 372 1854 New connections X 106 *2.09 1.85 .46
Yearsfor conservation measure 5 5 5 Consumption of new
Saving by grid per conn6ction kWh/conn/yr 121 241 2366 connections x 10 kWh 251 0 0
Consumption norm (improved) kWh/conn/yr 120 0 0 Total consumption of allX10
1991-92 connections x16kWh 460 0 0
Old connections, X 106(ex.ht)* 1.39 1.24 .63 1997-1998
Consumption of old Replaced connections X 106
connections X 106 kWh 336 298 1483 * 1.74 1.54 .78
Replaced connections x 106(ex.ht)* .35 .31- .16 Consumption of replaced con- X10
Consumption of replaced nections x16kWh 209 0 0
connections Ix 106 kWh 42 0 0 Growth rate in connections per cent 2 2 8
Growth rate in connections per cent 20 20 8 New connections X 106 *2.1 7 1.92 .56
New connections X 106 *.35 .31 .06 Consumption of new
Consumption of new connections X 106 kWh 260 0 0
connections x 106 kWh 42 0 0 Total consumption of all
Total consumption of all connections X 106 kWh 469 0 0
connections x 106 kWh 419 298 1483 1998-1999
1992-93 Replaced connections X 106 *1.74 1.54 .78
Old connections x 106* 1.05 .93 .47 Consumption of replaced con-
Consumption of old nections X 106 kWh 209 0 0
connections x 106 kWh 252 223 1112 Growth rate in connections per cent 2 2 8
Replaced connections X 106 *.70 .62 .31 New connections x 106 * 2.24 1.99 .67
Consumptionof replaced X16Consumption of 'newX10
connections x16kWh 84 0 0 connections x16kWh 269 0 0
Growth rate in connections per cent 20 20 8 Total consumption of all
New connections X 106 .77 .68 .13 conne'ctions x 106 kWh 478 0 0
Consumption of new 1999-2000
connections x 106 kWh 92 0 0 Replacedconnections X 106 *1.74 1.54 .78
Total consumption of all Consumption of replaced
connections X 106 kWh 428 223 1112 connections x 106 kWh 209 0 0
1993-94 Growth rate in connections per cent 2 .2 8
Old connections X 106 *.70 .62 .31 New connections X 106 *2.32 2.06 .78
Consumptionof old X16Consumption.168 of newX10
conniections x16kWh 149 741 connections x16kWh 279 0 0
Reptacedconnections X 106 *1.05 .93 .47 Total consumption of all
Con'sumptionof replaced connections X 106 kWh 488 0 0
connections X 10 kWh 125 0 0 Urban Rural IPS
Growth rate in connections per cent 20 20 8 Saigoeanabvscaro14259
n bv
New connections X 106 *1.27 1.12 .20 Taigoe cnrota consumption
Consumption of new10 Non- IPS AEH LT HT CL Total
con'nections x 16kWh 152 0 0 AEH
Total conisumptionof all 48 00 13 35 76 8 12
connections x 106 kWh 446 149 741 48 13 35 76 8 12
1994-95 Implications of DEFENDUS Scenarios on the Energy Re-quiremetntandi
Old connections X 106 *.35 .31 .16 Installed-Capacity Required for 1999-2000
Consumption of old
connections. x 10 kWh 84 74 371 1999-~2000 scenario Scenario I Scenario II
Replaced connections X 106 *1.39 1.24 .63 GWH requiredon consumption X10
Consumption of'replaced side *x16kWh 14646 11621
connections ~ ~~~~~ 106kWh 167 0 0~~~~~
1999-2000T and D losses per cent 18.5 18.5
Grwhrtnconnections per0cent 207 20 8 GWH requiredon generationside x 106 kWh 17971 14259
New connections x 106 *1.87 i.66 .28 MW requiredon generation side MW 3976 3295
Consumption of new MW available by VIII Plan
connections x 106 kWh 224 0 0 end (1994-1995) MW 5039 5039
Total consumption of all Seasonal MW from sugar
factories MW 214 214
fromcogeneration
X 371
connections
connetion ~106 kWh
XMW 476 74 renewables(small
Old connections x 106 *0 0 0 hydel, wind, etc.) MW 300 300
Consumption of old 16Surplus of Installed Capacity over Demand for 2000 AD
connections X10 kWh 0 0 0 2000 AD surplus (inc.
Replaced connections x I06 1.74 1.54 .78 cogen+small hydel, etc.) MW 15177 225J3
Consumption of replaced 162000 AD surplus (excl.
connections X10 kWh 209 0 0 cagcn+smal' -~~rt, etc.) MW 1Q6.3 -1744
Growth rate in connections per, cent 4 4 8 ____________________
New connections X 106 *2.01 1.79 .37 Comparison with the LRPPP projection
Consumption of new MW requiredby LRPPP on
connections x16kWh 242 0 0 generation side MW 9397 9397
Total consumption of all MW generation saving vs LRPPP MW 5421 6102
connections x 106 kWh 451 0 o Saving vs LRPPP (in 470 MW
1996-1997 Kaiga Nuclear Plants) 11.53 12.98
wr n vaiant of it)thould be chosen if to back them. scenariosmay be difficultto impumt.but
rationalitypmled. But, energy decision- But, now the suppy lobby does not have the conventional plans are imod06ssble.
mpakntis not done on the basis of rationa- the capital to carrythrough its exorbitantly
lity alone;thereare powerfulvestedinterests expensiveschemes;Fuirther, the fundershave (Concluded)
that have grown along with the electrical an alternativescenarTib on the table which
will be workedout in ever-increasingdetail. Notes
supply irodustry. Hitherto, these vested
interests have ensured that only supply- Will these funding institutions be able to
rrhis paper is a revised and expanded version
biased strategiesare implemented.And, the resist the more cost-effective solutions that of Chapter 5 written by the authors in Octob<r
financial and aid institutions have gone are also moreenvironmentallysound and in 1988 for the Expert Group set up (under the
along with supply-biasedapproachespartly the interests of the people? The deciding chairmanship of L C Jain) by the governmeXt
Oecausethe opposing argumentshave been factor may well turn out to be the fact that of Karnatakato prepare a report that was en-
Dfthe hand-wavingvarietywithoutnumbers development-focused end-use-oriented titled Karnataka: Perspective Plan 20(1. That
FIGURE 31a: ENVIRONMENTAL NMIAcT-ENERGY CURVE Chapter 5 suffered from two major defects:
(1) demographic and other constraints were
ignored in constructing the demand scenano
and (2) the supply aspect of the problem was
| MAXIMUM LOST not addressed except for the mention of pro-
I ''5TX |
jects already in the pipelinc Both these defects
lw~~~~~~~~~~~~~' are sought to be removed in the prusent paper.
The authors wish to thank the Swedish inter-
national Development Authority for having
sponsored a pojecLon energy planning diur-
ing thecolurse of which this work was carried
w I
out.
z ~-
z < Eairter presentations of this work-in April
1989 at the Student Projects Programme
Seminar at the Siddaganga Institute ,of
Tlchnology, lbmkur, May 1989 at the Energy
e~ 12S ~~ 15. CQAL
CQAL20.0Q2MLL 25ONT275 and Resources Group, University of California
at Berkeley, in June 1989 at the World Bank,
/ YR LEAST
LOST September 1989 at the Green Energy Con-
10 ference,Montreal, and at the Centre for Enetgy
tO.~~~~~(0016
MILILION and Environmental Studies, Princeton Univer-
TPY)I sity, October 1989 at the Energy Research and
a3 Tiaining Centre,ChulalongkornUniversity,and
at the International Institute of Energy Con-
o I - L- I- servation at Bangkok, March 1990 at the
12.5 15.0 17.5 20.0 22. 5 27.5 Department of Electrical Engineering, Indian
25.0
Institute of Science, Bangalore, and the Institu-
TWH/YEAR tion of Engineers (India), Mysore Centre, April
Note. Comparisonof the envir8nmental impacts of the least-cost and 'maximum'-costapproaches 1990 at the Royal Swedish Academy of Scien-
to the planning of energy supplies to meet the Froen Efricincy energy goal of 26,613 ces, Stockholm, and the KarnatakaPower Cor-
GWh/year. poration, Bangalore; and June 1990, at the
World Bank, Washington, DC-have each
FIGURE 31b: ENVIRONMENTAL IMPACT-CAPACITY CURVES
helped in sharpening the arguments- and
7- -' therefore it is a pleasure to thank the organisers
of these presentations.
Finally, special thanks are due to many col-
leagues, in particular and in alphabetical order
V Balasubramanian, Hal Feiveson, John
lIoldren, K S Jagadish, Thomas B Johansson,
*EricLarson, H S Mukunda, B.G Raghavendra,
S G Ramachandra, Jayant Sathaye, T R Satish
TPY Chandran, D P Sen Gupta, Robert S Socolow,
u 3:-2.669MILLION J Srinivasan and Robert H Williams, who have
been generous with their encouragement.]
1 R K Pachauri, H V Dayal and K

Z ICNSTL Ravishankar, Administrative Staff Col-
. -+--45-6- t ING DTAPCPTY(W
1030 MILO
lege of India, 1980, Report on The
Development of a Forecasting Model and
Demand Projections for Power Develop-
02-~~~I ment in Karnataka submitted to the Power
and Energy Division, Planning Commis-
sion, government of India, New Delhi.
)U? 2 Demand Pattern of Energy in Karnataka:
Present and Projected, PerspectivePlanning
Division, Planning Department, govern-
ment of Karnataka, August 1981.
2 ~~3 4 5 67 3 Report of the Working Group constituted
IN STALLED CAPACITY (GW) for Advance Planning for Utilisation of
Power in Karnataka, government of
Note': Comparison of the environmentalimpacts of the least-cost and 'maximum'cost approaches
to. the planning of power supplies to meet the Frozen Efficiency installed capacity goal Karnataka, December 1982.
of 5,562 MW. 4 Anon, 'Power: Prospects and Policies:
~ nd Political Weekly
aaomic April 13, 1991
Background Paper presented to the FIGURE32: ENVIRONMENTAL IMPACT-SANt) ENERGY COAI S
Economic and P)anning Council, govern-
ment of Karnataka, March 1983.
5 Reportof the Committee (popularly known
as the Three-Man Committee) constituted
by the Economic and Planning Council for
the 'Forecast of Energy Requirement and U') COAL
Availability to 1989- 90', Public Worksand ~ ~ ~ I
Electricity Department, government of
Karnataka, September 1983. --
6 Twelfth Electric Power Survey of India, ~l.0 30- 50
Central Electricity Authoritv. New Delhi,
March, 1985.
C)1
7 Energy Requirement up to 2001 AD, w w
z LI
Central Power Research Institute, 1987.
8 A Report on Long Range Plan for Power
Projects in Karnataka 1987-2000 AD
prepared by the Committee constituted by
the government of Karnataka headed by
S G Ramachandra, May 1987. I ~~~~w 3.057 MILLION
9 ThirteenthElectric Power Survey of India, GW/er an th RP la 4,2)Ghya)
Central Electricity Authority, New Delhi,
December, 1987.
10 Report of the Working Group on Energy
for the Eighth Five Year Plan-1990-95,
Planning Department, government of tO 20 30 40 50
Karnataka,' presented at the seminar on TWH /YEAR
'Karnataka'sEighth Five-YearPlan Perspec-
tive', Institute for Social and Economic Note: Comparisonof the environmental of the energy
impAgtslikelyfromthe implementation
Change, Bangalore 560 072, November requirementscorrespondingto the DEFENDUS Frozen Efficiencyscenario (26,613
16-17 1989. GWh/y~aY)and the LRPPP plan (47,520GWh/year).
11 Antonette D'Sa, Gladys D Sumithra and 13 (a) The abnormally high projection of to lighting loads. The AEH category has a
A K N Reddy, 'A Critical Review of Exer- 76,744 GWh/year of the CPRI has been tariff in which there is a flat rate of Rs 3
cises to Forecast Electrical Energy Demand excluded from this grouping. (b) Instead of per month per kilowatt of connected load
for Karnataka' (in preparation). the internationally accepted unit of GWh (subject to a minimum of Rs 12/instal-
12 (a)The 'abnormally' high projection of or gigawatt hours (= 10.9 watt hours = lation/month) in addition to energy charges
76,744 GWh/year has been excluded in this 10.6 kWh), Indian and Karnataka discus- of Rs 0.75 per kWh. It is the mo'1eaffluent
grouping into.three categories. (b) In order sions on electricity use the unit MU as an homes that have AEH connections whereas
to use the same year for comparing all the abbreviation for million units, i e, million the low-income groups have non-AEH
planning exercises, it is necessary to extra- kWh. connections.
polate many of the projections beyond the 14 The all-electric home (AEH) category in- 15 What is being stressed here is the fact that
planning horizon to which they restricted volves a 15 ampere connection that permits the projection depends on assunptions; the
themselves. Whereversuch an extrapolation both lighting and heating loads, in contrast validity of the assumptions is not being
has been made, a clear indication to that to the non-AEH category with an upper questioned.
effect has been provided in Table 1. limit of 5 amperes that.corresponds mainly 16 Throughout this paper, reference to a year
Appendix 2
ELECTRICITY-GDP ELASTICITIES (GROWTH RATE RATIOS) AND ANNUAL INVESTMENT RE?QUIRE1MENTS
If E is the electricity demand (in MW) and G, the gross domestic product (GDP), then
E = A * Ga or log E = log A + a * log G
where, d log E
ewd
log GE= a, the GDP elasticity of Electricity Demand.
If E(t) and E(0) are the installed capacities at times t and 0, G(t) and G(O), the GDPs at times t and 0, g[- and g(., the growtn rates of electricai
capacity and of GDP, and if
E(t) = E(0) * (I + g9)d and G(t) = G(O) * (I +
then E(t) = (I + g9)d = G(t)a = [(1 + g.),]a
E(0) G(0)
If t = 1, then (I + gE) = (1 + gG)a.
But, (I + x)" 1 + nx, and therefore
I + g= + (a * or
E= a g,. or a
* (gr/g) = - ratio of growth rates. The annual investment required for the electricity sector is
I= E(O)* a* g(* UCOP
= E(O)* g* UCOP
where UCOP is the unit cost of power (Rs/kW).
If E(0) = 600 GW, g 0.06 (6 per cent) and the UCOP 52,777/kW, the annual investment required for electricitv sector would be $100
billion/year-this was the number presented by the World Bank at the 14th Congress (September 1989) of the World Energy Coniferenceas the
annual investment requested by the developing countries for capacity expansion in their electricity sectors.
The govetument of India's VIII Plan proposal for Rs 100,000 crore tor an electrical capacity expansion of 38,000 MW corresponds to
E(O) = 58,200 MW, 9E = 0.1057 (10.57 per cent) and a UCOP of Rs 2&,316ik' or S1840/k' in the above expression for the annual investment
required for electricity sector.

is actually a reference to the financial year Corporation Limited and Karnataka Elec- claft, the astronomical investmentsit asked
startingwith April I of that year and ending tricity Board, January 24 1988. (b) A K N' fdr apparently forced the government of
with March 31 of the following year. Thus, Reddy,'Planning for Power in Karnataka- Karnatakato slash its projection to 35,000
for example, 1986 means April 1, 1986 to 1. Extravagant Projections' and 'Planning GWh and the installed capacity to 7,200
March 31, 1987, or 1986-87. for Power in Karnataka-11. Unexplored MW-by implication, the government has
17 One crore = 10 millions and Rs 14.30 = Alternatives'.Deccan Herald, September 16 rejected the LRPPP projection.
$1.00 in 1986. Hence, Rs 25,000 crore and 17, 1987. 23 Accordingto the conventional energy plan-
$17.48 billion. 20 Report of the Working Group on Energy ning approach, a growth rate for energy
18 The conversion from GWh to MW can be for the Eighth Five-YearPlan... op cit. consumption is used as a proxy for a growth
done on the basii ot the tormula in the 21 The authors have taken the liberty of chang- rate for the number of consumers. This is
LRPPP report, vi7, ing MU into GWh and SGR into LRPPP. fundamentallyunacceptableto the DEFEN-
MW = 1679 + 0.18345 * (GWh/year) I They have also italicised a. mysterious DUS approach beq4use the use of such a
19 (a) A K N Reddy,Note on Long RanigePlan phrase. proxy implies that the energy consumption
for Karnataka, submitted to Open House 22 The LRPPP report claimed that its projec- norms of those consumers and the energy
Discussion organised by Karnataka Power tion was very conservative. Despite this inefficiencies underlying those norms will
continue into the future. Instead, develop-
FIGURE 33a: TIME-SUPPLYCURVES ment, objectives (realised through various
(W/o 5-Year Preparation Period)
policy instruments and agents) should be
20000 expressed directly through a growth in the
number of consumers and changes in the
end-uses of energy should be implemented
through-new energy consumption norms.
3: The growth in energy consumption should
I15000- | - =_ _ _ _ _
then be derived as a result.
GOA= 13154Wh/RW Y_ _ *_
24 Consumption norms arise from the use of
devices and equipment (lamps, furnaces,
motors, etc) that convert the final energy
received by consumers into the energy ser-
vices requiredby them to satisfy their needs.
(5
zIL
1000
LEAST-COST
7 7,8 .i
W
Hence, these consumption norms cannot be
analysed and assessed without going into
the end-uses of energy.In particular,an end-
use-oriented approachiis essential in order
to identify opportunities for:the reduction
of energy consumption norms.
z 25 The idea of a 'frozen-efficiency' scenario
er ] -J [ J ~~MAXiMUM
'COST| came from the paper: 'The Ctmilenge of
w APPROACH
Choices: Technology Options for the
Swedish Electricity Sector' by B Bodlunud,
E Mills, T Karlsson and T B Johanssoti in
O 2 4 6 8 10 12 Electricity: Efficient End-use and S4ew
Generation Technologiesand their Planning
Imrplications,Lund University Press, Lund,
Sweden.
FIGURE33b: TIME-SUPPLY CURVES 26 The common statement: 'a kilowatt hour
3 GAAPP=1RO,1AC4HWX
(With 5-Year Preparation Period) saved is equal to a kilowatt hour generated'
is only partially correct because the saving
20000
of a kilowatt hour takes place ai the con-
sumption end of the energy system whereas
the kilowatt hour that is produced at the
generation end has to undergo transmission
and distribution losses before it is delivered
to the consumer. If, therefore, the T and D
a: LATCS losses are 22.5 per cent (as they were in
0 4 j 8 10 12 Karnataka in 1986-87), then I kWh saved
z at the consumer end is equal to 1.290 kWh
w ZG 146971WGH/IR YE:A,RS
APOACH=13 generated at the generation end. Thus, 'a
10000- kilowatt hour saved is equal to much more
w
a: LEAST COST _ than a kilowatt hour generated'.
U APPROACH Wh/year(Wit5-earudn
(=26,61313,459) J46,971
P n
Nid b nldnGWH h
ieyareparation 27 The search for a scenario that excludes
z efficiency improvements came from a pro-
vocative question from H A Feiveson at a
(5 000 seminar at the Center for Energy and En-
VironmentalStudies, Princeton University,
Princeton, in June 1989 which highlighted
w .. MAXIMUM'COST the danger of double-counting energy
APPROACH
savings both in the demand and supply
scenarios.
O 2 4 6 8 1O 12 '8 (a) F Krause and J Eto, 'Least-cost Utility
Planning Handbook for Public Utility
YEA,RS Commissioners', Volume 2: 'The Demand
Note: Comparison of the gestation pertods of the least-cost and "maximum'lcost approaches Side: Conceptual and Methodological
t0 the-planning of energy generation to meet the Frozen Efficiency increment of 13,154 Issues', National Association of Regulatory
(=~26,613-13,459) GWh/year (a) excluding and (b) including the five-year preparation Utility Commissioners, Washington, DC,
period before launching efficienicy improvement and electricity substitution measures. USA. December 1988;(b) E Kahn, Electric

Utility Planning and Regulation, Amercan
OF IP SETS
FIGURE34: ENERGYCONSUMPTION
Council for Efficient Energy Economy,
Washington, DC, USA, 1988.
-2 Each energy saving/generating technology
is considered to be operating at a fixed 4500 _ _
capacity (hours/year) which is why the unit

cost of energy for that technology is con-
stant over its contribution to the energy
demand and yields a step parallel to the 4000 -
energy demand axis. Thus, the cost-supply

curvesof the least-costapproach differ front
the cost-production curves in micro-
econonics in which the unit cost varieswith 3500 - _ _ _ _ _ _ _ _
the production output.

30 In March 1988, the Karnataka Electricity
Board reported the following number of WATTS/ IPS
connections: Non-AEH-2,568,718, 3000- _ _
AEH-563,981, Commercial-446,643,
Industrial-195,618 and IPsets- 557,162.
lkking 5.8 persons per domestic connection,
i e, the average number of persons in a 2500 -
Karnatakahousehold, 18.17 million people
benefited from electricity supplied to
homes. In addityon, it can be considered
that the 446,643 connections to commercial
establishments benefit all the 1.00 million
people in the commercial sector, the 195,618
industrial connections, the 1.31 million
people in the industrial sector, the 557,162
itrigation pumpsets, an equal number of
farmers plus 80 per cent of the agricultural
workforce (i e, 0.46 million agricultural
labourers). In all, therefore, only 21.5 1000 -L . L L
million people (or 50.7 per cent of the 42.4 o l- 0o (0' ' OD
milliop .1988 population) in Karnataka
benefit directly from its electricity.
31 A K N Reddy and Gladys D Sumithra(with
the assistance of P Balachandra, C V Ravi, Note: The year-wisevariationof the connectedload (watts/pumpset)and energyconsumption
Antonette d'Sa and B Sudhakar Reddy), (KWh/pumpset) of irrigation pumpsetS.
Karnataka Regional Sub-model and 1990). H Williams and Michael G Hylton,
Agricultural Sector Sub-model, Final 36 A 9W compact fluorescent lamp has an ac- 'Biomass-fired Steam-injected Gas-turbine
Report, submitted to the Advisory Board tual power consumption of 15W because of Cogeneration for the Sugar Cane Industry,
on Energy, August 1988. the ballast associated with the lamp. presentedat the meeting of the West Indies
32 (a) B Sudhakar Reddy, Ph D. Thesis 37 There are, however, inter-carrier substitu- ugar Technologists, Bridgetown, Barbados,
submitted to the Indian Instituteof Science,tions that undermine national priorities. A April 17-22, 1988; (b) Eric D Larson, Joan
July 1990. (b) B Sudhakar Reddy and classic example of this blinkered approach M Ogden and Robert H Williams, 'Steam-
A K N Reddy (in 'course of publication). is the attempt to save grid electricity by in- injected Gas-turbine Cogeneration for the
33 Of course, a rigorous analysis should also ducing customers to shift to diesel-based Sugar Cane Industry'. PU/CEES Report
take into account the so-called 'downstream'captive generation sets that only aggravate No 217, Center for Energy and Environ-
employment, for example, the employment the national problem with this middle mental Studies, Princeton University,
provided to those who manufacture distillate. Princeton (N J), USA, September 1987.
aluminium conductor cables, apart from 38 It is assumed here that substituting LPG for 42 (a) K V PrabhakaraRao, 'The Potential for
those involved with aluminium smelting. electricityto perform cooking tasks is in the Cogeneration of Electricityin the Sugar In-
34 Report of the Working Group constituted overall interests of the country; but this dustry of Karnataka'.M Tech(Management
for Advance UtViisation of Power in assumption has to be validated by consider- Studies) Dissertation, January 1989.
Karnataka, government of Karnataka, ing the LPG option from the point of view (b) K V PrabhakaraRao'and A K N Reddy,
December 1982. of indigenous availability, etc. 'A Technoeconomic Study of Cogeneration
39 (a) Proceedings of the seminar on Electrical
35 It is not claimed that the specification of with specific reference to the Sugar
this set of measures is a great achievement;Energy Tariffs and Metering organised by Industry', Seminar on 'Power Generation
the department of power, government of
however obvious the set, the fact is that it through Renewable Sources of Energy',
has 'emerged logically from the end-use India, and Swedish International Develop- Karnataka State Council for Science and
analysis of consumption. But, the set ap- ment Authority (SIDA) at the Central Technology, November 27-28, 1989,
pears to be*attractivebecause others have Power Research Institute, Bangalore, Bangalore.
come up with virtually the same set much November 6-7, 1987. (b) Excellent instru- 43 (a) Micro/Mini Hydel Stations in
later without the end-use analysis. For ex-ments of varying sophistication and versa- KarnatakaState, PreliminaryReport, office
aipple, Peter Miller has in a December 1989 tility are being manufactured indigenously of the chief engineer (Investigation),
paper 'The Energy Conservation Alter- (in fact, by a Bangalore firm, Systematics) KarnatakaPower Corporation, Bangalore,
native to the SardarSarovar Dam' come up to facilitate time-of-the-day metering and October 1980. (b) Micro/Mini Hydel
with similar measures. And very recently, even more advanced electricitymanagement Stationsin KarnatakaState, Preliminary
except for efficient motors, all the other techniques. Report, Office of the chief engineer (In-
measures have been recommended (ob- 40 D P Sen Gupta, S Sargunaraj and Sushila vestigation), KarnatakaPowerCorporation,
viously on the basis of a b~ref-by the Devi, 'Rural Electrification: Distribution Bangalore, August 1988.
Member(Technical)of the stateelectricity Systems for Loss Minimisation', Electrical 44 Joan Xi Ogden and Robert H Williams,
board)in a recentaddressby Karnataka's India, March 1984. Solar Hydrogen:Moving beyond Fossil
ministerfor finance(Mvsore.February10, 41 (a) Eric D Larson, Joan M Ogden, Robert Fuels, World Resources Institute,

Washington D C, USA, October 1989. refrigerators) are appropriate for meeting avoided or has to be installed through that
45 It can be argued that a five-year gestation base-load power requirements and others technology.
period for the implementation of efficiency (for example, gas turbinesand hydroelectric 57 The following formulae have been used for
improvements is too optimistic. If so, a power stations, and efficient lamps) are computing the base- and peak-load require-
longer gestation period, say seven or 10 appropriate for meeting peak-load power ments of the DEFENDUS scenario for
years, can easily be incorporated into the requirements. installed capacity: IC(BL) = (0.10097 *
scenario. But, the aim here has been to show 54 (a) The growth factor for 13 years AED) + 679? and IC(PL) = 0.08248
the benefits to be reaped from implemen- (1999-1986) @ 9 per cent is 3.0658 = AED.
ting conservation on a 'war-footing'. In any 1.09.13 (b) The LRPPP projected require- 58 It is, however, a moot point whether a
case, a five-year gestation period for con- ment for 1999 is given by 15,500 * 3.0658 so-called 'compensatory forest' can ever
servation is no less realistic than the gesta- = 47;520 where 15,500 is the 1986 replicate, and therefore substitute for, a
tion periods of 10 and eight years being used unrestrictedLRPPP demand on the genera- multi-tiered natural tropical forest.
for hydroelectric and nuclear plants. tion side. (c) If, however,the T and D losses 59 This figure of Rs 22,986 crore represents
46 Occasional Papers No 4 (1988) Census of of 22.5 per cent are taken into account, the life-cycle costs discounted to 1986 whereas
India, 1981. Report of the Expert Conmnit- 1986 demand on the consumption side the official figures are based on Rs/kW
tee on Population Projections, Office of the becomes 12,013 GWh. When this base is accounting costs.
RegistrarGeneral, ministry of home affairs, used for the compounding, then the result 60 The convenient spreadsheet provided by
government 'of India. is a 1999 projection of 12,013 * 3.0658 = Dilip Ahuja and his excellent work on the
47 Directorate of Mines and Geology, govern- 36,830 GWh consumption which at 18.5 per Regional A nthropogenic Emissions of
ment of Karnataka. cent T and D loss works out to a genera- Greenhouse Gases has been utilised for the
48 Based on the 'High Scenario'6ofthe Census tion requirement of 45,188 GWh. Thus, by computations here.
of India, 1981. compounding the base demand on the con- 61 The estimation of base year demand of the
49 (a) The saving/connection/year for lighting sumption side (rather than on the genera- LRPPP report is not transparent at all.
is = (averagewattage of bulbs--wattage of tion side as the LRPPP Committee does), 62 For example, the Taunton Municipal.
compact fluorescent lamp) x average the LRPPP projection is reduced by 2,332 Lighting Plant (TMLP) in Taunton
number of points per connection x average GWh. (d) The aggregation of the unrestric- (Massachusetts) USA has promoted a
number of 'hours of usage per year ted requirements of the various consumer scheme whereby it leases compact fluores-
Non-AEH connections: (50-15)/1000 x 4.21 categories yields (cf Appendix 1) a total cent lamps at Rs 38.40/CF lamp/year. Each
x (1.78 x 365) = 95.73kWh unrestricted 1986 demand of 11,607 GWh 18 watt 10,000-hour-life CF lamp that
AEH-connections: (48-15)/1000 x 9 x (1.97 x which compounds to a 1999 consumption replaces a 75 watt 1,000-hour-life achieves
365) - 213.56kWh requirement of 35,384 GWh-this works a saving (based on Rs 16/US $) of Rs 32.46
(For the hours of usage and number of out at 18.5 per cent to a generation require- * h /point/year where h is the average
points p;r connection, see Endnote 32) ment of 43,662 GWh. Thus, by using a number of hours of usage per day. Thus,
(b) To prevent over-estimation of the sav- reduced unrestricted 1986 base demand of any usage above 1.18 hours/day results in
ing potential, solar water heatersare assum- 11,607GWh instead of the LRPPP's 12,013 a net saving to the consumer even after pay-
ed to be used for 330 days per year. The GWh, the 1999 generation requirement is ing for the leasing charges which appear in
saving/connection per year for water- reduced by 1,526 = 45,188 - 43,662 GWh. the monthly bill for electricity (TMLP elec-
heating is = 330/365 x (average AEH elec- (e) When the unrestr-icted1986 demand of tricity charges are Rs 1.28 per unit or kWh).
tricity usage, for water-heating per year), 11,607 GWh is further reduced by propos- TMLP buys the CF lamps in bulk and gets
where the proportion of the AEH usage for ed power cuts to a restricted 1986 base a lower price than what the $ 20-25 that
water-heating was found to be 28.75 per demand of 10,431 GWh, the 1999 genera- customers would have to pay in the retail
cent (cf Endnote 32) tion requirement becomes 39,238 GWh. (f) market and replaces free of charge the CF
(c) The saving/connection/year for cook- This 1999 requirement of 39,238 GWh can lamps of customers. Since anyone can get
ing = 320/365 x (average AEH electricity be further reduced by 12,626 GWh to a CF lamp free from the electricity utility
usage for cooking per year), where the pro- value of 26,613 GWh (the frozen efficiency (TMLP) by means of a telephone call or a
portion of the AEH usage for cooking was value) due to the alteration of business-as- simple form, a secondary market in CF
found to be 18 per cent (cf Endnote 32) and usual growth rates of connections to the lamps has not arisen.
the assumption of 320 days was used to development-focused growth rates of the 63 In addition to efficiency improvements,
adjust for possible limits on LPG supply. DEFENDUS scenario. Even this can be changes in the product-mixof the economy
50 The government of India VIII Plan pro- further reduced by 8,642 GWh to the from more energy-intensive to less energy-
posal for an expansion of 38,000 MW over DEFENDUS centralised scenario 1999 intensive industries/activities have also
and above a base capacity of 58,200 MW generation requirementof 17,971 GWh due played a key role in reducing the energy in-
in 1988 at a cost of'Rs.100,000 crore yields to the efficiency improvements and elec- tensity. Estimates of the relativeshare of ef-
a rate of Rs 26,316/kW through the tricity substitution measures. ficiency improvements and structural
formula: Annual Investment = Base 55 A K N Reddy, G D Sumithra, P Balachan- changes have varied from 30:70 to 50:50.
Capacity x Growth Rate of Electrical dra and A D'Sa,The Comparative Costs of 64 The governmentof Karnatakaabolished the
Capacity x Unit Cost of Power. Electricity Conservation and Centralised tax with effect from April 6, 1985(Notifica-
51 The analysis of load curves from Karnataka and Decent ralised Electricity Generation, tion No PWD 37 EIP 85).
was carried out under the supervision of presentedat the seminar on 'Power Genera-
Gladys D Sumithra by G V Rao and tion through RenewableSources of Energy',
descr'ibed in the M Tech (Management Karnataka State Council for Science and Econoimie and Political Weekly
Studies) Project Dissertation entitled 'Load Technology, November 27-28, 1989, A vaiab/e from,i
Management with reference to Karnataka'. Bangalore, and the 12th Annual Inter-
52 The magnitude of excess reserve capacity national Conference of the International Modern Book Stall,
has been chosen to be approximatelv25 per Association of Energy Economics on B-6, Janpath Market,
cent in order that the resulting formula (8), Energy-Environment-Development, New Hazrat Ganj,
v-iz,IC = 0.18345 * AED will the same as Delhi, January 4-6, 1989, organised by the Lucknow - 226 001,
formula (1) used in the LRPPP Report, viz, Tata Energy Research Institute, 7 Jor Bagh, Uttar Pradesh
IC = 679 + 0.18345 * AED except for the New Delhi-110 003.
679 MW 'reservecapacity' used in-the latter. 56 The following formula has been used for
A.K. Nayak,
53 This disaggregation is essential, as shown converting energy saving/generation into
later, for planning electricity supplies Bus Stand Book Stall,
avoided/installed capacity: A AED *
because some energy technologies (for 0.18345 = IC wtfire AAED)is the energy Bhubaneswar - 751 009,
example, nuclear *nd coal-based thermal saved or generated by a specific energy Orissa.
power plants, aAndefficient furnaces and technology and IC is the capacity that is
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A End -Use-Oriented

LEAST-COST PLANNINO Al'tROACH 1T0

Economic and Political Weekly April 13, 1991

984 Economic and Political Weekly April 13, 1991

Just as cost-supply curves were con-

GESTATION PERIODS OF VARIOUS ENERGY

986 Economic and Political Weekly April 13, 1991

People-Orien ted Development-Focused

Economic and Political Weekly April 13, 1991 987

988 Economic and Political Weekly April 13, 1991

Economic and Political Weekly April 13, 1991 989,

Economic and Political Weekly April 13, 1991

Economic and Political Weekly April 13, 1991 991

992 Economic and Political Weekly April 13, 1991.

Economic and Pblitical Weekly April 13, 1991 993

Consumer Category Non- AEH IPS LT HT CL Total

Derivation of the 1986-87 Base Demand Assumed by LRPPP Projection

DEFENDUS Scenario I (Centralistedl

994~ Economic and Political Weekly April 13, 1991

Economic and Political Weekly April 13, 1991

ConisumerCategory Non-AEH_TConsumer categoryNnAE p

1 R K Pachauri, H V Dayal and K

998 Economic and Political Weekly April 13, 1991

Economic and Political Weekly April 13, 1991 999

capacity (hours/year) which is why the unit

energy demand axis. Thus, the cost-supply

the production output.

Economic and Political Weekly April 13, 1991

Economic and Politicai Weekly April 13, 1991

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