Predictions 2022: EV push, digitalisation could burden ageing power grid, says Hitachi's N Venu

2021 had been a year on tenterhooks, ricocheting from hope to gloom to a flat wait-and-see state. India in a whack-a-mole mode was setting records administering vaccines to its vast population, and just as fast new Covid-19 variants – Kappa, Delta, Omicron – kept appearing to strain existing relief measures.

Normalcy emerged in pockets and hence a significant population continued to operate remotely, hopeful the vital power infrastructure would support the new normal. Fact is, nothing can function without power. Not even national aspirations and targets.

At this year’s climate summit in Glasgow, India took a five-point pledge to bring its carbon emissions to a net-zero by 2070. That’s a tall order. As per the Council of Energy, Environment and Water, we are talking about 5,630 GW of new solar and 1,792 GW of new wind power, electricity’s share in industrial energy galloping to 65% from the 16% at present, and much more. It could be a whopping cheque of $10.1 trillion, about $8.4 trillion toward the power sector alone.

In the 2070 scenario envisioned at the COP26 summit, electricity will form the backbone of the entire energy system. Alongside a heavy penetration of renewables into the grid on the supply side, there will be new energy carriers such as green hydrogen and a higher count of electric vehicles (EVs) drawing heavily from the grid.

As of 2021, on-ground reality flashes a mixed report card. While India has achieved universal electricity access, energy efficiency and power quality continue to be vastly unexplored areas. Power transmission and distribution losses are more than twice the world average, while grid modernisation and digitalisation have a long way to go.

Even though global EVs sale in 2020 hovered around 2.3 million, they accounted for barely 1.3% (or 236,803 units) of total vehicle sales in India during 2020-21. Charging infrastructure leaves a lot to desire. Further, while EVs are vital for the energy transition, they can be a bane for an aging grid that is increasingly coming under pressure from new forms of load.

Let’s then talk about the energy mix. Although our total installed renewable energy capacity has crossed 150 GW, coal remains the dominant source of energy in the country. At COP26, India changed its stance on the dry fuel to phase-down from phase-out, for the transition away from coal is not going to be an easy one.

To make good on its climate pledges and sustain progress on its Nationally Determined Contributions, India needs multi-faceted progress. As fast as cleaning the energy supply, it must upscale the grid and transform the devices, such as EVs, and sectors, such as oil and gas, cement and steel, that rely on it. This will require next-level planning and collaboration between various stakeholders — industry, policymakers, civic authorities, academia, and research — to fine-tune current realities with long-term goals.

The two years of Covid-19-led unprecedented disruption has ushered in a faster adoption of and adaptation to digital power technologies in traditional sectors such as transmission works and rail. It has also brought in fresh fervor toward sunrise sectors such as renewables – from the government through productivity-linked incentive (PLI) schemes and from corporates via investment in green businesses.

Signs of renewed business activity and decision making in high-growth segments such as data centers and metros are appearing. We are also seeing recovery in core sectors which can lead to a faster pickup in demand for power and use of artificial intelligence, edge computing, and the Internet of Things (IoT) for grid modernisation.

According to Gartner, as hybrid work takes hold in the country, spending on IT by Indian firms toward innovation and modernisation of legacy systems, among others, is likely to hit $101.8 billion in next year, up 7% from 2021. This can bring in confidence among industries to digitalise critical power equipment and create new investment opportunities. This will also augur well for the entire power value chain, right from generation, transmission, distribution, to consumption that requires a digital upgrade.

2022 may not be a perfect year but it is a year that beckons opportunities in the right direction.