High Demand: IR aims to bring down its energy costs

Indian Railways (IR) is the largest energy consumer in the country. It consumes about 18 billion units (BUs) per year, roughly 2 per cent of the country’s total power generation, with a peak requirement of about 2,300 MW. Of the 18 BUs consumed, about 85 per cent is for traction (electrification of tracks, etc.) and the remaining is for non-traction purposes (lighting, powering gadgets, etc.). Energy costs account for the second highest share after salaries and pension outgo in IR’s total expenditure. With the aim of improving its financial standing as well as using sustainable energy sources, IR aims to bring down its energy costs.

IR’s present power utilisation scenario

Currently, IR buys power from distribution companies at a tariff that varies from Rs 4 to Rs 9 per unit. The national transporter witnessed a sharp increase of over 50 per cent (from Rs 4.40 to Rs 6.75) in electricity tariff from 2010-11 to 2014-15.

In a bid to reduce the tariff charged, IR invoked its status of deemed distribution licensee as per the Electricity Act, 2003 and decided to procure power directly from generators through the open access route. IR’s current strategy is to progressively change its status from consumer to distribution licensee for reducing its energy bill.

According to the Bureau of Energy Efficiency (BEE), IR has huge potential for energy saving. Goals suggested by the BEE with regard to the energy conservation potential are: 7.5 per cent of energy saving in electric traction, 4 per cent in diesel traction, and 10 per cent in the non-traction area. Achievement of these goals is possible with a payback of 12-18 months. The BEE has suggested that in the long run, a 15-18 per cent increase in energy efficiency in electric traction and 10-12 per cent increase in diesel traction is possible.

Plans and strategies: Sourcing of power

IR’s power procurement strategy comprises sources such as allocation by the Ministry of Power (NTPC’s Dadri plant), captive power plants (Nabinagar, 90 per cent allocated to railways), and contracts for securing power supply through competitive bidding, bilateral agreements and power exchanges.

On the energy sourcing front, IR has started to buy electricity at the cheapest possible cost from the market through open access. Power purchase agreements (PPAs) have been signed for over 1,300 MW, with players such as Ratnagiri Gas and Power Private Limited, Tata Power Limited (TPL), Adani Power Limited, NTPC Limited and Jindal Thermal Power India Limited. Further, bids have been invited for states in southern India.
Steps taken by IR to source power include the signing of a bilateral power procurement agreement with the Damodar Valley Corporation (DVC) to purchase 50 MW of electricity and securing 50 MW power supply through open bidding. Besides, another 530 MW has been allocated by the Ministry of Power up to March 2017 in states such as Maharashtra, Gujarat and Jharkhand, PPAs worth 80 MW with TPL in Maharashtra, 585 MW of power through competitive bidding in states such as Chhattisgarh, Madhya Pradesh, Uttar Pradesh, Rajasthan, Punjab, Haryana, Delhi, Bihar and Odisha. These steps are expected to result in annualised savings of about Rs 20 billion post commencement of power supply.
Initiatives in the traction segment include the induction of three-phase locomotives with regenerative braking systems from 2016-17 onwards. In addition, 116 energy efficient alternating current/direct current rakes have been introduced in Mumbai suburban rail, and another 70 are under manufacturing at the Integral Coach Factory (ICF), Chennai. Besides, regular energy audits of electrical installations are being carried out. Initiatives in the non-traction segment include increased use of LED lights, deployment of energy-efficient water coolers and ceiling fans, and installation of electrical equipment with three-star and above rating.
A tender is to be floated for the procurement of 400 MW of power in select states (Andhra Pradesh, Tamil Nadu, Kerala and Telangana) on a short- term basis (for a period of nine months, due to open in April 2016).
A tender for the procurement of 396 MW in the states of Andhra Pradesh, Tamil Nadu, Kerala, Telangana and Karnataka has been invited on a medium-term basis for the period up to December 2018. (Request for qualification bids are due to open in May 2016.)
The first 250 MW unit of IR’s captive Nabinagar plant (total allocation to IR is 900 MW) was synchronised in March 2016. It is likely to commence operations in September 2016.
Railway Energy Management Company Limited, a joint venture (JV) of IR and RITES Limited, is also planning to procure power for IR through power exchanges via the day- ahead, term-ahead and intra-day bases, to meet peak and contingency requirements.

Thrust on renewable energy

IR is now giving greater importance to renewable energy. With regard to solar energy, more than 10 MWp solar plants have already been installed. Some of these are a 2 MWp plant at the Rail Coach Factory (RCF), Rae Bareli, a 1 MWp solar plant at the Katra railway station, 5 MWp solar panels at stations and solar-based lighting systems at level crossing gates, etc. Orders have been issued for another 6.5 MW of solar units. Going forward, plans of procuring another 1,000 MW of solar power are afoot.

Solar energy also has the potential to be used in signalling. Typically, 15 kW of capacity is required for wayside stations and 2-3 kW at level crossing gates. Over 80 per cent of the locations on IR’s network are still untapped for solar power installations. Besides, for these installations, the return on investment is much higher than the cost of capital. Also, enough space is available for the installation of solar panels.

As far as wind energy is concerned, 10.5 MW plant at the ICF has been installed. A 26 MW windmill has also been commissioned in Rajasthan. In the Southern Railway zone, a 12.5 MW windmill plant has been sanctioned.

Initiatives on the technology front

The Centre for Railway Information Systems has taken some noteworthy measures on the technology front. Railsaver, one of the key initiatives, pertains to the collection, assimilation and monitoring of information of 5,000 substations. It helps in drawing up the future strategy for energy management. Besides, Indian Railways Green Energy Initiatives has also been launched. This is a web-portal which discusses IR’s initiatives, projects and future plans renewable energy segment. Another new initiative is the meter-data acquisition system that has been deployed at the Delhi and Ambala divisions (on a pilot basis) to enable the analysis of energy consumption and facilitate energy management. It also has key features such as network optimisation, reliability and monitoring. The United Nations Development Programme has extended funds to the tune of Rs 3.5 million for these projects, under which energy audits, a key part of IR’s strategy for energy management, will also be conducted.

Issues still remain

IR is facing a host of issues and challenges with respect to energy cost minimisation. These pertain to training and capacity building of staff, inaccurate load forecasting, absence of a procurement process based on life-cycle costs, legal, regulatory and policy challenges, benchmarking, standardisation and long-term institution building, poor growth in innovations, and in adequate financing. It is imperative for IR to address these issues so as to minimise energy costs and exploit renewable sources to the maximum.