Wednesday, June 10, 2009

IT interventions in electricity distribution

One of the biggest disappointments of infrastructure sector has been the failure to bring down the persistently high Aggregate Technical & Commercial (AT&C) losses in electricity distribution, despite focussed efforts like the APDRP and numerous technology based initiatives. AT&C losses remain shockingly high at more than 30%.

One of the reasons for failure to make headway with reducing technical and commercial losses has to do with the inability of technology based interventions like Supervisory Control and Data Acquisition (SCADA), Geographic Information System (GIS), Automatic Meter Reading (AMR), and IT based Enterprise Research Planning (ERP) softwares on billing and collection, operation and maintenance etc to yield the desired results. For years now, all these initiatives have been implemented, both in pilot and scale, in many distribution utilities in the country. Except for a handful of deceptively simple (and mostly misleading) examples of city-based utilities, none of these interventions have succeeded in scale in any of the larger utilities.

It is shocking but true that there are no large state-wide or even region-wide distribution utility in the country which has successfully implemented any of these solutions. There is no such large utility that has implemented AMR based metering solution for even one category of consumers.

Even in the city-based private utilities like those in parts of Delhi, Bombay etc, the results of these technology interventions have been mixed, and appears to have done little to bring about any dramatic reduction in the AT&C losses. Despite all the capital investments made so far, the losses in these utilities in the range of 15-25% is easily on the higher side. It is all the more inexcusable given their natural advantage of having urban consumers, compact geographical area, good load mix, and absence of agriculture consumers.

This state of affairs is all the more surprising for a sector ubiquitous with vendors peddling technology intensive products that claim to improve technical efficiency, reduce losses, improve billing efficiency, and so on. I will list out a few reasons for the inability of such technology-based interventions in distribution to make much headway:

1. Most often, the intervention is done without detailed survey of the requirements and taking into account the pre-conditions for its successful implementation. There are no detailed plans to address the possible contingencies (say, difficulty in establishing and stabilizing communication links that are critical to the effective functioning of the systems). After the product is delivered and the implementation starts, the search for solutions begin, and many times remains a futile search!

2. Technologies are taken off the shelf and deployed without making the necessary adaptations to the local environment. This becomes especially pronounced with interventions involving use of communication technologies and work-flow automation softwares. Customization (of both hardware and software) presupposes domain expertise and knowledge of the local work environment by the vendor, both scarcely available commodities.

3. The business model for such projects is invariably a product procurement approach. The vendor delivers the product (often with a maintenance contract), and it is the responsibility of the distribution utility to use the product, with "help" from the vendor. This approach is fundamantally flawed for such projects, in so far as it fails appreciate the critical distinction between the technology product and the service that this product seeks to deliver.

4. Lack of professionalism (on both sides, but more importantly and inexcusably on the vendors side) is a characteristic feature of many of these interventions. There is little clarity of the final outcomes or deliverables, nor proper assessment of the likely obstacles in the success of the initiative. The contracts are rarely made contingent on the delivery of specific outcomes or deliverables.

5. Vendors (and even the buyers) pay more attention to the technology dimension of the product or service they are selling, without paying adequate attention to its work environment and management dimension. It is commonplace for the supplier toquikly install the devices and software, but struggle with the operation and management of the devices, training of personnel for its operation, delivery of outputs etc.

6. The challenge of implementation and use of the aforementioned technology interventions are compounded by the wide geographical spread of the work sites. The inhospitable and infrastructurally deficient nature of many of these locations makes it a formidably complex task.

7. Finally, in the absence of successful demonstration examples anywhere, the utilities undertaking these experiments experience the "first-mover disadvantage" and are handicapped by it. The inability of the project to deliver on its promised outcomes, dents the credibility of the utility (vigilance enquiries, press criticism, and sunk costs) and makes it risk-averse (thereby hesitant to try out new technologies).

The result of all this is a landscape littered with still-born technology-based interventions. SCADA solutions which seek to deliver the important electricity sub-station functions of VOLT, VAR, VCB controls, actually end up delivering the incidental functions of data acquisition. We have sophisticated GIS software applications, with the latest and high resolution satellite imagery, that sit on dubious database. We have AMR devices on sub-station feeders without effective multiplexers required to consolidate and transmit data and with suspect reliability in billing high value consumers (which the utility cannot afford). Energy audit softwares that suffer from the GIGO syndrome. ERP solutions on financial accounting and HR management end up being used as mere data dumps.

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