1. A Study on ‘Mechanisms for Coping with Power Outages’
2009
24 November 2018
A Study on Mechanisms for Coping with Power Outages

2. Primary Research Summary
An extensive study has been conducted in 21 cities across the country covering ~1500 respondents
Geographical Coverage – 21 Cities
Respondent Categories
Number of Respondents
Residential Users
647
Commercial Users
748
Industrial 65
Power Backup Equipment OEMs/Dealers 43
Power Utilities 8
Total
1511
Ludhiana
Noida
Gurgaon
Delhi
Kanpur
Faridabad
Lucknow
Vadodra
Bhopal
Indore
Rajkot
Mumbai
Navi Mumbai
Pune
Visakhapatnam
Hyderabad
Bangalore
Mysore
Chennai
Coimbatore
Madurai
Cities covered for the study
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

3. Parameters for Assessing Backup Power Cost
To assess the power outage coping mechanisms and their related costs, we have analyzed multiple scenarios based on the following parameters
Parameters
Residential Users
Commercial Users
Monthly consumption is an outcome of income levels and size of household
Varies from
Monthly consumption is an outcome of establishment size, business segment and income level
Varies from
Average Monthly Consumption
Depends upon severity of outage, frequency of outage, timing of outage and income levels
Depends upon needs of the business, severity of outage, frequency of outage, income levels
Usage of Backup Equipments
Across cities, the tariff varies based on monthly consumption levels, connected load and type of connection (Residential vs. Commercial)
Grid tariffs considered do not include state taxes and fuel adjustment charges
Grid Power Tariff Slabs
Type of Backup Used
Depends predominantly on load/appliances to be run during outage followed by duration of outage
Inverter (600 VA, 800 VA, 1400 VA)
Generator (7.5 KVA, 15 KVA, 250 KVA)
Size/Capacity of Backup Used
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

4. Outage hours (per day) for peak season
Power Backup Mechanism - Inverter
Power Backup Mechanism - Inverter
The premium for an 800 VA inverter ranges from Rs 0.67 to Rs 2.85; The battery capex accounts for a large portion of the premium
Break-up of Premium Over Grid Power (For a 800 VA inverter)
The cost of backup power can be split into its individual components
Operating expenses
This refers to the expense on the grid power that is used to charge the inverter batteries. This is thus constant irrespective of the average outage duration
Battery maintenance
This is a small component and reduces with increase in average outage as the expenses gets spread across a larger number of generated units
Battery capex
This is the largest expense component for backup power
For a given number of batteries, this reduces with increase in average outage duration as the cost is spread over a larger number of units generated e.g. Battery capex cost per unit reduces from 1 hr outage to 3 hr outage as a single battery can suffice up to 3 hours
However, with increase in number of batteries, this component adds to the cost of power per unit significantly (e.g. 2 batteries required instead of 1 for a 4 hour outage)
Inverter capex
This component reduces with increase in outage duration as the cost gets spread across a larger number of units generated
Rs per unit
Operating expenses
AMC cost
Battery capex
Inverter capex
Outage hours (per day) for peak season
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

5. Outage hours (per day) for peak season
Power Backup Mechanism - Generator
The premium for a 15 KVA genset ranges from Rs 0.57 to Rs 3.38; The operating cost (fuel expense) accounts for a large portion of the premium
Cost of back-up power w.r.t outage hours per day (For a 15 KVA Diesel Genset)
The cost of backup power can be split into its individual components
Operating expenses
This refers to the expense on the diesel fuel
This is the largest contributor to the cost of backup power
Genset capex
This component reduces with increase in average outage duration as the cost gets spread across a larger number of units generated
Maintenance expenses
Refers to regular servicing that is required once every 250 to 300 operating hours
Also includes the overhauling expenses that are required after ~ 6000 hours for a mid size genset
Cost of back-up power (in Rs per unit)
Operating Expenses
AMC cost
Genset capex
Outage hours (per day) for peak season
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

6. Type of back up equipment
Scenarios - Cost of Back up Power
We have therefore modeled the cost of backup power for the following scenarios
Scenario
Type of User
Scenarios
Monthly Consumption
(in Units)
Type of back up equipment
Equipment Load Rating 1a
200
Inverter
600 VA
Residential 1 1b
400
Inverter
800 VA 1c
600
Inverter
1400 VA 2a
500
Inverter
800 VA 2b
1500
Inverter
1400 VA
Commercial 2 2c
1500
Generator
7.5 kVA 2d
4000
Generator
15 kVA
Scenarios explained in detail in this presentation
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

7. Scenario – Cost of Backup Power - Residential
Consumers in cities with outage pay a premium ranging from 17% to 79% over the grid power 1b
Overall Cost Borne by Residential Consumers – 400 Units Monthly Consumption
Rs./kWh `
Grid Power cost
Grid Power cost for 24x7 supply
Premium for using back up
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

8. Scenario – Cost of Backup Power - Residential
The premium paid is highly correlated with the typical daily outage duration and the duration of the peak outage season 1b
Premium Over Grid Power Borne by Residential Consumers – 400 Units Monthly Consumption
Rs./kWh
Premium borne for using back up
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

9. Scenario – Cost of Backup Power - Residential
There is a 16 to 19% increase in premium owing to the opportunity loss on capital expense 1b
Premium including Opportunity Loss on Capital Expense – 400 Units Monthly Consumption
Premium for using back up
Opportunity loss on capital expense
Rs./kWh
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

10. Scenario – Cost of Backup Power - Commercial
Consumers (using genset) in cities with outage pay a premium ranging from 11% to 149% over the grid power 2c
Overall Cost Borne by Commercial Consumers – 1500 Units Monthly Consumption – with Genset
Rs./kWh `
Grid Power cost
Grid Power cost for 24x7 supply
Premium for using back up
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

11. Scenario – Cost of Backup Power - Commercial
The premium paid is highly correlated with the typical daily outage duration and the duration of the peak outage season 2c
Premium Over Grid Power Borne by Commercial Consumers – 1500 Units Monthly Consumption
Rs./kWh
Premium borne for using back up
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

12. Scenario – Cost of Backup Power - Commercial
There is a 12 to 14% increase in premium owing to the opportunity loss on capital expense 2c
Premium including Opportunity Loss on Capital Expense – 1500 Units Monthly Consumption
Rs./kWh
Premium for using back up
Opportunity loss on capital expense
Outage trend
Hrs/ day
1.5
2.5
0.7 2 2 5 5 1 2 7 3 4 2
2.5 2 5 3 2 2 2
Days/month 30 30 30 30 20 30 30 30 30 30 30 30 30 30 30 30 30 2 2 30
Duration of peak season (in months) 3 4 4 5 3 3 12 3 12 12 3 12 5 3 3 3 3 3 3 3
Source: Primary Research, UC analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

13. Premium over the Grid Power (in Rs)
Scenario – Cost of Backup Power Summary
Residential consumers pay a premium ranging from 17% to132% while commercial consumers pay a premium ranging from 6% to 149% over the grid cost
Premium Paid over Grid Rates
Type of back up equipment
Units consumed per month (kWh)
Residential
Inverter
Inverter
Commercial
Generator
Premium over the Grid Power (in Rs)
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

14. Capital and Operating Expenses for Backup Power Generation
~ Rs 98,000 crore is estimated to have been invested in various power backup equipments with an additional ~Rs 30,000 crore per annum spent as operational expenses
Capital Investments in Backup Power Equipment
Annual Operational Expenses for Backup Power Generation
Rs crore
Rs. Crore
Rs 98,011 crore
Life of Equipment
(in years)
Rs 30,261 crore
Battery Maintenance Expenses
Operating Expense for Inverter Efficiency Losses
Genset 15
Inverter and Battery Systems
Residential and small commercial establishments have installed inverters with battery storage as a mechanism to provide power backup during outages
The installed base of inverters can be estimated to be ~ 43 mn units
This translates to an investment of ~ Rs 22,000 crore in inverters and another Rs 24,000 crore for the batteries used for storage
Generator Sets
Diesel generators are the most common type of generators used by mid to large commercial establishments as well as by industrial segments to cope with power outages
This investment can be estimated to be ~ Rs 52,000 crore over the last 15 years
Diesel Consumption
An estimated 6.6 million metric tonnes of diesel was used for the purpose of power generation in
This translates to ~ Rs 27,000 crore at the consumer level only as fuel expenses for generating backup power
Inverter Efficiency Related Losses
An inverter battery system has an efficiency loss factor associated which means that not all the grid power used up in charging a battery is actually available for usage during an outage
This loss can be estimated to be Rs 1560 crore annually for the current installed base of inverters
Battery 3
Expense on High Speed Diesel Consumption
Inverter 8
Note: Annual Sales Values ( ) - Genset ~ Rs 5200 crore, Inverters ~ Rs 3634 crore, Batteries ~ 5033 crore
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage

15. Inverter System Efficiency
CO2 Emissions
Further, the usage of power backup equipment is environmentally damaging and results in an additional 1.9 million tonnes of CO2 release on a yearly basis
CO2 Emissions because of Backup Equipment Usage
Combination
Inverter set
Prevalence
Inverter System Efficiency
Inverter
Battery 1
Branded
High
70-80% 2
Local
Medium
60-70% 3
Low
50-60% 4
40-50%
Million Tonnes of CO2
Inverter Efficiency Loss related
The inverter system has an efficiency loss factor associated which means that not all the grid power used up in charging is actually available for usage during an outage
This means that the usage of inverters adds to the CO2 emissions to the extent of its efficiency loss
This additional CO2 emissions can be estimated to be ~ 1.9 million tonnes annually based on the installed capacity of the inverter systems in the country
Source: UC Analysis
24 November 2018
A Study on Mechanisms for Coping with Power Outage