Let us start by understanding, from the Electricity Act point of view, how Panchshil Realty becomes the “deemed licensee” for its Kharadi SEZ project.
Vandana Bangar Yermalkar: The Ministry of Commerce & Industry (Department of Commerce), Government of India vide its notification dated March 3, 2010, has specified that the developer of a special economic zone (SEZ) is deemed to be a distribution licensee under the provisions of the Electricity Act, 2003. Hence Panchshil Realty, through its group company EON Kharadi Infrastructure Pvt Ltd, is a deemed distribution licensee for its SEZ area.
“ERO Power’s core responsibility will be to provide uninterrupted power supply at very competitive rates.”
Tell us what ERO Power’s core responsibility towards electricity consumers of the SEZ would be, as envisaged in the agreement with Panchshil Realty. Has the agreement already taken effect, which is to say have IT/ITES already started operations at the SEZ?
Vandana: The core responsibility would be supplying power at competitive rates, uninterrupted power supply, doorstep consumer services and would be responsible from power purchase till recovery of monies from consumers.
As a professional company with skilled and highly experienced professionals (who were instrumental for starting Maharashtra’s first IT/ITeS SEZ as distribution licensee) ERO Power approached Panchshil Realty for end-to-end solutions for operating SEZ as distribution licensee. ERO Power has already started the operations on November 6, 2020.
For the sake of understanding, can we presume that ERO Power will function like an “input-based distribution franchisee” for Panchshil Realty?
Vandana: ERO Power shall be a business partner to Panchshil Realty for ensuring smooth operations of power distribution business, by performing all activities that a distribution licensee has to do. Furthermore, we are doing SCADA-based monitoring of the entire network and automated meter reading arrangements for hassle-free meter readings.
“We shall strive to purchase power at competitive rates, and target minimal T&D losses, zero commercial losses and highest operational efficiency.”
Please discuss how electricity supplied by ERO Power would be at a more competitive tariff for consumers than what would have been the case if taken directly from the state power utility, MSEDCL?
Vandana: It is the duty of each distribution licensee to provide competitive tariffs. We shall strive to purchase power at competitive rates and target minimal T&D losses, zero commercial losses, highest operational efficiency and infusion of technology for keeping tariffs at their lowest. We envisage at least 20-30 per cent savings to the clients, from the very first year. We have already prepared a user-friendly bill/invoice to be issued to the clients. To summarize, this arrangement has come like a boon to all clients who were struggling to reduce the costs in such pandemic situation.
What is likely to be the total load (in terms of mw) that ERO Power expects to handle currently? How much would this figure be when all units of the SEZ are functional?
Nisar Shaikh: Once fully operational, ERO Power shall be handling 30 mw of power. We have already set up a 24×7 control room for monitoring the power purchase quantum and exact consumption. The other work of control room shall be monitoring the high consumption meters, attending faults if any and attending customer grievances. We are striving for “zero” grievance.
For ERO Power, is this the first major power distribution agreement of its kind?
Vandana: Yes, for ERO Power, it is the first major power distribution agreement. However, we are targeting similar SEZs in near future. We are already in talks with more than four SEZ developers for such arrangements.
We presume that Panchshil Realty, being the distribution licensee, would also have to manage sub-transmission/distribution assets (transformers, etc) under its purview. Please discuss. Would ERO Power be involved in this aspect also?
Nisar: Yes, the distribution assets fall under purview of the distribution licensee. Hence that has to be maintained in efficient way. ERO Power is involved directly and is handling the assets also. Planned maintenance, predictive measures and effective testing methods shall definitely help us to reduce the breakdowns. We are striving for “zero” breakdown. SAIDI, SAIFI and CAIDI are most measurable parameters for power sector. We are targeting to reach global benchmarks. (See endnote)
Coming back to ERO Power’s ultimate service to electricity consumers of the SEZ, please elaborate on what would constitute the “end-to-end” service being offered?
Nisar: The core responsibility would be supplying power at competitive rates, uninterrupted power supply (24×7), doorstep consumer services and would be responsible from power purchase till recovery of monies from consumers. ERO Power shall perform all the duties as what the distribution licensee does. Moreover, we shall be infusing latest technologies to meet our duties and responsibilities. Additionally, we are giving doorstep services which we think no distribution licensee is offering, anywhere in India.
We assume that units located in the SEZ, by their IT-centric nature, would require uninterrupted and quality power. How would ERO Power ensure this? For instance, would there be power backup solutions (DG sets, etc)?
Nisar: Yes, as rightly said all IT/ITeS units work 24×7 owing to the nature of their business requirements. Further they need 24×7 uninterrupted power supply. We currently have N+1 DG backup systems for ensuring uninterrupted power supply if power through grid fails. Further, Panchshil Realty is building an EHV GIS substation near the SEZ which will help to cater to growing electricity demands.
Would ERO Power be looking at displacing some grid power by renewable energy, through captive solar power plants, for instance?
Vandana: In fact, a distribution licensee is obligated to have 15 per cent of power through renewables. ERO Power is managing the portfolio of power purchase in such a way that the renewable energy accounts for more than 15 per cent.
“It is noteworthy that women comprise 65 per cent of the ERO Power team.”
What are the typical challenges that ERO Power expects to encounter whilst honouring this agreement with Panchshil Realty? What type of skills would be typically required to meet such challenges, and how is ERO Power gearing up to the situation?
Vandana: The skill set required for distribution licensee is rare in the market as it needs multidisciplinary experience —regulatory, commercial, technical, legal, IT-oriented, finance and accounting. ERO Power professionals have the necessary talent mix, and will be able to start the power distribution licensee in record time. Further, the average age of ERO Power team is around 25 years, and adequate emphasis has been laid on women empowerment.
Despite the technical knowhow and talent, small-town women engineers do not get the opportunity they deserve. We have recruited engineers from rural parts of Maharashtra by selecting them through campus interviews. We have helped them overcome their shortcomings through rigorous trainings and hands-on practical tools, talks, and simulation experiences for SCADA and AMR.
We are incredibly happy to provide a platform for girls from rural Maharashtra. It is noteworthy that women comprise 65 per cent of the ERO Power team.
“ERO Power envisages playing a leading role in power distribution in Maharashtra and other states.”
Do you see the success of this agreement with Panchshil paving the way for more such agreements in future for ERO Power? Is ERO Power already in discussion with other developers/deemed distribution licensees for similar agreements?
Vandana: ERO Power is currently distributing 30 mw of power to two SEZs of Panchshil Realty. ERO Power is also a recognized startup company by the Central Government. ERO Power envisages playing a leading role in power distribution in Maharashtra and other states. We are already in talks with big SEZ developers and are actively looking to capture the power distribution market pan-India as well as for optimization of costs for upcoming data centers, IT parks and commercial business hubs.
Note: SAIDI = System Average Interruption Duration Index; SAIFI = System Average Interruption Frequency Index; CAIDI = Customer Average Interruption Duration Index. SAIFI measures how often a customer can expect to experience an outage, SAIDI measures average outage duration per customer, and CAIDI measures average outage duration if an outage is experienced, which is also the average restoration time.
