From the beginning Energy Management had been the thrust area of the present Government. Major components and strategies of this, is to bring reduction in the cost of energy of Railways. The total energy bill of Railways is around Rs. 30,000 crore which includes about Rs. 18,000 crore for diesel traction (for carrying about 35% freight traffic), Rs. 10,500 crore for electric traction (for carrying about 65% freight traffic). In addition, about Rs. 1500 crore is paid for use of electricity for other than traction purposes. This amounts to about 30% of total working expenses of Railways.
2) Despite being a bulk consumer, Railways have been paying extremely high charges for electric traction power. Till recently, Railways had been sourcing this power in a conventional manner and procuring from DISCOMs as a consumer, despite being the largest single consumer in the country. In addition, this tariff had been increasing at a rate of about 5% per year for last 10 years.
3) Accordingly, to bring down the cost of Energy in Railways various strategies were developed including supply side and demand side management. On the supply side, it has been planned to procure power through the bidding process at an economical tariff directly from generating companies and through bilateral arrangements taking benefit of Deemed Licensee status of Railways. On demand side management emphasis is being laid to reduce consumption by inducting latest technology equipment.
4) Railways are Deemed Licensee. This status has been derived from Electricity Act, as Railways from its inception had been carrying out the complete activity of generation, transmission and distribution of electricity for its own purposes. These provisions of the Act were duly implemented for the first time, under the leadership of Shri Suresh Prabhakar Prabhu, Hon’ble Minister of Railways, in the current year 2015-16. Using this provision Railways have now started sourcing of about 600 Mega Watt (MW) power in the states of Maharashtra, Gujarat, Madhya Pradesh, Jharkhand and U.P.
5) In the Budget Speech for the year 2015-16, Hon’ble Minister had announced that Railways will work towards reducing the cost of electric traction bill by more than Rs. 3000 crore towards 3rd year i.e. by 2018-19. In his Budget Speech for this year 2016-17, on 25th Feb 2016, Shri Prabhu was happy to announce that, “this target will be achieved a year earlier, with procuring of power in 5 states through open access (Maharashtra, Gujarat, MP, Jharkhand & UP in NCR region on Railways transmission network)”. For this purpose, Railways have taken up bi-lateral & multi-lateral procurement of power directly from the market. As part of this, as indicated above, about 600 MW has already been tied up which has already started giving annual saving of Rs.1300 crore. Another 1000 MW is in the pipeline & will be contracted soon which will give additional saving of about Rs.1700 crore on annualised basis. All these steps together will take the total saving to more than about Rs. 3000 crore on annualised basis.
6) With the establishment that electric traction is an economical and environmental friendly mode of Rail transport, it has also been announced in the Budget presented on 25th Feb 2016 for the year 2016-17, that the pace of electrification will be increased with an aim to cover complete Railways network in next few years. In the current year while Railways could complete about 1600 kms. Railway electrification highest ever, for the next year, the target has been enhanced to about 2000 kms. In addition, the sanction of works has also been increased by 50% to about 3400 kms. The Hon’ble Minister also announced that the works for electrification will be done through innovative financing mechanism using new project management techniques. To reach this aim of early electrification of railway networks, co-operation with various agencies of Ministry of Power is also on the anvil. Further, it is being planned that the savings coming from the use of electric traction will be used to finance the new electrification projects.
7) With increased electrification across the country, it will be possible to provide EMU/MEMU services throughout the country which not only increases the sectional speed but will also provide a faster & cheaper mode of transport.
8) Railway’s supply side strategy to reduce its energy bill will also include rationalisation of cost of diesel fuel. As part of this, Shri Prabhu announced a new strategy by which Railways plan to source High Speed Diesel (HSD) directly so as to reduce the diesel fuel bill of about Rs.18000 crore by almost Rs.1500 crore in year 2016-17.
9) To address the Demand side issues Railways are working to reduce energy consumption by introduction of latest technology locomotives and Electrical Multiple Units (EMUs) (using 3 phase IGBT based technology). This plan has already been put in shape by deciding to produce only 3 phase locomotives from November, 2015. On non-traction side, LED based lighting, high efficiency fans and pumps are being introduced. In his Budget Speech Sh. Prabhu announced that Railways have decided that in future all new luminaries will be of LED type and in next 2 to 3 years, all stations will be taken up for provision of LED lighting. These actions will result in improved use of energy by more 3% and will provide additional saving of about Rs. 300 crore.
10) Further, by way of energy auditing through internal resources and by using outside experts, implementation of their suggestions will bring down the energy consumption by 10% to 15% in next few years. Railways have already taken number of steps in this direction and audit by Bureau of Energy Efficiency (BEE) have indicated a reduction by 2% in non-traction energy despite an increase of about 4% energy requirement due to providing modern facilities like escalators, lifts and food plazas etc. In addition, BEE had also evaluated that on Electric traction side Railways are achieving saving at the rate of 3% on year to year basis, which is comparable to the best international benchmarks.
11) To use energy in an effective manner, an important step taken by Railways is to create additional capacity in locomotives to feed the air conditioning and train lighting power through the locomotive by a system called Head On Generation (HOG). In this system the electrical energy for the train comes from the locomotives only. This system will eliminate the need of running 2 power car coaches in Shatabadi/Rajdhani/other End On Generation (EOG) trains and will create more accommodation for passengers. This system is highly eco-friendly as well as it provides power without noise & the need to burn diesel. It is also far more energy efficient system. The Minister declared that four nos. of such trains have already been introduced, including Delhi-Mumbai Rajdhani & in the coming years, 40 more trains will be provided with this mode of traction to meet Air conditioning loads in trains.
12) Railways are looking at every aspect the way it uses energy & is working towards the goal of minimising carbon foot prints on account of use of energy. In this process, it has embarked upon an ‘Action Plan’ to harness energy from renewable sources for meeting its energy needs. Initiatives in this regard include harnessing of solar energy, wind energy and also waste to energy. Railways on date already have about 50 MW renewal energy capacity and further floated tender for 50 MW solar plants on roof tops of Railway buildings. In addition it will soon be floating tenders for additional 200 MW capacities. In addition, Railways will also harness 150 MW wind energy through tariff based bidding process for its own use and have already started procuring 26 MW power from its wind plants in Jaisalmer in Rajasthan installed by its fully owned company, namely Railway Energy Management Company Limited (REMCL).
13) In the previous Budget Speech, Hon’ble Minister of Railways laid down the path for Railway’s Solar Mission to install 1000 MW solar plants utilising the Railways building roof tops, covering all railway stations, workshops etc. In the Budget Speech for 2016-17, he further declared that possibility of utilising the Railway’s spare land along the railway tracks will also be explored for this purpose.
14) In harnessing renewable energy, Railways also plan to use its waste to generate energy. For this purpose initially major terminal hubs and A-1 category stations will be taken up where energy will be generated after segregation of waste.
15) In progressing all these areas innovative financing mechanism will be used, including Public Private Partnership (PPP). The Railways tenders for 250 MW solar plants will be done under PPP model and additional 150 MW wind plants capacity will also follow similar model. In this classic example of Public Private Partnership, Railways will provide its roof tops at no cost, while the developers will invest money in setting up solar plants. With new environment and focus on ease of business, it will be possible to take forward such initiatives at a faster pace. This will also give push to make in Indian initiatives, as part of these solar plants will be set up with Central Finance Assistance (CFA) from Ministry of New & Renewable Energy (MNRE) which provides for use of solar panels made in India.
16) Railways are greener mode of transport and dedicated freight corridors with electric traction system will further add to its impetus to reduce CO2 emission and will greatly contribute to Intended National Determined Contribution (INDC) given during COP 21 2015 in Paris.
17) All these initiatives of Railways are being taken by involving all sections of society and by fostering partnership to bring down the cost of energy and also improve the quality of services to its esteem customers.
18) Railways are working to bring in use of technology to change the business as usual approach. Such initiatives as brought out above will keep Railways operating ratio within 92% despite taking into consideration the impact of 7th Pay Commission.