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the construction of interstate lines due to permitting and land acquisition delays (see the detailed assessment in Chapter 8 on system integration).

Network investment, notably at distribution levels, has been a high priority for the government, with a view to ensure access to electricity. In addition, the Ministry of New and Renewable Energy and the Power Grid Corporation of India developed the Green Energy Corridors. The corridors include interstate and intrastate networks to integrate the additional 40 GW of renewable energy by 2020 (first phase), notably from the variable renewables-rich states of Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Himachal Pradesh and Rajasthan. Total costs were estimated at USD 7 billion. The integration of the new renewable target of 175 GW will require a second phase of the Green Energy Corridors.

Figure 7.21 Annual completion of new transmission lines

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Source: CEA (2018a), National Electricity Plan 2018, www.cea.nic.in/reports/committee/nep/nep_jan_2018.pdf.

Quality of supply

In the light of high transmission and distribution losses, growing electrification and the poor financial health of the DISCOMs, India’s residential electricity supply still has a high number of power outages. A recent study using satellite images found that the extension of the electricity grid during 2005-12 may have actually led to a higher intensity of power outages in the period after 2013 (World Bank, 2019). No reliable data are available as India’s DISCOMs are not obliged to measure supply disruptions. The Indian Human Development Survey collects information on the reliability of supply. In 2011/12, 45% of the rural population had power outages of around 13 hours a day (World Bank, 2019).

The DISCOMs are under scrutiny for the delivery of electricity and quality of supply. They are required to ensure reliability and quality of supply at all times – otherwise they can lose their licence. However, there is no monitoring in place, even if the SERCs have the legal right to remove licences.

At the same time, the state governments have signed memorandums of understanding with the MoP for the provision of 24/7 quality and reliable power by March 2022.

International experience confirms that clear performance standards and monitoring of quality of supply is best ensured through the so-called SAIDI/SAIFI indices (see Box 7.5).6 SERCs have powers to set and monitor standards of performance of licensees; for instance the licensee has to pay compensation to consumers for failure to comply with the

6 SAIDI = System Average Interruption Duration Index; SAIFI = System Average Interruption Frequency Index.

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standards. SERCs also can induce quality of supply, notably through the introduction of performance-based regulations (operational efficiency through an availability-based tariff).

A model regulation on power quality was proposed by CERC for adoption by SERCs (an ongoing process).

Box 7.5 Monitoring and implementing quality of supply rules

Many countries’ regulators are implementing SAIDI and SAIFI indices with a view to guiding operators towards more reliable distribution network operations. Under quality of supply, India’s regulatory institutions are increasingly focusing beyond access to ensuring electricity is provided to subscribers at all times. As a measure of the reliability of electricity distribution, regulators and network operators calculate the number and length of interruptions to electricity distribution using international standards called SAIDI and SAIFI created by Institute of Electrical Electronics Engineers:

SAIDI (System Average Interruption Duration Index) – a system index of the average duration of interruption in the power supply indicated in minutes per customer.

SAIDI = total duration of interruptions for a group of customers/total number of all customers

SAIFI (System Average Interruption Frequency Index) – a system index of the average frequency of interruptions in power supply.

SAIFI = total number of interruptions for a group of customers/total number of all customers

These quality of supply indices provide regulators with the tools to assess the performance of network operators, establish a quality factor in revenue regulation, compare and benchmark their operations, and where necessary, demand that distribution network operators reimburse customers for long interruptions in electricity distribution. India’s power sector has grown fast and most villages have gained access to electricity. The role of the distribution companies and the network is going to increase. Regulators therefore need a better system for assessing the performance of DISCOMs to achieve not only a reduction in technical and financial losses, and thus efficiency, transparency and open access, but also the quality and continuity of supply. The Forum of Regulators (FoR) has discussed with SERCs and the power industry the need for better monitoring, incentives and supervision of quality of supply. In August 2018 the FoR issued recommendations for state regulators and DISCOMs on how to the implement regulations on power quality across India (FoR, 2018).

An amendment to the Electricity Act is under consideration by the GoI, with a focus on the supply of reliable and quality power. In 2018 the GoI proposed amendments to the tariff policy, which are presently under consideration, with a basic framework for quality of supply:

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Continuity and reliability of supply: the consumer is entitled to have reliable supply of electricity on a 24/7 basis, provided they are not in default and have not been charged with any offence under the Electricity Act warranting disconnection. The 24-hour supply of adequate and uninterrupted power is to be ensured for all categories of consumer.

Quality of supply: this shall be measured as per standards prescribed by the CEA.

Application for connection, disconnection, enhancement or reduction of connected load: these must be responded to and completed within a reasonable time frame.

Complaints of supply disruption: these must be responded within the stipulated time frame barring major breakdown or force majeure.

Failure to meet standards: in this instance, penalties may be imposed on licensees in accordance with section 57 of the act.

Power cuts: In case of power cuts other than in force majeure conditions or technical faults, an appropriate penalty as determined by the SERC shall be levied on the DISCOM and credited to the account of the respective consumers. The level of the penalty shall be laid down by the respective SERC through regulations.

Flexibility of the power system

India’s power system will need to accommodate the targeted 175 GW of renewable energy by 2022, 275 GW by 2027 and the 450 GW thereafter. This will require measures to ensure system integration and improve the financial viability of the power sector. Regional grid integration is advancing, but at a very slow pace, which is due to political economy, lack of financing, potential loss of revenue for incumbent generators and competition concerns. These concerns are common across regional electricity markets and systems around the world.

Coal remains the primary source of reliability in the power mix (with 200 GW out of a total of 356 GW installed capacity) besides hydropower, whose share is expected to decline in the next decade by 30% due to climate change impacts (CEA, 2018a). Following changes introduced by the CERC in 2017, the coal fleet is mandated to run at a minimum of 55% for interstate generating plants (previously above 70%), which makes its contribution to flexibility rather limited. The IEA has worked with the MoP and MNRE on actions to foster power plant flexibility, notably of the coal-powered fleet. Efforts are being pursued at a state or regional level to reduce the need for flexibility of the system, by smoothing the peak demand periods or by better forecasting and dispatching.

India has large potential for demand-side management. The IEA World Energy Outlook 2016 estimated that almost a third of India’s electricity demand could be shifted in the summer (June to August), while the high share of variable renewables in the winter limits such options during December to February. This is particularly true for agricultural demand. Several states already plan to shift agricultural consumption to the daytime by adjusting preferential monsoon and night-time tariffs. As electricity consumers are used to frequent power supply cuts and interruptions, their price and supply elasticity is much higher than in other countries and by international comparison. India has very good conditions for demand response from industrial, commercial and household consumers.

India expects growth of wind and solar PV to reach a share in total installed capacity of 36% by 2030, and flexibility needs will therefore significantly increase. The system integration of solar PV will require investment in storage and distribution networks and

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