Environmentally sound energy efficient strategies:

a case study of the power sector in India

Executive summary

India's energy consumption is increasing and it is likely to grow for quite some time as efforts to provide better living standards to her population are made. Thus, during the last decade, India's energy consumption more than doubled from 91 million tonnes of oil equivalent (mtoe) in 1980-81 to 189 mtoe in 1991, reaching 219 mtoe in 1994-95. Most of the increased energy consumption has been contributed by coal and oil, the fuels that are also associated with emissions of greenhouse (GHG) gases. As a signatory to the Framework Convention on Climate Change that was adopted at Rio by the international community, India needs to pursue environmentally sound energy development. Since fossil fuel use contributes the largest share of GHG emissions in the atmosphere, efficient production and use of energy can reduce emissions and put India on a low energy intensive growth path, and thus benefit the environment most in the long term. Equally of concern are the health effects associated with fossil fuel use, and soil and water pollution due to coal based power plants. Thus, one of the best ways to improve quality of life and reduce environmental damage is also by increasing energy efficiency.

Coal is a major source of energy in India, providing more than 60% of the commercial energy requirements. Coal is also most polluting fuel in terms of GHG emissions. Considering India's energy resources, coal may continue to provide a large part of energy requirements in the future too. Coal is mainly used for generating electricity. Therefore, efficient measures for generation, transmission and end use of electricity can help in reducing the environmental pollution, leading to environmentally sound development. The report highlights some such important measures; reduction in auxiliary consumption (ie. the electricity consumed by generating units in the process of generation), reduction in transmission and distribution losses, and application of demand side management (DSM) options for high tension industries. A glance at India's power sector indicates considerable scope for improvement in these areas; auxiliary consumption in various thermal power stations in the country varied between 8 to 14% in 1994-95, transmission and distribution losses between 16.4 and 25.5% in major power consuming states (with an average of 21% at all-India level). DSM options, that have already made impact in some of the developed countries, are yet to make a headway in India.

The study was conducted in two phases. Maharashtra State Electricity Board (MSEB), the largest utility in Maharashtra was chosen for the detailed study in the first phase. For the study of auxiliary consumption, two typical plants of the MSEB were selected. The transmission losses were studied for the MSEB system based on a snap-shot picture of the system. For the DSM part, energy saving potential in HT industries in Maharashtra was explored based on a survey of HT industries.

In the second phase of the study, two more plants outside Maharashtra were also studied to get better insight into diverse causes for the different levels of auxiliary consumption and estimate potential savings. All India potential for savings through reduction in auxiliary consumption was also estimated in this phase.

Auxiliary consumption

The consumption of electricity by power plant auxiliaries depends on factors such as unit size, level of technology, plant load factor, coal quality etc. The largest share of installed capacity in India (about 48% in 1995, accounting for 25,600 MW approx.) was from 200/210 MW units, most of which were installed in the late seventies, and eighties. The auxiliary consumption in these plants varied between 8 to 14%. A majority of these plants are yet not due for renovation, but available technology for power plant auxiliaries has considerably improved since their installation, indicating substantial scope for reduction in power consumption in these plants through up-gradation of auxiliaries. The case study was therefore focused on 210 MW power plants.

Auxiliary equipment upgradation: High auxiliary consumption in power plants can be due to the factors outside control of an individual plant; for example, coal shortages and poor coal quality, grid requirements (backing down, reactive generation requirements) etc. However, there are several technological and other plant related factors that can be addressed to reduce auxiliary consumption. Replacement of existing drives for ID fans and BFPs by variable speed drives, utilization of flash steam from continuous blow down and waste steam LSHS tank heating to provide air conditioning in the plant through vapour absorption system, cooling tower system improvements (for example, through a system to apply 24 volts on motor windings to prevent ingress of moisture in Nasik TPS), retrofit for ash handling system, and pulse energization of ESPs were evaluated for the case study plants. Overall energy and CO2 savings, payback periods and cost of CO2 reductions from various options are given in Tables 1 and 2. The reduction in auxiliary consumption as a percentage of electricity generation for these units is between 1.53% and 2.2%, respectively. If an average auxiliary consumption reduction of 19 million units (MU) is considered for 80 units of 210 MW (about 70% of the total 120 units), energy savings work out to 1520 MU and CO2 emissions savings are approximately 1.5 million tonnes per annum.

Other measures: Improvement in the power factor of auxiliaries, proper sizing of auxiliaries, and measures such as sliding pressure operation of units (as against BFP discharge throttling to keep turbine inlet pressure constant), instrumentation for auto air-load control to run the unit with optimum excess air, reliable flame monitors etc. can be selectively studied for individual power plants. Coal beneficiation to improve coal quality and turbine uprating (from 210 MW to 235 MW, already a proven upgradation technique) are other promising alternatives that offer quantum jump in efficiency of power production.

All-India level energy savings: NATGRID model developed at IGIDR was used to quantify possible cost savings resulting from energy savings through reduction in auxiliary consumption at all-India level. The model considered 19 electric utilities with 210 generating units, 90 inter-utility transmission lines, 23 major coal-fields and 97 power station to coal-field linkages to minimise the total system cost. The results are given in Table 3.

The CO2 emission savings range from 0.7 million tons to 1.5 million tons per year. Since decrease in unmet demand in this exercise also comes from reduction in auxiliary consumption, same has also been considered while calculating savings. Over the life time of the power plants, the savings could be as large as 23 million tonnes.

Table 3. Reduction of auxiliary consumption considering national grid operation

Parameters Auxiliary Consumption
Actual Restricted 10% Restricted 8%
Total System Operating Cost (Million Rs.)

Unmet Energy (MU)

Total Generation (MU)

Total Auxiliary Consumption (MU)

Coal Based Generation (MU)

Total Coal Supplied ('000 Tons)

Average Generation Cost (Rs./kWh)

Average Thermal Units Auxiliary Consumption (%)

Annual CO2 Reduction ('000 Tons)

Rate of Emission (Tons/kWh)































Source: IGIDR Study

Reduction in transmission and distribution losses

Transmission and distribution (T&D) losses of major states in India varied from 16.4% to 25.8% in 1992-93 with an all-India average of 21.8%. Although losses in developed countries are very low compared to this, considering its special characteristics, expert committees have suggested an upper limit of 15.5% for Indian power system. MSEB system is relatively efficient with losses at 16.4%, but losses have varied from a low of 14.3% in 1987-88 to 18.3% in 1990-91. A break up of the typical losses in MSEB system indicated that although transmission losses are within the prescribed norms, distribution losses are higher. The T&D losses can be technical losses such as transformer and feeder losses and non-technical losses (also known as commercial losses), that are mainly due to pilferage and faulty meters.

Distribution system study requires a field study to measure losses at different locations in the network. An experimental study was outside the scope of present study. However, a MSEB study indicated overloading of 8000 distribution transformers in the system and a high reactive load (with power factor as low as 0.6) resulting in high losses. The measures initiated by MSEB to reduce losses include provision of additional transformers in case of overloaded areas, requirement of capacitors for LT consumers at their premises, leasing scheme for LT capacitors for transformers for agricultural consumers, and upgrading transmission voltage, wherever possible. Steps have also been initiated to check commercial losses. There are several measures that can be taken to reduce distribution losses depending on the causes that are identified based on a field experiment. Short term measures include reconductoring, installation of capacitors, reconfiguration of the network, upgradation to high voltage transmission etc. In the long term, system can be optimized through a detailed system study.

Transmission losses in the high voltage network were studied for the MSEB system based on a snapshot picture of a typical peak hour. The analysis indicated scope for improvement in losses even for HT transmission. At some buses in the system, reactive power compensation was observed to be inadequate resulting in voltage drop (and hence losses). Thus, increased reactive compensation can reduce transmission losses further. The results are summarised in Table 4.

Table 4. MSEB HT transmission system losses

Type of Bus Actual Voltage Range Power Factor Remarks
400 kV 378 kV - 401 kV - Out of 9 buses, 3 had none and 2 had inadequate compensation.
220 kV 211 kV - 225 kV 0.77 - 0.79 Seven buses were with PF and voltage in this range. In addition to this, two buses were with low voltage, 206 and 204 KV.
132 kV 121 kV - 123 kV 0.79 - 0.81 Eight buses were with PF and voltage in this range. In addition, three buses had low voltage, 121 to 122 KV.
100 kV 96 kV - 99 kV 0.69 - 0.78 There were four buses with PF in this range.

Demand side management (DSM) options

The DSM study is based on an earlier comprehensive study carried out at IGIDR, that included a survey of HT industries. DSM offers several advantages such as reduction in electricity generation requirements on account of energy savings, short gestation period of 1 to 2 years for DSM measures as against 4 years and more for power plants, reduced burden on infrastructure such as transport (as a result of reduced fuel requirements) etc.

The HT industries in Maharashtra consumed 31% of the electricity in 1992-93 and accounted for 38% of peak demand. Motors, melting, electrical heating, compressed air, air conditioning and lighting were major end-users of electricity. DSM options considered were energy efficient motors, variable speed drives, good house keeping practices, vapour absorption refrigeration systems (VARs), improved electric arc furnaces (EAFs), efficient lighting systems (replacement of 250 W high pressure mercury vapour lamps by 150 W high pressure sodium vapour lamps, replacement of Incandescent by Compact Fluorescent Lamps (CFLs), and replacement of magnetic ballasts by electronic ballasts), high efficiency fans and pumps, improvement in power factor (PF), industrial Cogeneration (COGEN), and time of day tariff (TOD). These options were evaluated using COMPASS software. The payback period for these options varied between 0.5 to 2.4 years with an active DSM programme, and between 0.6 to 4 years without a DSM programme. DSM programme is required to accelerate rate of adoption and diffusion since typical consumer discount rates to evaluate an option are very high; 25% and above as against utility discount rate of 14%. A five year DSM plan (1994-98) was worked out (Table 5). It can be seen from Table 5 that with all the identified options, demand savings of 760 MW and energy savings of 8590 million units are possible in a five year period. The cost of saved demand for the utility is Rs. 4500/kW, and overall cost (including DSM participants costs) is Rs. 15900/kW. The peak demand is expected to flatten gradually by the above order over a five year period.

Table 5. Five-year DSM plan for Maharashtra - summary of results

DSM Option Demand Savings


Energy Savings

in 1998




(Rs. million)




















































































Total 436.7 3380.7 1900.6 4300 0.82 12700
COGEN 323 5211.6 2328 4800 0.76 19100
Grand Total 759.7 8592.3 4228.6 4500 0.78 15900

The impact on environment is through reduced emissions of CO2, and other local pollutants like SO2 and NOx. More than 9 million tonnes of CO2 and 27 and 43 thousands of SO2 and NO2 respectively is expected to be emitted less over the five year period.

Barriers in implementations

Institutional barriers: Currently, there is no institutional mechanism in the utilities to systematically take up issues related to upgradation of equipment in power plants, T&D lines, and DSM formulation and implementation. The thrust of the current set up in the utility is on expansion rather than consolidation and modernization of existing stock. As a result, returns are poor from the existing plant and equipment. Due to lack of an institutional set up, other barriers such as technical, communicational also exist that hamper implementation of upgradation programmes in these areas. Technological barrier may also exist due to lack of exposure and training of the plant personnel.

Institutional set-ups are therefore needed at plant and overall utility level to take up upgradation programmes in these areas. Outside experts can be associated with such set-ups (for example from consulting firms, power plant manufacturers, universities etc.) to synergise the expertise. In case of DSM, innovative approaches such as energy service companies (ESCOs), consortium approach (consisting of utility, industry associations, financial organisations and relevant governmental agencies) need to be explored.

Financial barriers: Currently, there is no appropriate financial mechanism to carry out upgradation programmes, except for complete plant renovation. Therefore, even if upgradation plans were to be systematically formulated, non-availability of funds may be a problem. One of the major reason for this is current pricing policies for the power, that make the utilities financially dependent on government. Further, the current policies are neither conducive to conservation nor to build up a healthy power sector that may be capable of raising its financial requirements. DSM programmes need explicit funding mechanism that also does not exist. Besides a funding mechanism, launching of DSM programmes would first require a demonstration through a pilot project. However, the pilot project can be funded by some of the existing energy funding programmes of IDBI and ICICI.

Restructuring and reforming power sector policies is vital to success of conservation programmes. International agencies such as World Bank, ADB, GEF etc. can also be approached for relevant programmes in these areas. ESCOs can become viable with sound power pricing policies, and raise money from the market.

Recommendations for future work and role of various agencies

Based on the foregoing discussion on the barriers to DSM and the institutional and financial mechanisms needed to overcome them, following steps have been identified for the next phase of work.

(i) Action by MSEB

(a) Formation of an expert group in MSEB at the apex level (in the corporate office/planning department), responsible for drawing up short term and long term measures for technological upgradation for plants and T&D lines, and conservation programmes including DSM. Experts need to be drawn from various plants and T&D zones/stations and outside organizations. For example, depending on area of expertise, experts from other utilities, NTPC, manufacturing organizations like BHEL, other industries, institutes/universities, and governmental agencies like EMC can be associated with the group.

(b) Formation of a task force in each plant and T&D zone to formulate and execute the plan for the plant or T&D zone/station, based on the recommendations of the expert group.

(c) Formation of a consortium consisting of representatives from MSEB, industry (equipment manufacturers), associations like CII, governmental agencies (like EMC) and a research institute/university working in this area, to initiate a pilot project for DSM.

(d) Commissioning a study on reforms required in pricing policies and interacting with the state government for carrying out the reforms.

(ii) Action by the State Government

(a) Providing the necessary information, policy guidelines and support for working out the pricing reforms by MSEB.

(b) Assistance in getting the recommended pricing reforms implemented, if necessary through legislation.

(c) Taking up issues, whenever required, with the central government to implement the recommended pricing reforms.

(d) Introduction of more autonomy and accountability through an MOU with the MSEB and if necessary, initiating steps to convert the board into a company for this purpose.

These measures are expected to not only tap the conservation potential that this study indicates, but go a long way in improving the overall working of the utility.