Money Matters

Saving high-loss feeders

Money Matters
By Manzoor Ahmed Alizai
Mon, 09, 22

The issue of transmission and distribution (T&D) losses has been one of the most difficult conundrums for energy experts in Pakistan. The prevailing debt in the power sector and the country’s economic outlook have made it almost impossible to engage third parties for investment in this sector.

Saving high-loss feeders

The issue of transmission and distribution (T&D) losses has been one of the most difficult conundrums for energy experts in Pakistan. The prevailing debt in the power sector and the country’s economic outlook have made it almost impossible to engage third parties for investment in this sector.

Last year, most of the distribution companies (DISCOs) failed to meet the regulatory T&D targets, and despite having no budgetary constraints DISCOS were not able to remove the operational and management impediments in catering to the T&D losses and recorded a loss of Rs110 billion.

In Pakistan, electricity losses contribute to a significant amount of wasted resources, making the country’s grid extremely vulnerable. While the country has long sought a strategy to reduce these losses, the decade-old problems of technical and financial losses in the power sector, as well as the energy access gap, persist, and traditional intervention solutions such as power curtailment have always been at the root of the power sector's ongoing unsustainable trajectory.

Among the many strategies that can be taken by the DISCOs, one strategy in particular would be important to explore ie, solarising high loss feeders. The solarisation of high-loss feeders offers multiple benefits to the overall grid infrastructure. Its application can play an instrumental role in loss reduction experienced by electric utilities—including both technical and non-technical losses by potentially deferring transformer and transmission line upgrades, equipment maintenance interval extension, and distribution system reliability improvement.

From the end user's point of view, self-generation could imply more reliable and affordable access to electricity. So, loss minimisation, reliability, low carbon footprint, sustainable energy provision, and clean and cheap energy—all could be achieved with a well-chosen distributed generation (DG) network.

Solar photovoltaic (PV) has already reached grid parity in Pakistan and has become a cheaper source of power procurement compared to fossil fuels and even other renewable resources. However, if we look at the DG uptake so far, the growth is more concentrated in the financially healthy regions and has failed to take off in the high-loss zones. This however needs a focused intervention, a realistic action plan based on significant stakeholder support, alignment of national and provincial electricity and energy policies and planning, a facilitative and enabling environment, and consolidated changes at each stage of the energy value chain. It is necessary to have a sustainable and profitable business strategy and detailed regulation plan for strategic sited solar PV growth.

Globally, there are several commercial models which have been employed for the integration of solar-powered DGs in the utility infrastructure.

Bangladesh is a leading example where the coupling of the PV technology to a viable business model resulted in extensive uptake among different customer classes. Infrastructure Development Company Ltd (IDCOL), a state-owned development financial institution launched a public-private partnership initiative. The initiative encompasses easy loans and standardised after-sale services for end users.

More than 9 percent of the country’s total population has so far benefitted from this initiative which is one of the highest globally. Likewise in India, Solar PV rooftops reached an accumulated capacity of 1,700MW in the year 2021 and recorded a growth of more than 100 percent from the previous year. The prevalent business models are mostly centred around CAPEX and OPEX models that have facilitated this growth and dissemination of PV technology. The models are mostly designed for customers and communities who otherwise are not able to access the previous financing schemes.

We can see that a new wave of supportive frameworks, business, and finance models is playing an important role in extending prosumerism and catalysing the bottom-up transition. However, Pakistan is still marked by the absence of such emerging models, and this ‘absence’ has been one of the major impediments to the otherwise enormous potential for solar PV uptake.

For Pakistan, community solar initiatives could play a pivotal role in ensuring energy accessibility to end users and addressing the grievances of DISCOs concerning the revenue loss due to T&D losses.

Typical community solar arrays are owned by utilities or third-party project developers. Its structure begins with a shared solar array generating and feeding solar power into the microgrid. The microgrid can be operated on islanded mode or grid-connected mode depending upon the operational load and availability of the resource. The electricity produced from individual shares of community solar is then credited back to the participant’s electricity bills, much like it is for residential PV systems located on individual rooftops.

Customers who subscribe to the community solar initiative over individual solar PV systems can benefit from economies of scale as well as lower installation costs. A thorough tariff framework for community solar in high-loss feeders cannot only incentivise the end customer, but will also provide an alternate revenue stream to utilities.

Therefore, High-loss feeder solarisation through community solar will greatly help in cutting the losses and will offer a much-needed fiscally prudent pathway for addressing the longstanding challenge of power sector losses. —a win-win situation for the government, utilities, as well as end-users. The government should institute a supportive regulatory environment for solarising the high-loss feeders in respective DISCOs.

The writer is a research associate at the Policy Research Institute for Equitable Development