It is a well-known and accepted fact that renewable sources of energy, especially wind and solar, are infirm in nature. Their intermittent energy generation patterns create no major problems in grid operations when they are integrated into the grid on a small scale. However, with renewable energy penetration increasing in India, several state grid operators have reported challenges in integrating these sources into the electricity grid. Large-scale integration of renewable energy into the grid leads to voltage and frequency instability, as well as transmission congestion. The problem is more acute in wind-rich states, where the wind generation profile changes on a daily basis, depending on the speed of wind from time to time. Solar energy generation, though somewhat constant for a given month, faces high levels of intermittency on cloudy days.
This intermittency not only causes issues in grid management due to system-level implications, but also entails significant financial costs for grid operators and related infrastructure owners. One reason for the high financial cost is the need to ensure standby thermal power capacity to meet demand when wind and solar power are not available, and to have flexible generation that can be ramped up and down in accordance with the variable renewable energy generation. In addition, the absence of large-scale energy storage systems, natural gas plants, and pumped storage hydropower plants to balance the load profile impacts thermal power plants. Thermal plants have to operate at lower efficiencies and plant load factors due to the higher specific heat rate and auxiliary consumption. The wear and tear in these plants also increases, which, in turn, leads to a rise in equivalent operation hours. Also, there is an impact on the deviation settlement mechanism (DSM) charges for interstate flow of power, and extra transmission charges on account of lower utilisation of transmission systems for evacuation of renewable energy.
Quantifying the financial implications
The Central Electricity Authority (CEA) instituted a committee to carry out a detailed analysis for estimating the financial implication of these operational measures on grid operators, using the test cases of Tamil Nadu and Gujarat during the renewable energy-rich season in 2017. The “Report of the Technical Committee on Study of Optimal Location of Various Types of Balancing Energy Sources or Energy Storage Devices to Facilitate Grid Integration of Renewable Energy Sources and Associated Issues” was released in December 2017. It estimated that after taking into account the impact on DSM charges and tariffs for discoms, as well as balancing charges, standby charges and extra transmission charges, the financial implication due to renewable energy integration for Tamil Nadu and Gujarat stood at Rs 1.57 per unit and Rs 1.45 per unit respectively. The pan-Indian impact for the year 2022, when renewable energy capacity is expected to reach 175 GW, is estimated at Rs 1.11 per unit. In case this cost is shared by all the states in the ratio of their renewable purchase obligations (RPOs), the charge per unit is expected to decline to about Re 0.70 per unit.
The report recommends a detailed study of the cost-benefit aspects regarding the adoption of grid balancing methods. In many cases, the installation of energy storage systems near the point of generation may prove to be more economical as compared to the augmentation of transmission systems. Setting up of grid-scale battery energy storage systems can also be useful in wind-rich states, to prevent curtailment on account of congestion and lowering of DSM charges. Other recommendations in the report pertain to the adoption of workable measures for planning and sharing grid balancing responsibility. Additionally, real-time power markets can be used for grid balancing and reducing the financial implications of intermittent renewable energy. Inter-country energy exchange can be carried out by supplying firm baseload power to neighbouring hydro-rich countries such as Nepal and Bhutan during lean demand periods, in return for balancing hydropower from them to match peak demand. The report also lays emphasis on having ancillary services on a permanent basis, in view of the increasing renewable penetration into the grid. Capacity building exercises for Indian grid engineers and operators need to be adopted, based upon the experiences of countries such as Germany, Spain, and Japan, which have high penetration of renewables. The report recommends the adoption of suitable policies and regulations to mitigate the issues related to increasing renewable energy penetration. It concludes that even after taking into consideration the financial implications, setting up renewable sources would still be more cost effective as compared to coal-based capacity in the future. n
Based on a presentation by Pankaj Batra, Former Chairperson, CEA, at a recent Renewable Watch conference