The Ministry of Power, Government of India, recently issued Draft Electricity (Rights of Consumers) Amendment Rules, 2021 for public comments.
The amendment seeks to stipulate the following
three rules to the existing rules:
“1. “In
view of the increasing pollution level particularly in the metros and the large
cities, Distribution Licensee shall ensure 24x7 uninterrupted power supply to
all the consumers, so that there is no requirement of running the Diesel
Generating sets.
2. Consumers,
who are using the Diesel Generating sets as essential back up power, shall
endeavor to shift to cleaner technology such as RE with battery storage etc in
five years from the date of the publication of this amendment or as per the
timelines given by the State Commission for such replacement based on the
reliability of supply by the distribution company in that city.
3. The
process of giving temporary connections to the consumers for construction
activities or any temporary usage etc. shall be simplified by the distribution
licensee and given on an urgent basis and not later than 48 hours. This will
avoid any use of DG sets for temporary activities in the area of the
distribution licensee. The temporary connection shall be through a prepayment
meter only.”
The proposed amendments appear to be governed
by the desire to minimize the air pollution levels in India through all means. Prima
facie, this is a well-intended thought and should be welcomed. However, a
careful analysis of the context and proposed measure would suggest that these
rules take the zeal for ESG a little too far.
Insurance value of DG backup ignored
These rules simply ignore the “insurance” value
of the power back-up provided by the power generating sets (DG Sets).
These rules also seems to be denying the modern
world where there are significant number of mission critical and life-saving
functions that cannot afford power outage even for few seconds. Hospitals for
example cannot afford to risk power outage in ICUs and lifts. Large apartment
buildings cannot afford power outage in lifts. Data centers and banks’ servers
cannot afford power outages even for few seconds.
DG Sets provide insurance against power outages
to these functions. The power back up that relies on nature (solar and wind)
may not provide adequate insurance cover in cases of natural calamities like
cyclones, prolonged sun outages due to persistent rain etc.
This is the insurance value of DG Sets that
prompts use of DG Sets in cities like Mumbai, where the distribution companies
are obligated to ensure 24X7 power supply for past many decades.
The rules assume that most large buildings will
have enough roof top and other open space to install solar panels that would
generate adequate electricity to keep the battery bank charged to support the
emergency and mission critical functions. This assumption may be mostly
erroneous.
Whereas the rules put onus of supplying the
uninterrupted power on the distribution licenses, it does not speak about grid
failures, in which case distribution companies will be helpless.
The proposed rules also seem to be disregarding
the available data on sources of air pollution in large metro cities. Numerous
studies have indicated that the share of DG Sets in overall air pollution in
large cities may be miniscule (2%). This level will fall further significantly
after implementation of CPCB-IV norms in DG Sets. It is therefore important to
focus on industrial clusters and farms for pollution control (through DG Sets)
rather than large cities, IT Services clusters and residential complexes.
It is pertinent to note that in past 3 years,
there have been some instances of implementing ban on use of DG sets during
months when pollution levels usually spike. For example, in 2018, the Supreme Court-appointed Environment
Pollution (Prevention and Control) Authority (EPCA) had banned diesel generator
sets only in Delhi during the Graded Response Action Plan (GRAP). The Delhi
Pollution Control Committee (DPCC) had issued a large list of exemptions where
DG Sets were allowed. These included DG Sets used for essential services such
as medical purposed (hospitals or nursing homes or healthcare facilities) elevators
or escalators, railway services or railway station, Delhi Metro Rail
Corporation services including its trains and stations, airports and interstate
bus terminus, lifts of housing societies, etc.
Technological evolution
of DG Sets denied
While the draft amendment
rules emphasis on adoption of cleaner technology, they fail to acknowledge that
DG Sets are also evolving fast in cleaner technology terms. The present genre
of DG Sets emits significantly lower smoke and noise as compared to the legacy
DG Sets. Moreover, the technology evolution of DG Sets and diesel (as a fuel)
continues as we read this. Ethanol based generating sets are already being
tested and gas based generating sets are in use at some places. But given the
uncertainties of supply chain of ethanol and gas, diesel continues to be the
most preferred fuel for power backup systems, for now.
ESG may be crossing some
redlines
These rules are not isolated instance of the
whole ESG paradigm crossing the red line of pragmatism & purpose; and
venturing into the realm of over zeal and activism.
There is absolutely no denying the need and
importance of the consciousness about good environment, sustainability and
governance practices. But these practices must be pragmatic and not suffer from
dogmas.
For example, we have seen a lot of ESG conscious
investors shunning companies like ITC Limited, which has been amongst the few
companies with positive water and carbon emission footprint for long, and
embracing largest refineries and plastic producers as fully ESG compliant.
Setting tougher emission norms for DG Sets,
like BS VI for vehicles, would be far more effective than replacing these with
solar powered backup. DG Sets meeting the enhanced emission norms will be used
in across the country and in all sectors. Therefore, the impact on environment
will be much more impressive.
The government agencies and businesses which
tried to transgress the territory of the Niyamgiri Devta (an epitome of
environment and sustainability) may not be taken seriously if they talk about
ESG. It has to be imbibed as a way of life not a goal to be scored.
