Keynote address by Ashok Lavasa, ADB Vice President for Private Sector Operations and Public–Private Partnerships, at the India Smart Utility Week (ISUW) 2022, 2 March 2022.
Good afternoon to all of you from Manila and greetings wherever you are in the world.
Thank you for inviting me to speak at today’s virtual session. Looks like technology has already bound us into a smart grid during the pandemic bringing in tremendous efficiency in utilization of resources and showing remarkable results that point to the future workplace. So, in a sense, the benefits of a smart architecture created by the application of modern technology are already before us and that is what this conference is all about.
This conference is an important event to discuss best practices and latest technologies in smart energy and smart cities. The work done by the India Smart Grid Forum is vital in accelerating the energy transition through clean energy, electric grid modernization and electric mobility as well as through working with global governmental agencies. Working with national and international agencies to build capacity and technical expertise in smart technologies is crucial in mainstreaming the clean energy transition.
Before I speak about the various initiatives of the Asian Development Bank let me applaud the insights on smart utilities landscape provided by the previous speakers, many of whom I have had the privilege of knowing and working with personally. I appreciate their perspective and their commitment.
The Asian Development Bank has recently enhanced its target for climate finance by scaling up its ambition from USD 80 bn to USD 100 billion of cumulative financing between 2019 and 2030. As part of this commitment, we work with our developing member countries as well as the private sector in these countries to upscale the use of smart energy and smart technologies. We all know that smart technologies play an important role in tackling climate change. Cities are responsible for most of the world’s economic activity, energy consumption and greenhouse gas emissions. Therefore, to significantly cut emissions, urban centers will need to both use less energy as well as take greater advantage of periods when intermittent renewable energy is available. Smart cities can help control greenhouse gas emissions by reducing electricity and heat production, as well as by reducing emissions from the transport sector. A smart grid is also a requisite for transporting renewable energy generated in remote locations to load centres.
Global greenhouse gas (GHG) emissions can be roughly traced back to four broad categories: energy, agriculture, industrial processes, and waste. Overwhelmingly, almost two-thirds of global GHG emissions come from our energy consumption. Within the broad category of energy, 24% of total emissions arise from manufacturing and construction, 17% from transportation, 11% from domestic consumers, and 7% from commercial consumers. Around 4% of emissions arise from the energy consumed by the energy and fuel industry itself.
While I am not aware of a comprehensive quantitative study that catalogs all the environmental benefits of smart technologies, some limited studies provide an indication of just how large these benefits can be. According to a recent report by the Ericsson Group, smart grids can lead to a global reduction in GHG by approximately 1.5% to 4% by 2030. According to the same report, information and communication technologies, or smart technologies, have the calculated potential to reduce global greenhouse gas emissions by up to 15% by 2030.
ADB’s work in the smart technology space is vast, but today I want to focus on a few examples of the work ADB is doing in smart energy, smart mobility, and smart cities, especially examples of ADB projects under implementation in India.
One example of the work we are doing in smart energy is with Intellismart, a leading provider of smart meter assets in India. There is a strong thrust from the Government of India to convert the conventional electricity meters to smart meters, in line with the government’s mission to develop smart cities under the national Smart Cities Mission. ADB is providing financial assistance to Intellismart to help build technology infrastructure for its smart meter assets, along with financing the concessions it has won to install smart meters on a build, own, operate and transfer basis.
Smart meters result in substantial savings for power distribution companies on the back of improved billing and collection efficiencies. These help in reduced manpower costs for data acquisition, billing, and collection. In addition, distribution companies, which are financially stretched, benefit from not having to incur upfront capital expenditure to install smart meters. Smart meters enable minimizing the human interface with consumers thereby reducing rent seeking and leakage of income that should accrue to the Utilities.
Another example of a project where ADB has provided support in smart energy is in upgrading the distribution system in Bengaluru. ADB structured a $190 million combined sovereign and non-sovereign loan, to support the conversion of overhead power distribution lines to underground cables, with parallel installation of optical fiber cables, as well as installation of automated ring main units adapted with a distribution automation system in urban Bengaluru city. This project is implemented by Bangalore Electricity Supply Company Limited (BESCOM) and will improve the efficiency of electricity distribution and delivery of electricity supply to residents of Bengaluru and support the Government of India’s strategy of building an energy-efficient distribution network. The distribution automation system will allow the power system to monitor and control the distribution line switchgears from the control center. In addition, optical fiber cables installed as a part of the project can be utilized for a smart metering system, and any other devices that contribute to making the distribution grid more reliable, flexible, responsive, and smart.
In addition to assistance on smart meters and smart grids, ADB has also provided support on developing battery energy storage systems. With the requirement of the rapid integration of renewable power, electric vehicles and utilities need fast responding grid services that can cater to peak demand as well as the variability of intermittent generation from renewable sources of energy. A battery storage system enables electricity to be stored and then delivered within milliseconds, reducing the instability of the electric grid resulting in more energy to be captured and delivered on demand. A battery storage system deployed at utilities can assist in managing peak power demand, avoiding voltage and frequency deviations through quick ramping up and backing down of power, optimizing the utilization of distribution network and thereby result in reducing the capex load, providing more stability to the grid.
ADB is providing financial assistance for battery energy storage systems in Delhi. Tata Power Delhi Distribution Limited, AES Corporation and Mitsubishi Corporation have set up a pilot 10 MW battery energy storage system project at a sub-station operated by Tata Power Delhi Distribution Limited in Delhi. The pilot will assess the impact of battery storage on peak load management, frequency regulation and overall grid stability. This is a scalable model and if replicated across utilities would result in faster integration of renewable power in the power mix in India.
In these three examples, by working with the private sector and city governments, ADB can provide capacity building and knowledge sharing at a local level, in addition to financial assistance. These projects also serve as pilots which can easily be replicated throughout the country.
ADB has also done substantial work on developing smart cities in our developing member countries. We believe that smart cities should be people-first cities. Smart means pivoting around people and their needs, so that they can live the good life and fulfill their aspirations and dreams. Technology is simply a means to ‘smartness’; only when a people-centric strategy is implied through the technology that it can become smart and enhance livability.
One example of a people-centric smart city where ADB has provided assistance is the Agartala City Urban Development Project, which aims to provide stronger and more sustainable urban services in Agartala, focusing on smart roads and tourism infrastructure. The project is part of the Government of India’s Smart Cities Mission and was approved in 2021 with an ADB financing amount of $61 million. In addition to the loan, there is an attached technical assistance to the project, which aims to provide public awareness and capacity building of agencies in urban service delivery.
The project will construct climate-resilient roads and an underground utility corridor with the shifting of electrical lines. These activities will improve public health by reducing urban flooding and improving overall air quality.
The smart components of the project are being implemented by Agartala Smart City Limited, which is a state-owned enterprise established by the Government of Tripura, to develop and implement projects under the Smart Cities Mission. These smart city components include an integrated intelligent traffic management system and surveillance with smart traffic signals, closed-circuit television cameras, automatic number plate recognition cameras, rapid transit system, integrated command and control center, and smart network.
The previous examples spoke about ADB support through loans, grants, and technical assistance. ADB also provides seed, early and early-growth stage capital to startups with solutions for emerging Asia, through our venture capital arm, ADB Ventures. Last year, ADB made a $2.6 million investment in Euler Motors, a smart mobility company based in Delhi. Euler Motors is an Indian manufacturer of light electric 3-wheeled vehicles for last-mile commercial logistics. In addition to providing capital, ADB as a climate and gender conscious investor, also helps in building the environmental, social and governance frameworks of our investments.
In addition to work done through loans, grants, technical assistance, and venture funding, ADB also works with governments on building the enabling environment, programs and policy reform needed to spur smart technologies. ADB is currently processing a policy-based loan to enable market reforms in India, and this is supporting several policy initiatives such as the establishment of an Ancillary Service Market and the streamlining of an open access regime. These reforms will provide additional opportunities for smart grid and digital applications in the power sector. ADB is also in discussions with Ministry of Power on the financing of the Revamped Distribution Sector Scheme which also has a dedicated component for smart meters.
ADB has also implemented several projects and programs related to smart cities, smart grids, and smart transport in our developing member countries. Recently in New Clark City in the Philippines, which is planned smart and disaster-resilient community, we have assisted the government in refining their smart city master plan, and in procuring private partners to build a smart grid distribution system and a smart water and wastewater system. Additionally, ADB is working with the Government of Australia through the ASEAN Australia Smart Cities Trust Fund, to enhance the planning systems, service delivery, and financial management of ASEAN cities by developing and testing digital solutions and systems that will lead not only to smart cities, but cities that are competitive, inclusive, green, and resilient. The program also works with cities in the region to boost private sector collaboration, gender equity and climate action through smart strategies. There are more than 20 ASEAN cities in the pipeline that the trust fund will gradually engage with, including cities such as Baguio, Kaysone and Makassar. In Baguio, in the Philippines, the Fund is working with the city government on a flood forecasting and early warning system to mitigate impacts and protect residents, especially the vulnerable. In Kaysone, Lao People’s Democratic Republic, a smart learning platform is being designed to prepare students for the demands of the job market, providing necessary skills while also helping businesses to increase efficiency. In Makassar, Indonesia, a livable city prioritization platform is in the works, which will support Makassar’s vision to become a world-class city.
Finally, I would like to conclude by reiterating that any strategy incorporating smart technologies should keep people as the core component of the strategy. Technology is nothing but a set of tools and when used correctly, makes our lives easier and more fulfilling. As we have seen in the past, technology has the potential to greatly improve the lives of the poorest and most vulnerable and provide new opportunities by leveling the playing field.
Let me end by recalling what the UN Secretary General said while describing the recently released IPCC Report ‘Climate Change 2022: Impacts, Adaptation and Vulnerability’, which he described as “an atlas of human suffering”, “Our continued reliance on fossil fuels makes the global economy and energy security vulnerable to geopolitical shocks and crises. Instead of slowing down the decarbonization of the global economy, now is the time to accelerate the energy transition to a renewable energy future…A prompt and well managed transition to renewables is the only pathway to energy security, universal access and the green jobs our world needs.”
Thank you for your patience. I thank Reji for inviting me, Reji we know is an inseparable part of the smart grid of modernization of the power sector and keeping the idea alive and growing through the Smart Grid Forum. I look forward to the deliberations in this Forum adding to the momentum to a smart future.