Friday, December 14, 2012

"The cost of energy" for Bhutan

"It’s that time of the year again when power generation dips to the lowest but demand peaks with thousands of heaters on. Which means its time to complain of the energy bills, which is much higher than the summer bills when energy consumption is way lower. But this winter it is not only households that are concerned of energy bills and working out ways to control consumption, even the government is doing the math and holding discussions. For several years now, domestic demand has been higher than our overall winter generation which drops to less than 300 MW because there is less water flowing in the snow fed rivers. A significant increase in generation is not expected until 2017 when the Punatshangchu project is commissioned. Most of the domestic consumption today is by industries in the southern belt. Domestic users or household consumption is less than 20 percent of the total demand. In recent years consumption has increased because of the rural electrification project and several hydropower projects that are under construction round the clock. The country’s biggest cement plant in Dungsam, which is on the verge of commissioning, would alone require about 26 MW at any point of time. This winter total import is expected to go up to 54 MW. In the past Bhutan never paid for electricity it imported in winter from India since it cancelled out with what was exported in summer but this time the modalities appear to have changed. Some energy officials say for the first time domestic energy demand is far outstripping generation converting Bhutan to a net electricity importer in winter. The complications arise because Bhutan has to import at a much higher rate from India while it exports to India in summer at a much lower rate. The other option is bartering with a neighbouring Indian state the same quantity of energy during the lean and peak season. But this too is complicated because of the Unscheduled Interchange Mechanism. Under this mechanism if the importer consumes more or less than the agreed amount, the importer is penalized based on the frequency of extra or less energy consumed. The penalties are extremely high and energy authorities say its only possible to project consumption. This mechanism has become the watchword for interstate electricity trade in India. Some experts say the mechanism is merely a penal and disciplinary tool to deter deviating from schedule but others say pricing by grid frequency keeps supply equal to demand and cancels out fluctuations. If imports are going to entail higher costs who is going to pay for it? Will industries have to close for a few days every now and then or will it be passed on to the domestic consumer? While a deal is being worked out the best that can be done is to switch off when not in use." Courtsey: kuenselonline

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