Fulbright US-India Series: Baldev Singh Sran | Chairman of Punjab State Power Corporation Limited

Baldev Singh Sran is the recent Chairman and Managing Director of Punjab State Power Corporation Limited, which is Punjab’s state-run and only distribution company.
In his 2-year eventful stint, Mr. Sran brought down the transmission and distribution losses and worked to use resources of private thermal plants for banking of power in winters, for the state to draw in summers. In this interview, we discuss Mr. Sran’s successful undertaking, as well as clarify the concepts of fixed charge and variable charges for thermal power plants. In addition, Mr. Sran provides his views on how to improve the health of distribution companies and also the challenges associated with RE integration as penetration levels increase.
I hope you enjoy my conversation with Mr. Sran! ​

Topics covered in this podcast:
  • ​A brief introduction of Mr. Sran and his involvement in the Indian energy sector
  • How did Mr. Sran manage to create a surplus of power during the summer season?
  • What is the average cost of supply of power in Punjab?
  •  What is the fixed charge versus the variable rate for thermal power plants?
  • What were some of the key challenges with the grid integration of renewable energy from the distribution and system level perspectives?
  • Clarifying the concepts of stranded capacity charge and fixed charge in grid integration Is ramping down the solar or the thermal plant a cost to the distribution company?
  • Why are Indian distribution companies in low financial health and what are some possible solutions?


00:06 Karan Takhar
Hello everyone this is Karan Takhar and welcome to the Zenergy energy podcast. Over the past decade, India has done an impressive job of integrating renewable energy into its energy mix. For this Fulbright Podcast series, I sought to investigate the enabling factors and potential of India's global leadership in renewable energy with the focus on solar. This Fulbright series is broken down into Four Seasons. This season we look at the next set of key technologies and regulations. Integral for unlocking India's continued renewable energy success at the system level. It includes conversations with leading regulators and thought leaders. Across energy management, storage, transmission, and distribution. 

In this episode, I will be speaking with Baldev Singh Sran, who's a former chairman and managing director of the Punjab State Power Corporation Limited, which is a Punjab state-run and only distribution company. In his two-year eventful stint. Mr. Sran Brought Down the transmission and distribution losses and work to use the resources of private thermal plans for banking or power and winters for the state to draw in summers, we discussed Mr. Sran's views on how to improve the health of distribution companies across India and also the challenges associated with Ari integration from the distribution perspective, I hope you enjoy my conversation with Mr. Sran. 

Thank you, Mr. Sran so much for participating in this interview. I really appreciate you Taking the time. I want to ask you just to briefly introduce yourself so that listeners can get a bit of an understanding of your background and involvement in the renewable energy sector in India. Could you provide a brief introduction?

02:18 Baldev Singh Sran
Thank you for having me, Mr. Takhar. Good afternoon everyone. My name is Baldev Singh, Sran. First and foremost, I hope everyone is staying safe during these challenging times. Regarding my introduction, I after graduating in electrical engineering from Punjab University in 1982. I had the fortune to serve for the power sector of the state of Punjab for over the last 37 years in different roles right from the lowest rank of assistant engineer to the topmost post as chairman, becoming managing director. The most recent being two years to never as chairman, commending director of Punjab State Rubber Corporation Limited, which is looking after distribution as well as the generation ring of the Page during my career I have servers, then all the three facets of the power sector that is generation, transmission and distribution fields. Mr. Takhar and everybody hearing I am really super excited about the research work on real energy that Mr. Takhar is doing and hope I will add some value with my experience and insights Now kindly let us get started.

03:47 Karan Takhar
Thank you so much.

03:47 Baldev Singh Sran
For the real job.

03:48 Karan Takhar
No, it's so nice to have you on here and just to be able to ask you questions and learn from your experience which is so vast. Just from my research I've spent a few months actually over-locked down, period. I was in Punjab spending time in Chandigarh and prior to enter and walked down. I also had the opportunity to speak with a few people who work in the Punjab Energy Development Agency as well as the Punjab State Electricity Regulatory Commission. Of course, I got your reference from Miss Sidhu, who heads the PSPCL so very appreciative to have connected with you and so I learned that Punjab's load is highest in the summer because this is when the agricultural season is peaking in Punjab and then the lowest in the winter When agriculture is in its offseason, says Reading an article in the Punjab News Express, and interestingly, learned that in the year 2019, during your tone or as CMD of PSPCL. Power was sold for the first time ever in the summer, meaning there was a surplus in the summer. Even though Punjab had its load peak. So can You talk a little bit about how You managed to orchestrate this?

05:13 Baldev Singh Sran
Sure, actually Punjab has a very peculiar demand curve, mainly on account of the low industrial and high seasonal agricultural demand, and further, due to the extreme weather variation from zero to 47 degrees Celsius, and for the current scenario, Punjab now has peak demand, raising between 12,000 MW to 13,000 and 500 MW during the summer period of June to mid of September, and during the rest of the year, particularly in the winters the demand of about 6000 MW prevails during the day and only near 3000 MW during the night, August during the winters, so there is a huge surplus of power from September mid-September onwards and during the 2018-19 system operation was maneuvered to utilize potential in August onwards to sell power in the exchange during the year 2018, boil the demand in Punjab, at that time, reduces for demand in the rest of the country distressed and particularly during September and October. There is a lot of demand in the South end and other parts of the country, and particularly during this 2019 the country being driven by the politicians, there was a higher demand in overall in the country due to the forthcoming parliamentary elections to be held from March to May 2019. So being the professional this organization and really having a heart in the organization, I had really planned with my team to utilize this period of clean season and the demand in that country and during this period We sold 2268 million joules of energy worth ₹ 1183 crores with a special emphasis to sell the power during peak load hours, then the rates in the exchange or maximum. This we did buy, It's yeah, myself being a nation man as well I have spent about 15 years in the generation. So we maximize the nation during the peak hour and totally rescheduled our agriculture supply. We did not get the supply during the peak hours to the agriculture and we merge those eight hour supply which was to be given during the rest around 14 to 16 hours of the day and we sold the power during this peak hour, and particularly the rates were very high during the peak powers during that but actually, it was black marketing and rates have gone up to rupees 15 and more during those flowers and we aren't in that rate of rupees 5.85, and we during the intraday sale and about rupees 5.47 for June during the day ahead market and in this way, we earned a lot of money for our company and also we are proud that we will serve their country with our excess power during that period So that is why we managed our load. We've raised over the nations and which we utilize the energy. thank you.

08:59 Karan Takhar
Very interesting So I'm curious as to what is the average cost of supply of power in Punjab.

09:06 Baldev Singh Sran
Definitely, the surplus power which we sold that the variable cost was around 3, 3.25 or 3.50 approximately during this period. So while we were selling, we were definitely not running our high cost to France during that period. So whenever we were having the margins based on our variable cost of our plants, who is used to sell those that power So overall average cost of rather purchase throughout. So here the average cost of purchase in Punjab is around Rupees 4.5 that include the fixed charge. Also for the variable rate is around 3, 3.25.

09:58 Karan Takhar
What exactly does this mean The fixed charge versus the variable?

10:02 Baldev Singh Sran
Rate or the other regarding mix fixed charge and variable. Let's we have entered into the PPS. Normally almost everywhere the generators enter into the PPS with the distributor distribution companies on. There is a two-part there because we may contracted capacity of, say, 1000 megawatts. But we may not utilize that capacity throughout the day or throughout the year, so to safeguard the letters that distribution company has to pay some amount as fixed stars, even if we do not draw the power from them maybe on 80% of their contractor request we have to pay the fixed charges maybe at a rate of around one point, rupees 1.5 or so of where 80% of pagination pasty, those are the fixed charges and plus we have to pay the variable charges that mainly include the fuel costs which is around ₹3 to 3.25 on an average for the jouls by energy, which we draw from that generator. So as we have entered into the contracts for around 25 years with most of the thermal generators and others, so we have to pay them the fixed charges. So it is my variable charges which we have to pay the extra while we are drawing the power from the So if I am getting the variable cost as rupees 3.25, any amount over and above this which I am able to sell in the market or somewhere. Else I will learn something out of that.

11:49 Karan Takhar
OK, that makes a lot of sense. Thank you for clarifying and I would like to ask You about your experience with integrating renewable energy into the system, particularly focusing on some of the challenges and system-level costs that are inherent. With integrating renewable energies, so I know in Punjab. Punjab has done quite a good job of integrating solar and wind and hitting its RPO targets. However, I'd like to ask you like from the distribution and system-level perspectives. What were some of the key challenges with the grid integration of renewable energy?

12:30 Baldev Singh Sran
Definitely, Punjab has been at the forefront to meet and integrate the renewable energy targets. Everyone understands the importance of the renewable energy. It is the most essential requirement of safeguarding our environment and particularly India. Being the signatory to the price, sorry to the Paris climate agreement in 2016 and as promised to add 40%. Global energy, that is wrong, 450 gigabytes capacity by 2030 and definitely, there are almost nil challenges in integration of hydropower, maybe it is run of the river, or definitely, there are no challenges when it is damp, controlled hydropower, whereas with the increase in the renewable energy, particularly bend and solar, which being bar in the forum in nature it creates a major or most of the challenges in the grid operation. Just, for example, we have a recent example of the solar eclipse which resulted in an unbalanced in a huge influence in the grid. and I had to be managed with gate rate converted efforts throughout the India. So increase in the solar and wind power. It also is creating the requirement of complementary cushions to meet kicked Mars during early morning and evenings. So definitely recall this solar as well as build. So bend is a more in Param power pole. Power is also an informed power because whenever there are clouds or something else. Oh, there is rain so don't know, they produce the views strictly, so there are big challenges, so definitely for that, we have nowadays. We have good forecasts regarding the weather condition, so keeping that is a major rather requirement to properly assess the now for the weather forecasting as well as your load requirements. So all these things can be what I see It can be better done if we have a dam control this hydropower or pumped storage hydropower. So if we can manage our load requirement so for that I see computer storage power stations can be effective, but potential for these needs to be studied and also the introduction of the time of the day tell, particularly because we have the most requirement during that. Speak louder during hours, particularly during the evening, particularly during that period no solar power is available, so we have to very aggressively introduce the time of the data on all that consumers, including the domestic luma. So that we can control demand as well as supply system. So definitely keeping the increasing penetration of the Ari power. So throughout the world and India particularly have to work very hard to raise its integration either the battery-controlled battery storage stations have to be Putin, or particularly that available potential of this Hydro and all that for complementary energy available with us for some amount of these thermal plants, particularly which we have to do. We run during the day at the 50% load, and in the evening hours we have to increase the generation from the thermals to manage the system. So here I would also like that there there is one apart from this grid operation region of RE power is leading to very high tariffs to that consumer, mostly due to the cost of the as I have already explained, the cost of the already contracted power from conventional sources, particularly from thermals, has to be stranded. The power has to be standard in view of the increase, because in the India PRC. Every year in Facing the quantum or percentage of battery power which we have to meet Jews as AARP obligation. So far that because all the distribution companies already had tide up with the thermals and orders for the next 25 years skipping over demanding view. So now when this additional energy or energy power is put into the system so we have to surrender that power from the thermals and this cost us extra. Because then we have to pay more fixed charges on account of the gender, power, and further also barry Power from the biomass and hydro or particularly the new hydro coming up hydro because they have their collective capital incentive so therefore cost is high. So although the solar power is cheaper, but for that, we have to raise the counterbalancing power during the peak over, so what I see as a distribution manager is a common man. Also, Bari power being pumped into the system is leading to the higher tech. Yep, so far that we have also have to find the ways and means for it, particularly because it is a global issue. So some this viable gap funding of RE projects is required to be done so that the power from them is less costly, so this is All, if anything else, is required on this subject, we can particularly.

18:35 Karan Takhar
That was very helpful and pretty comprehensive. The only question I really have in addition to that is so you mentioned how and this is also, so I've had a few conversations on this subject with others with mostly academics. Never been with someone who really, lets out distribution companies so it's very nice to hear your perspective. So my question is with regards to this stranded capacity that occurs as more renewable energy comes onto the good, so you mentioned that during the day, for example, because there's more solar than the thermal generation plants come down to 50% operational capacity. So then as a result of this, for my understanding. The distribution company, who already has a contract with those thermal generators then for the 50% that's not being used, would have to pay the fixed rates, which earlier we talked was around ₹1.50 paisa for that 50%. That's not presently being utilized during the day, so that's the surrendered capacity charge if I'm correct. So would be The fixed charge. That's being paid by the distribution company for the thermal generation plant that's not being used right?

19:59 Baldev Singh Sran
No rightly, Mr. Takhar, who have rightly understood all the issues, so this all is leading to the higher costs to the convenience.

20:08 Karan Takhar
I see OK, but I'm pretty confused because then my thought is that renewable energy and solar now is has become so cheap, so even, and with this added cost of ₹1.50 Paisa, that's being paid for the capacity that's not being used by the thermal And with solar Which is now around what ₹2.50 paisa, so that would amount the whole cost of ₹4.

20:37 Baldev Singh Sran
Mr. Takhar, well as globally We are now talking that solar power is costing only ₹ 2.50 or less than ₹ 3. It is a hard fact or the other fact is also that it is available only for 8 hours, so or rest of the 16 hours I had to invest somewhere I have to install something I have to get contracted to some other generator to feed my consumers so it is if something is available for 8 hours. So definitely I have to invest something somewhere else also. So then I have to, he proves letters, so overall my cost will increase if I so it is only this used. Well, if I'm getting the power from any Ari power which is less than the variable cost from by thermal plants. So if it is less than ₹ 3 to 5 overall or this is 3, so then it is definitely to me, but there are two I can use only 50% of my thermal generation because we cannot start and stop the thermal during the day and night. For that, I have to keep them running on the minimum technical load that is around 50% of their return capacity. So these are the RE power, while we have to integrate this sorry power into our system.

22:12 Karan Takhar
So you pretty much have to compare whether the solar Is more competitive than the variable cost the fuel cost of thermal?

22:21 Baldev Singh Sran
Ya, sure.

22:23 Karan Takhar
And is there also a cost associated with For example, because solar comes down heaviest during late afternoon, maybe at noon? Let's just assume it comes pretty heavily and then noon until five or noon until 6. Then it goes down, so I assume then you have to ramp up the thermal plants or ramp it down, rip it down at noon from maybe 8090% of 50. And then in the evening, you ramp it maybe 50 to 7080, whatever it may be. So is that also a cost to the distribution company who carries that comment?

23:05 Baldev Singh Sran
 definitely, all the costs are are are bound by that level. So distribution company on so even also I will add here also that when we operate the thermals at 50% of load their efficiency also comes down. There also cost of donations also goes up. So all that economic aspects have to be taken into calm while integrating this Ari power to the system. So definitely whatsoever. The cost is occurred wider distribution company. It is the consumer is he has to pay all the things through these regulators which issue the tabs on based on the process of the distribution company. So I think the issue is very clear to you that I repower. It should be a balance between the cost of the power as well as the Buddha grid operations.

24:03 Karan Takhar
The last question I can think about, which I'm not fully grasping on this specific issue, is in the PPA that the distribution company forms with a thermal generator which are around 25 years or however long they are, so there are two rates that are agreed upon one is the fixed rate and then once the variable rate it's agreed upon it in the onset. So why I'm a little confused is When solar does come on and then all of these new costs are being incurred to the thermal generation plants, the cost of ramping up and ramping down, for example, or the cost of production that occurs with less utilization of the plant. So wouldn't that be borne by the thermal plant and not a distribution company, because I would think that the distribution With me is only paying the thermal plants according to the agreed-upon rates initially signed in the PPA, this is where I'm finding confusion. How does it get passed on to the consumer if these rates are already agreed upon in the PPA Hey, do you understand what I'm asking?

25:17 Baldev Singh Sran
Yes, yes, definitely, actually. Actually, the rate in the PPA is already agreed that I have to send a letter saying. I have contracted 1000 MW Prestige thermal plan so already I have agreed rate with a fixed rate but on average throughout the year 50% of your power of means an on average of 8000 MW. The power I will buy from you. If I will not wine, then I will pay the fixed charges at a rate of so broken these 25 years or for every year the rate is already. Fixed in the PPA that for the first year I have to pay rupees. So and so as it charges per June or the next year, I have to pay so and so rupees per person so that amount I have to pay. To the thermal, if even If I do not draw even a single unit start, then That is why when I use more of the repo During these 25 years, I am bound by that PPA to pay to the thermal. As fixed charges.And also to the this sorry at the agreed rate personalities.

26:43 Karan Takhar
So if the cost though for the thermal increases, the distribution company would not assume that cost, right? The thermal plant would assume it, but the distribution company would simply pay the agreed-upon fixed rate that came about early on, right? Or am I mistaken distribution company then also have to increase the fixed rate to help cover the thermal plans increased cost.

27:08 Baldev Singh Sran
I will clear the issue regarding the thermal plants which are there within my own company, which I myself on the thermal, so they are inefficiency on account of this ramping up and ramping down is is to my account to the distribution company because that is a part and parcel of  Regarding the private, perverse, so definitely there is no such provision in the PPA or that, but they are challenging this aspect during the this against in front of the state regulatory commissions and CRC also that they are also asking that with with the reduce the This the donation their efficiency has come down. This is virtually a change of law and there should be paid for that and being a technocrat, I would say definitely when there is an efficiency loss, which I have agreed to him that I will get minimum 80% load from you. But I am getting only 50% or 60% roll from them. But definitely, their efficiency goes down. Although there is no provision in the PPA, but for my own thermal donations, so I have to be here because I am the owner of those So for that small part of the IP, these independent power producers, those are private players, so they are burying it So what I mean to say Overall there is a loss. Who the sector maybe later Or maybe it should be a distribution company.

28:46 Karan Takhar
Thank you so much, Mr. Sran. Now I'm fully understanding.

28:51 Baldev Singh Sran
Welcome and thank you, Mr. Takhar, for giving me this opportunity to interact on this subject. Which is really my mother subject and I wish that this sector should flourish and serve the people not in my country but throughout the globe. Thank you, everyone.

29:10 Karan Takhar
I hope you enjoyed that episode and do check out the show notes For more information on my guest See you next time.

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