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Power supply crunch: Diesel gensets’ capacity at close to 100 GW

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Shubhranshu Patnaik, partner at Deloitte India, said diesel gensets are only used as back-up power and it is unfair to compare this with installed capacity of power. However, since reliability is an issue and there is a cost involved in operation, various industries are looking at switching to cheaper options if the operation is for long hours.

Amid a growing demand-supply mismatch of electricity and high cost of power to commercial units, businesses and other establishments are increasingly relying on diesel generators (gensets) to ensure uninterrupted power supplies. At last count, the country’s diesel genset capacity was about 95 gigawatt (GW), or a quarter of the total installed power capacity in the country (400 GW).

As against this, renewable energy capacity (wind+solar) at the end of April 2022 was 109 GW, but the power generated in these units is just a quarter of that at present.

Diesel gensets, unlike utility-scale plants that run on diesel as a fuel, are mostly used as back-up power in areas where reliability of power is a big concern.

Experts note that the rising trend of diesel gensets with bulk consumers reveals the skewed dynamics of the electricity sector. The country, which is aiming to create 500 GW of renewable capacity by 2030 to meet clean-emission norms, has recently seen the largest coal-based power producer NTPC saying it will scale up its fossil fuel capacity as well, without undermining green energy plans.

However, given its polluting nature and regulatory orders forcing companies to shut diesel generation in winters to control pollution in the National Capital Region for three-four months, it is expected companies will switch over to cleaner options, such as battery storage, in the coming years. There has been an uptick in enquiries for battery storage from large institutions in the last one year, said experts.

Shubhranshu Patnaik, partner at Deloitte India, said diesel gensets are only used as back-up power and it is unfair to compare this with installed capacity of power. However, since reliability is an issue and there is a cost involved in operation, various industries are looking at switching to cheaper options if the operation is for long hours.

Just the operating cost of diesel gensets is Rs 30/unit for high-rise condominiums, hospitals and hotels, which are treated as essential service providers. He said, “If we set up a battery storage facility on a 4-hour operation basis, it will cost anywhere around Rs 7.5 crore/MW but can be cleaner and more reliable as compared to Rs 3.5 crore/MW for diesel gensets.”

The challenge with battery storage is that it requires double the space of diesel gensets. “Diesel gensets are portable, compact and modular. To set up 50-MW diesel genset capacity would require less than half an acre of land, but battery storage would need double that space. There are plans to stack up batteries vertically; if that happens it will save lots of space for customers,” Patnaik said.

Ashok Sreenivas, of Prayas (Energy Group), a Pune-based public interest group for power sector, said although reliability of power would differ for different industries and locations, India is still several years away from the reliability achieved in developed countries.

“In case of diesel gensets, the operating hours are usually much less as the overall power situation in the country has improved significantly in many areas. They are mostly used for back-up power for essential services, so we must see how much and for how many hours they are operated if we really need to compare with installed capacities, which is firm mainline power used for regular supply,” Sreenivas said.

The total capacity of diesel generators in the country was seen at 72 GW in 2015-16 and was then expected to grow at the rate of 5 GW per year, according to the Economic Survey 2016. The survey stated that as per Central Electricity Agency (CEA) data, diesel genset capacity for industrial loads greater than 1 MW was 14 GW, and a substantial portion of the rest (58 GW) may be contributed by micro and small industries, with load capacities of less than 1 MW.

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