Appendix I

Integrated Resource Planning

Integrated Resource Planning, Energy Efficiency and Sustainable Development have become buzzwords in the energy planning scenario of Canada and the United States.

This marks a sharp contrast from the earlier practice of encouraging exponential growth in demand and planning of power projects with the 'least cost' in view. ('Least cost' is still a deciding factor, but now social and environmental costs are included in the calculation.) A steady growth in demand for energy is no more considered as synonymous with development as many energy intensive developmental efforts may prove to be unsustainable in the long run.

In Canada, one of the leaders in hydroelectric development, the change has come about after a lot of public debate on energy policies, environment and related issues with the non-Governmental organisations on one side and public utilities on the other side. Now, most of the utilities have broadly accepted the principles of integrated resource planning and energy efficiency. The recently published blue print for the new energy policy of the Canadian province of Quebec, for example, recommends that the policy should be based on the principle of sustainable development and that the province should resume its policy of promoting energy efficiency. In the province of British Columbia, power utilities are explicitly required to draw up Integrated Development Plans.

Integrated Resource Planning (IRP) is an evolving approach designed to make sure that energy planning furthers the interest of society as a whole. Whereas traditional planning for the energy sector primarily focussed on energy supply and the financial interests of the power company, IRP aims at providing energy services (as distinct from energy per se) to the society at lowest cost and with the least negative impacts. Systematic analysis of all possible strategies to meet the energy service needs is undertaken, taking into account all future scenarios. This poses an analytical challenge which is met through twin concepts of transparency and expert review.

If IRP, which is also called sectoral environmental assessment, is to be applied to India, the country would probably need national, regional and State plans. Load forecasts will have to be drawn up to describe the full range of plausible future energy needs. This will obviously be different from the load forecasts being prepared the Planning Commission, Planning Boards or the State Electricity Boards. Instead of just one forecast, multiple scenarios would have to be envisaged.

Under IRP, measures to reduce demand for power through energy efficiency and conservation would have to be considered on an equal footing with new proposals for power production. Uncertainties and risks with respect to demand and financial consequences are explicitly recognised and strategies are evolved to manage them. Importantly, the environmental and social impacts of strategies are fully integrated into the decision making process. It is recognised that as long as alternate resources are ranked according to economic criteria alone, neither the criterion of sustainability nor that of least total cost to society could be met.

The concept of sustainable development emerged in the eighties from a report by the World Commission on Environment and Development, better known as the Brundtland Report. The Report defined sustainable development as "development that meets the needs of the present without jeopardising the ability of future generations to meet their needs." The Commission also concluded that reducing energy consumption must be the first measure considered for sustainable development.

In 1989, Quebec's public utility, Hydro Quebec, which is one of the leaders of hydroelectric power development in the world, included sustainable development in its corporate objectives. It also decided to play an active part in deliberations on the concept of sustainable development and its application in Quebec and elsewhere in the world through its international activities. (It is currently carrying out one project in India aimed at sustainable development in the energy sector under the 'E7 Network of Expertise for the Global Environment'). Utility's environmental performance, it declares, is as important to its customers as is its quality of service.

Like wise, utilities like Hydro Quebec, Ontario Hydro (Province of Ontario) and B. C. Hydro (Province of British Columbia) place emphasis on energy efficiency in their development plans. Ontario Hydro declares in its annual report for 1994 that energy efficiency is the only way Ontario could successfully achieve the twin goals of competitiveness and sustainability. Both Hydro Quebec and Ontario Hydro are having surplus generation now and hence are going slow on energy efficiency programmes. But the broad policies remain unaffected.

It is felt that the economies of West Germany and Japan are eclipsing that of US and Canada because the former are more energy efficient. An analysis by the Canadian Government shows that commercial building energy consumption can be reduced by an average of 55 per cent primarily through controlling lighting and air conditioning loads. In Ontario motors consume about one third of the power and 25 per cent of this could be saved through use of power factor controllers.

In India also considerable scope for savings exists in improving the motors used for irrigation and industrial needs. Replacement of existing incandescent lamps with fluorescent tubes, compact fluorescent bulbs and halogen bulbs could dramatically reduce consumption through the initial investment would be high. Such replacements even with a subsidy will be economically justified if the costs are less than marginal costs for building additional generation capacity. There is need for diverting more investments into energy saving devices and popularising their use. (It is said that energy use in developing countries is about 25 per cent less efficient than in developed countries. But wastage of power is often high in the developed countries. For example, empty halls and rooms left lighted overnight, office computers left on overnight even when they are not doing any real time job and overly lit areas are common sight in Canada.)

Mr. Robert Goodland of the Environment Department of the World Bank suggests that most energy efficiency and conservation measures, including demand side management, should be substantially in place before new capacity comes on line. Demand side management includes various measures like full cost pricing, incentives for not using power during peak hours and even population control. 'Substantially in place' means the marginal economic cost (including environmental externalities) of saving an additional kilowatt hour through conservation becomes as high as the marginal cost of a new kilowatt hour generated and delivered to the consumer.

Mr. Goodland places energy efficiency and energy conservation on the top of the environmental ranking of new energy sources. Renewable and sustainable sources like solar and hydrogen, photovoltaics, wind, tidal and waves and biomass come next in the given order. Nuclear energy is listed as the worst source. Next comes coal, oil, gas and geothermal, in that order. Hydroelectricity is placed seventh in the list of 12. It is considered renewable and potentially sustainable.

Mr. Goodland advocates that involuntary resettlement should be avoided or reduced (make resettlement so attractive that it becomes voluntary) to improve the image of hydroelectric power. On resettlement, the economic condition of the oustee should be better than it was previously. As negative effects of hydroelectric projects are often proportional to the area submerged, the area submerged per MW of generation could be a good criterion for choice of a hydroelectric project. The best of hydel projects could be the mini hydel projects or the run of river projects. Upgradation of existing capacity would be another alternative.

Experts agree that some of the mega hydel projects have unacceptably high negative impacts. When that is the case, benefits of a single dam can be captured by two or three dams with much lower impact. According to Mr. Fabian Acker, an expert on the subject, the need to develop small hydro resources was becoming more urgent in third world because of rising populations and in the developed world because of growing awareness of environmental restraints. Load factor, distance (between the source and the demand centre) and cost were factors to be considered in opting for small hydel projects.

There is consensus that a sustainable hydel project should always be preferred over coal. Though the air pollution caused by coal burning thermal projects could be substantially reduced using modern technology, the plant would still let out large quantities of carbon dioxide, a green house gas. On the other hand, it can be seen that coal may be preferable if the hydel reservoir submerges large areas of tropical forests. Submersion of tropical forests would generate considerable quantities of green house gases whereas a live forest would act as a sink for carbon dioxide. Besides, tropical forests provide many other benefits.

Roy Mathew http://www.expert-eyes.org/irp.html

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