Nick Rosen | |

Red tape meets black wire
Just a few days ago 10 per cent of the world’s population faced a series of power cuts – India’s Northern and Eastern grids came to halt and 600 million people were confronted with the delicate state of their nation’s electricity grid.
The reason for the power failure is complex, and you can read more detail below, but essentially it came down to one thing: the power system had recently been transformed from a system to move electricity around this massive country into a system to trade electricity.
“Power stations, which earlier had to be very sensitive to shifts in demand within their region over the course of the day, can now export their surpluses to where its needed,” the Economic Times proudly announced today. “But the pricing mechanisms and regulatory frameworks need to match up with the physical development. Bigger systems require better regulatory oversight – the costs of failure can be huge in a large system,” it says.
These days, India has something approaching one national grid, since a decision last decade to bolt together several regional grids. And the connections joining these sub-grids together are both too complex to be managed easily, and insufficient to handle partial failures elsewhere in the system.
The solution is to diversify the power supply from the current state-owned monopolies to allow private investment of every size and kind – particularly the establishment of micro-grids based on renewable energy, which could be partially connected to the main system and would add huge resilience were the same thing to happen again in the future.
The grid collapse was just a failure of technology and economics, but it came to symbolise everything from the weaknesses and failures of India’s power reforms, the moral and policy failings of the eight-year reign of the UPA government, to the evaporation of the Indian economic miracle.
What exactly happened will only emerge when a committee of enquiry delivers its report. But the emerging data is clear that a few states overdrawing power from the grid is no explanation for the breakdown.
There have been rapid changes in India’s power transmission network over the last decade. In March 2012, India’s central electricity authority, warned that the “Indian power system … complexity is increasing on all fronts”. And that “any incident – natural calamity etc, even on single element of this capacity, has the potential to cause a major grid disturbance”.
Decades ago India’s power grid was a large collection of state-level networks with few if any links among states. In the 1960s, states began to link their electrical networks with each other. It wasn’t until 2002, that connections between regions began in earnest. Ubntil then, India’s transmission grid, was a system to move power from generating plants to wholesale customers like state electricity boards.
But between 2002 and 2006, the northern, eastern, western and northeastern grids were all linked up through a set of transmission lines creating a power ‘superhighway’ which excuded only the Southernmost states, and ran across central and eastern India from Agra and Gwalior in the west towards Sasaram in Bihar.
From Maharashtra and Gujarat to the North East, states are now one electrical grid whose crucial artery is this superhighway. The commissioning of the Agra-Gwalior line in 2006, was the final link in closing this mega-loop. It was this Agra-Gwalior link which was to play an important part in the grid collapse.
This national grid (North East-East-West) is loosely linked with a southern grid, and by 2014 the southern states had expected to be tightly linked with the superhighway – something which they will no doubt now be re-thinking.
Why was it important to integrate the grids this way? Customers for power are widely distributed – important urban and industrial centres such as Gujarat, Maharashtra, Mumbai, Delhi for instance, while the fuel for the power they need is highly localised.
The coalfields of Jharkhand and Chhattisgarh are the most critical source, followed by the hydropower rich states in the north, and the northeast. Rather than move the coal to where it’s needed, its cheaper to set up generating stations near the coal fields, and move the electricity to customers, which is where the grid comes in handy.
Coordinating the movement of electricity between the five grids, and within them, is a hierarchy of what are called load dispatch centres – at the state level, at the level of each of the five grids, and finally a national one. The five grid-level dispatch centres, and the national centre are run by Power System Operation Co Ltd (POSOCO), a subsidiary of Power Grid corporation, a central government PSU. The state-level centres, on the other hand, are run by the state governments.
So what exactly happened to kill the grid? It appears the breakdown began in the western part of the superhighway. The day before, two components of the grid were already weak. One of the two circuits linking Agra and Gwalior, and the line between Zerda in Gujarat and Kankroli in Rajasthan were down either due to repair or upgrade work. Between them, these two routes were the main link between the western and northern grids.
With two important links between the western and northern grids down, the remaining circuit between Agra and Gwalior had to carry a massive amount of traffic. By July 29, there was over 1,000 MW of power flowing on this one circuit alone, leading to a near collapse of this critical line on that day at 3 pm – around 36 hours before the grid actually collapsed.
Given the steadily weakening link between the northern and western grid, how was power to flow from west to north? It was likely that power would have been ‘wheeled’ through the east – a long circuitous route across Madhya Pradesh, Chhattisgarh, Jharkhand, Bihar and Uttar Pradesh, leading to massive loads on the lines there.
This is where the decisions of states and politicians began to be relevant . The lines in different states (called radial lines) are fitted with special equipment which is supposed to disconnect that line from the rest of the grid, if there is a sharp fall in frequency, signifying high loads. As the line disconnects, the demands on the rest of the grid should fall (since a set of consumers have been cut off), thus helping bring the supply-demand back into balance.
However, many of these radial lines and under frequency relays as they are called, are owned and operated by state government entities. These entities rarely maintain relays properly and are often under political pressure to continue drawing power from the grid, even when the load on the system is heavy.
With such massive loads, at some point things had to give way. Between 2:33 am and 2:35 am on July 30, a large set of lines between Balia in Bihar, Gorakhpur in eastern UP and Lucknow simply tripped and shut themselves down. In 2009, the Agra-Gwalior line had suffered a similar collapse. In a study of that incident, Power Grid engineers stated: “Outage of only one element in the system might have lead to a collapse…thus we need to revisit…contingency plan for better security in future.”
At the same time as the various lines in UP and Bihar were tripping in the early hours of July 30, other components started shutting themselves out or ‘islanding’ themselves from the problem. The western region would have disconnected itself from the rest of the grid by this time. Then the generating stations started islanding themselves as well to protect against damage to power equipment caused by sharp swings in the grid frequency.
Within two minutes, between 2:33 am and 2:35 am, a vast swathe of north India went dark. It was a classic domino effect – a chain of events, each one causing the other. Individual events were not necessarily critically dangerous in themselves, but taken together, they bought system crashing down.
The second outage of July 31 was a consequence of the first. In the hours leading up to it, a large chunk of lines connecting the east and the north from Balia to Patna to Biharshariff were still down. The crucial Ranchi-Sipat link between the eastern and western regions was down. And the Zerda-Kankroli line was still out of action. If the grid was already compromised before the outage on 30th night, it was tottering on the morning and early afternoon of the 31st.
Questions will be asked as to how the grid was allowed to function in such a weak state. Again, a small fault anywhere along the system would have triggered a cascade of trippings. Within the space of a minute, between 1:01 pm and 1:02 pm, 38 links between various parts of the northern, western and eastern grids went down. Most of the generating capacity went too.
The Western Grid could also have suffered a collapse – as it islanded itself, the frequency there rose sharply, indicating excess supply of power (since customers in the north were not available) – this could have potentially damaged plants in the region.
The private sector currently provides 30% of electricity in India.The system is supposed to incentivise producers to supply more at a time of heavy load. But as soaring fuel costs have boosted the cost of power, this ‘incentive effect’ has weakened sharply.
Besides the physical infrastructure, the economics of the grid has changed sharply in the past decade. Buyers and sellers declare the power they are likely to draw from the grid, or supply to it, 24 hours in advance to enable engineers plan and distribute loads between different entities.
Delhi for example might announce on Wednesday, that it will draw 2,300 MW in the morning of Thursday, increase that to 3,000 MW by the afternoon, and then gradually wind down in the evening. But if Delhi actually draws more than it said it would, that’s what’s called ‘overdrawing’.
The system attempts to make states pay a price for doing so. When there is heavy demand in the system, and the frequency starts to drop, the cost of each unit of power starts rising automatically, making it more expensive to buy power, or making it more remunerative to supply more to the grid than a supplier earlier committed to.
Alternatively, if a buyer chooses to cut demand at such a time of stress, he gets rewarded by being paid this so-called UI rate. And for sellers who over commit, but underdeliver, the UI rate becomes a penalty they have to pay. The aim is to bring demand and supply back in balance. Its a different matter that some states are in heavy default of their UI dues.
But what regulators discovered a few years ago was that some states began intentionally scheduling more power than they actually needed. At times when they knew the grid was going to be overworked, they would tell the system they needed to draw say 3,500 MW, when they actually only needed 3,000 MW.
Thus they got the credit for being responsible members of the system at a time of stress, while making a tidy sum of money in the process, from the UI benefits they received. Similarly producers had an incentive to announce they would supply far less power than they actually could, then supply more, benefiting in the process.
So the regulator effectively capped the benefits that any player could get from the UI system, by replacing a single rate with a set of slabs. As a result, the per unit UI price has fallen from Rs 6.7 per unit in 2009-10 to Rs 4.09 per unit in 2011-12. Court rulings have also put paid to attempts to raise the UI rate.
But over time, fuel costs and the cost of generating each extra unit of electricity have soared, leading to a scenario where the cost of generation of each unit is more than the UI rate. Put simply, the costs outweigh the returns, leading to a situation where in times of heavy demand, power producers would rather cut production below what they scheduled, and pay the UI penalty, rather than produce more power as the UI system was supposed to incentivise them to do.

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