The Energy Sector: Our Current Grid and a Framework for the Future

The previous article in this series talked about sustainability as a balancing act between environment and exploitation. It also introduced sustainability’s linkage to the energy and e-mobility sectors. In this article, we will focus on the energy sector, the lifecycle of energy, existing and emerging technologies, the transition to renewables, policy support, and challenges faced by stakeholders while transitioning to sustainable sources of energy

Energy is essential for every aspect of human society: manufacturing, transportation, communication, heating and air conditioning, lighting, and everything in between and beyond.

It is a commodity that is extracted from natural resourcesand delivered to end consumers. During this process, it passes through various stages, all of which together comprise its ‘life cycle’

Life cycle of the energy sector

The term ‘life cycle ’ refers to thestages that a product goes through from cradle to grave. For energy, this includes the stages from generation to end use.

Across this complex lifecycle there are numerous opportunities for making processes and technologies more sustainable through better ways of energy management and the use of clean technologies. Further, the emergence of renewables and distributed energy generation is transforming the systems of hierarchical and centralised generation into de-centralised grids with distributed energy sources. Some of the sustainable energy technologies already being explored are ‘Waste to Energy’, hydrogen fuel cells, and more futuristic technologies like cold fusion.

The stages in the energy life cycle and the potential for sustainable practices in each are elaborated upon below.

1. Generation involves the conversion of energy stored in raw materials/inputs,intoa usable form electricity. Various types of convertors are used today for transforming thermal, chemical, mechanical, potential, light, tidal, etc. energy into electrical energy. While,conventional sources of energy such as thermal, nuclear, hydro, etc. are mostlyused to provide for the base demand (minimum demand for electricity at a given point in time),non-conventional renewable sources like wind, geo-thermal, and photovoltaics are increasingly being used to provide for the base load (minimum demand for electricity on a grid over a 24-hour period) and peak demand. Further, while conventional energy generation plants are mostly government owned and operated, renewable power generation plants are mostly privately owned and operated.

Today, energy generating companies are increasingly adopting technologies for the seamless porting and onboarding of retail customers for open access using technologies that integrate current grid energy scheduling with smart grids and, Blockchain.

2. Transmission involves ferrying the electricity generated by power plants to regionalsubstations across high-voltage transformers and high-voltage powerlines.Transmission technology is the same regardless of thesource of energy generation,and is responsible for the loss-lesstransfer of electricity to even the remotest areas.Transmission systems in India are managed mostly by government owned companies like Powergrid. Operators are paid a rent based on the capacity they reserve on their lines and the distance electricity is transported through their lines.The transmission space presents immense opportunities for a clean energy transformationin terms of the predictive and preventive maintenance of transmission infrastructure, management of congestion, curtailment for renewable energy, etc.

3. Distribution follows transmission and involves the movement of electricity from local neighborhood transformers to the end user via low-voltagewires. Local distribution companies are also responsible for recovering the energy charges from end users in a timely manner. Efficiency in these systems is key to reducing wastage and meeting energy demands. Solutions like demand side energy management, virtual power plants, etc. are crucial for the integration of renewables, and for localized energy management in an efficient manner.

4. Energy management is focused on the conservation, storage, and management of energy resources. Proper management of energy is critical for the effective integration of renewable energy into the grid. Energy managementsolutionscombinepassive and active energy management elements such as storage batteries, building energy management, smart home systems, smart appliances,IoT sensors, smart grid systems, etc. Further, artificial intelligence and machine learning (AI/ML)-based tools are used for advanced demand and supply forecasting, consumer behavior analysis, and novel consumer-centric energy management approaches such as P2P energy trading and demand response.

5. Consumption is the final stage of the energy life cycle and involves the use of electricity by endusers. Consumers are increasingly turning prosumers (consumers and producers), that is, they are becoming owners of energy assets who not only consume energy, but also store and produce energy. It is, therefore, important for energy players to understand the energy behaviors of end users in order to deliver improved energy efficiency and manage energy better.

Quest for net zero: shift to renewables, technology transitions, and policy considerations

In India, the energy mix is changing: the share of renewables is rapidly increasing, while that of carbon-based sources is steadily declining. For instance, according to a report by the India Brand Equity Foundation, and initiative of the Ministry of Commerce and Industry of the Government of India, the country’s renewable capacity addition already stood at 8.2 GW for the first eight months in FY 2022, compared to 3.4 GW for the first eight months of FY 2021. Further, today, India is globally ranked 4th in terms of wind power, 5th in terms of solar power, 4th in total installed renewable capacity.

Large investments and government support have greatly bolstered this process, particularly in terms of phasing out technologies geared towards fossil fuel use, and installing infrastructure needed to harness renewables—like efficient solar panels, wind farms, and ocean and geothermal energy generators. For example, in the UnionBudget 2022–23, INR19,500 crores was allocated to boost the manufacturing of high-efficiency solar modules, 100% FDI was allowed in the power sector, and several schemes were announced to help augment electrification across the country, among other things.

In addition to energy generation, another highly important aspect of renewable energy use that countries are still understanding is integration and storage . Unlike thermal or nuclear power, the amount of solar and wind energy that can be harnessed, at any given timefluctuates. Energy storage capacity is, therefore, needed to provide a buffer for short-term energy generation variations, and to store the excess energy generatedduring peak hours for use during low-generation periods. This would not only prevent wastage and increase efficiency, but also save energy costs and capital costs on infrastructure. Across the world, countries are working on creating storage technologies such as large lithium-ion battery systems, hydrogen generation and storage, and pumped hydroelectric energy storage systems.

In order for the energy sector to harness the full potential of clean technologies, a key need is foundational grid infrastructure like smart grids;, enabling technologies like AI/ML, Blockchain, digital twins, etc. for multi-energy vector integration; and most importantly an enabling regulatory environment with consumer centricpolicies that promote energy efficiency,the integration of renewables, the de-segregation of carrier and content, and empowerment of prosumers. India has begun torollout smart grid infrastructure over the past decadeunder the National Smart Grid Mission, and infrastructure readiness exists in a few pockets like the New Delhi Municipal Corporation; Madhya Pradesh West Zone, Indore; Chamundeshwari Electricity Supply Corporation Limited, Mysore; Telangana Southern Power Distribution Company Limited,Jeedimetla; etc. However, coverage is still very low (under 10%).Yet, technology readiness exists and numerous startups offer solutions ranging from demand and generation forecasting, to community energy management and distributed energy resources management systems.

What is also requiredis adequate policy upgradation to support these infrastructure and technology enhancements. The Draft Electricity Bill 2021 provides insights into the thought process of the Central Electricity Regulator (CERC) and the path ahead for the power sector. It is evident that the regulator is keen on driving system efficiency and reducing electricity losses, de-licensing the electricity sector to encourage competition and provide more choice to consumers, increasing the liquidity of utilities through direct benefit transfer to consumers, and improvingthe financial health of government owned utility companies.If the bill is implemented, most of these regulations could potentially catalyze the power sector. But at present, the bill has been put on hold in lieu of the current amendment of the Electricity Act 2003.

Nonetheless, overall, we believe that the trajectory of the electricity sector is in the right direction andgiven the collective interdisciplinary efforts towards a green energy transition in the 21st century, the way we harness, distribute, and use energy can be transformed to a sustainable system.

Stay tuned to this blog section for more insights on our transition to a green future.

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