After almost 18 months of homework and deliberation, the Power Division of the Ministry of Energy has finally unveiled the draft of National Electricity Policy 2020 which now will be presented to the Council of Common Interests (CCI) for its approval. A quick visit at the draft should be sufficient to reveal that it’s tall in intent but vague, non-specific, and abstract in content. More than anything, it lacks the substance that was essential to pull the ailing power sector out of the present quagmire and set it on a course to financial health and vitality in the future. Therefore, in its present form, it may not help the government in achieving its strategic objectives for reviving the economy.
The Policy’s three overarching goals, “access to affordable electricity supplies”, “security”, and “sustainability”, are high-sounding as well as cherished. However, they lack the specificity, concreteness, and associated timeframes, to guide the power sector entities and their managements downstream of the Ministry as to what they are being asked to focus on, accomplish, and by when? The draft Policy also does not specify the metrics that will be used to assess their success or failure on each count.
Similarly, the six guiding principles, efficiency, transparency, competition, financial viability, indigenization, and environmental responsibility, as laid down in the draft Policy to guide the leaders and managers in the power sector entities in their efforts to accomplish the three strategic goals are all highly-desirable principles. However, these will be difficult to translate into practical, concrete, and doable strategies and work-packages as the Policy does not provide any guidance as to how these are to be operationalized and put in to practice.
The government should not expect to see its Policy succeed without ensuring that it also puts in place the requisite leadership and managerial capacity, technical expertise, and supportive tools on ground
Just to illustrate the above point, let’s take the three strategic goals set in the draft Policy. On “access to affordable electricity” to consumers, what exact measure will be used to set prices of electricity in the country to ensure that these are not above the willingness and ability of the consumers to pay? Will it be the same for all categories of consumers or will it vary in accordance with consumers’ contribution to national economy? What attributes will be used to ensure the “security of supply’ to consumers? Minimizing risk to imported fuel supplies, threats to local supply and delivery infrastructure, or both? How will be the “sustainability” of the electricity system ensured? By minimizing adverse impacts on the local and national environment, health and safety of the consumers and general public, or preservation of the country’s natural resources and habitats?
The draft Policy states that none of the above three strategic goals will be subservient to the other two and each one will be pursued independently of each other and in a balanced manner. How will this balance is to be achieved in reality, how will their achievement measured, and how will the implementing entities deal with a situation if accomplishing of one of these goals makes a trade-off with the other two inevitable?
When devising policies, effort is always made to set a clear hierarchy among different policies, from top national policies down to local ones. Similarly, efforts are also made to ensure that the policy for a particular sector of the economy guides those in its subsectors. It’s strange that the Ministry issued Alternative and Renewable Energy Policy (ARE Policy) first, now it has issue this National Electricity Policy 2020, and it plans to issue a National Energy Policy soon. This is in reverse order that was actually required.
The targets set for renewables (20% by 2025 and 30% by 2030) have no mention in the draft Electricity Policy which stipulates that all generation and transmission projects will be developed strictly in accordance with the Indicative Generation Capacity Expansion Plan (IGCEP) of the National Transmission and Desptach Company (NTDC). It is not clear whether the NTDC has to follow ARE Policy or the Electricity Policy when it comes to developing renewables in the country.
It’s good that the draft Policy requires developing of different zones in the country for the future renewable energy generation schemes in the country. It is critical in this regard that transmission and distribution (T&D) networks and facilities in the country are also developed with a clear objective to facilitating the rapid growth of renewable schemes. Without an enabling and supportive hosting T&D infrastructure, the nation may not be able to derive the full range of benefits that renewables are capable of providing to our economy and society.
The draft Policy also speaks of ensuring a least-cost approach to generation and T&D development in the country. This approach is a legacy of the past from the natural monopoly character of power supply and delivery business. With the growing popularity of small, modular, and renewable generating technologies, electric vehicles, affordable storage technologies, and enabling smart and intelligent grid technologies, the concept of least-cost in the electric utility business has already run its course. Instead, our Ministry and electricity regulator should encourage devising of imaginative, innovative, and flexible pricing schemes that the wholesale- and retail-sellers of electricity can use to derive the most value that renewables, distributed generation, and demand response hold for our country.
The conventional approach to evaluating the feasibility of different generation options at the “busbar” point (the point at which a generator is connected to the grid) of these plants will not be appropriate and fair to distributed resources and demand-oriented solutions. In the future, every new scheme for serving the consumer demand of electricity in the country should be evaluated in terms of the actual cost (whether it’s to be incurred or avoided; monetary as well as social and environmental) it will impose on the country. This will ensure a level-playing field for all supply options, conventional as well as new renewables.
In the draft Policy, the government indicates its intention to impose surcharges for certain costs of some special development schemes by bypassing the regulator. This is not a good idea and is tantamount to taking away the autonomy from the regulator and wrest greater control from it for imposing charges and surcharges that the government will deem necessary. The government must reconsider its decision. The autonomy of the regulator and its careful review and scrutiny of all costs to be imposed on final consumers is of utmost importance to the health, viability, and sustainability of the power sector, and, therefore, must be maintained. In fact, it should be further enhanced.
The draft Policy specifies the role of a “Nominated Entity” in the monitoring, evaluation, and mid-course correction of the Policy during its implementation. The Ministry should not have kept this aspect ambiguous and should have clearly specified it to enable assessment whether this “Nominated Entity” is adequately equipped for effectively discharging its contemplated role in the Policy or would require improvement.
Another critical aspect that the present draft Policy leaves wanting is the institutional capacity that will be the key to accomplishing the strategic goals established in the Policy. The government should not expect to see its Policy succeed without ensuring that it also puts in place the requisite leadership and managerial capacity, technical expertise, and supportive tools on ground. This capacity will play make or break role between the success and failure in the new Policy. As management guru, Peter Drucker had once noted, “Only three things happen naturally in organizations: friction, confusion, and under-performance. Everything else requires leadership”. This leadership, our government will have to provide, if it really wants its new National Electricity Policy to succeed. ?
The writer is a freelance consultant, specializing in sustainable energy and power system planning and development.