India may be better served by a plan that looks at developing solar and other renewable energy generation in step with cost effective storage and flexible generation that is available to all states.
The Narendra Modi government’s aggressive push for renewable energy, seeking to increase its share in the electric supply from the current 7% to nearly 19% by 2022, has been greeted with much enthusiasm all round. What is most striking is the target for solar capacity, which has gone up five-fold to an eye catching 100 GW. Till recently, 100 GW was the official estimate of India’s solar potential in the “medium-term” – till 2032. As justification for its aggressive target, the government points to the price of solar approaching “grid parity” and the international commitments it has made to increase the use of non-fossil-fuel sources of energy.
While energy generated without emissions is generally welcome, the rapid penetration of solar energy into the grid on the scale planned will present major problems for the state distribution utilities. In particular, it will make it difficult for them to meet another commitment made by the government to the people of India of providing “24 hours supply of adequate and uninterrupted power”.
The problems associated with solar electricity on the grid stem from the variability of solar generation. The output of a solar power plant varies with the movement of the sun and follows a bell shaped curve with a peak around noon. Cloudy or foggy conditions lower output and moving clouds can cause rapid fluctuations.
The variability of solar generation (and more generally of all renewable energy generation) is something the utilities need to handle as they must maintain a balance at all times between electricity supply and demand on the grid. Balancing becomes more challenging with increasing penetration of renewable energy.
Balancing supply and demand
Balancing is not a new requirement. Even if generation on the grid is not variable, balancing requirements will arise from daily variations in demand. The average all India pattern of demand variation is a higher day time demand compared to the night time load and a sharp peak in the late evening. Load balancing is achieved by varying supply from conventional – coal, gas, hydro – power plants. These plants come with a range of characteristics which define their use in balancing.
Older subcritical coal-fired plants have low flexibility as they were designed to provide a steady output. Frequent output changes in these plants leads to wear and tear with attendant costs. Newer supercritical coal-fired plants are more flexible and resilient than the older subcritical plants by design. Gas-fired and hydro power plants with reservoirs are the most flexible and their output can be changed rapidly to handle changing load.
On an all India scale, coal-fired plants provide a steady output – to meet what is called the base load – while gas-fired plants and hydro plants with storage are managed to respond to variations in demand. With gas being expensive, hydro generators are used, wherever possible, to meet demand peaks.
A problem for the states
However, it is at the state level that balancing problems come to the fore.
That is because in India’s federal structure, states (and utilities within the state) are responsible for balancing supply and demand on their own grid. For this, they require a mix of conventional generators with different levels of flexibility that is adequate to meet the variations in load and renewable supply on their grid. However, all states do not have access to the different resources in the right measure.
Tamil Nadu, which has a large wind power capacity, is a good case study. Balancing requirements arise from both load and supply variations. The uncertainty associated with wind power generation adds to the complexity. While the state has significant reservoir-based hydro capacity, its ability to use this for balancing is restricted by irrigation release schedules and periods of high inflows into reservoirs when hydro power generation cannot be curtailed.
When wind power generation is greater than expected, the state utility, lacking flexible balancing resources, has to back down power from coal plants or refuse wind power. Either option results in objections from the other party – violating contract provisions in one case and not respecting the “must-run” status in the other – and the dispute is now in the courts. Legal issues aside, there are negative economic consequences either way. Varying power from coal plants means underutilisation of capacity and higher costs related to wear and tear. Backing down wind power means wasted energy.
Are we prepared for large-scale renewable energy?
The different types of long gestation infrastructure needed to handle large scale penetration of renewable energy on the grid are known from government sponsored studies dating to 2012 and 2013. These are broadly inter-state transmission lines, grid level storage and adequate flexible generation resources.
Transmission corridors carrying renewable energy across state boundaries would bring balancing resources over a larger area into play. In storage, these studies identified pumped storage projects – where energy is stored in water pumped from lower reservoirs into upper reservoirs – as a good option as there were a number of potential sites in India. Additionally, these projects would also support flexible generation.
Based on 12th plan targets for capacity addition (which included 56 GW of renewable energy), it was estimated that by 2017 only 60% of the balancing power requirements would be met by flexible generation from the planned pumped storage, hydro and gas plants. The remaining would have to be met using the less flexible supercritical coal plants. After steeply raising the renewable energy target to 175 GW by 2022, how is the government preparing the grid for it?
The only preparation underway is in the area of establishing inter-state transmission corridors (termed ‘Green Energy Corridors’). These were already under implementation for existing renewable energy sites in Tamil Nadu, Gujarat and Rajasthan and the present government has enlarged their scope to include its “ultra mega solar parks”.
There is no visible movement on augmenting pumped storage capacity. Among new grid-level storage technologies, electro-chemical technologies (batteries, capacitors) may be the most suitable for Indian requirements. These technologies are however still five to ten years from commercialisation and as yet only one large battery storage plant (>10 MW with 4 hrs supply) is in operation worldwide.
Even if the government projections for addition of flexible generation capacity hold, the planned growth in renewable generation will far outpace it. In fact, capacity addition is likely to fall short by a large margin with problems with both gas-fired plants and hydro plants – expensive imported fuel in one case and environmental issues in the other.
Given the above, flexible generation resources will be grossly inadequate to meet balancing requirements by 2022. Coal-fired plants, both supercritical and subcritical, will have to be used for balancing and utilities, lacking adequate flexibility to handle supply variations, will be forced to resort to supply interruptions and load shedding.
The real cost of solar
Problems of balancing aside, there is also the issue of cost. Utilities are extremely price conscious and will not contract solar energy if it is more expensive than other sources. After solar producers offered to sell NTPC electricity at rates of Rs 4.63/unit in AP last year and at Rs 4.34/unit in Rajasthan early this year, the Minister of Power was quick to announce that solar energy prices had reached “near grid parity”. This statement is misleading.
NTPC is able to sell this power to utilities only because it “bundles” it with cheaper power from its old coal-fired plants and offers them power at the “bundled” rate lower than its purchase price for solar electricity. It is this bundled price that must approach “grid parity” – the average contracted price of electricity on the grid for the utility – for NTPC to be able to find buyers.
Then again, even after reaching “grid parity”, solar can prove to be expensive. Its true cost to the utility is not just the price at which it has been purchased. The cost of balancing – be it the cost of storage or the cost of coal capacity held in reserve – must also be attributed to solar generation.
The government’s announcement of massive solar energy targets therefore appears to be an impetuous decision. States will be unwilling to allow high penetration of solar energy into their grids considering its cost and the problems of addressing its variability. That is why the central government is all set to force the issue by increasing renewable purchase obligations. The new tariff policy states that solar electricity must constitute 8% of non-hydro power consumed by every utility by 2022.
Forcing the issue will have consequences for the quality of electricity supply. The limited arsenal in their hands to deal with supply variability will make it difficult for state utilities to fulfil the commitment of adequate and uninterrupted power supply 24 hours a day. The central government anticipates the need for curtailing demand. That is why it is pushing for the large-scale installation of smart meters that can support time-of-day tariff and facilitate demand reduction.
Savings on carbon emission would come from capacity underutilisation of coal plants, an expensive strategy for India. With no storage available on the grid, coal plants will be needed as backup, and installation of new solar plants will not lower the requirement for new coal plants.
India may be better served by a plan that looks at developing solar and other renewable energy generation in step with cost effective storage and flexible generation that is available to all states. Such a combination would reduce carbon emission by reducing the need for new coal plants. If such a plan entails slower adoption of solar generation, that may not altogether be bad; solar plants, as long term trends suggest, will only get cheaper with time.