Blended Power

MNRE launches a scheme for combining wind with solar energy

The renewable energy sector has witnessed some key developments over the past few months. Four auctions have been conducted during this period, all of which are being considered historic. That these bids were carried out during the ongoing Covid-19 pandemic has made them even more interesting.

In January 2020, the Solar Energy Corporation of India’s (SECI) tender for 1.2 GW of solar, wind and storage projects for the supply of peak power recorded tariffs of Rs 6.12 per kWh and Rs 6.85 per kWh from Greenko and ReNew Power for 900 MW and 300 MW of capacity respectively. In May 2020, ReNew Power won a tender to set up 400 MW of renewable capacity for round-the-clock (RTC) supply at a tariff of Rs 2.90 per kWh. In June 2020, Adani Green Energy emerged as the biggest winner under SECI’s manufacturing-linked solar tender. It won the world’s largest solar order to build 8 GW of PV power plants in India, along with a 2 GW domestic solar panel manufacturing unit, at a tariff of Rs 2.92 per kWh. In July 2020, Tranche IX of SECI’s tender for 2 GW of interstate transmission system (ISTS) connected solar projects recorded the lowest tariff of Rs 2.36 per kWh, bid by Spanish developer SolarpackCorporacionTecnologica SA.

Apart from these landmark tenders, another important development has taken place, which will have long-term benefits for India’s renewable energy sector. The Ministry of New and Renewable Energy (MNRE) has sanctioned the scheme for tariff-based competitive bidding for the procurement of renewable power from 2,500 MW of ISTS-connected blended wind power projects, which will be implemented by SECI. It has also released guidelines for this scheme.

According to the guidelines, the main objective of the scheme is to provide a framework for the procurement of electricity from 2,500 MW of ISTS-connected wind power projects with solar PV blending of up to 20 per cent. The scheme has been released to ensure the availability of renewable energy to discoms at competitive rates and to further develop the wind power sector in India.

Rationale for this scheme

While competitive tenders have led to a considerable drop in wind and solar power tariffs, recent bids have shown an upward trend in wind power tariffs. Since wind power is available during early morning and evening hours, it is necessary to encourage the setting up of wind capacity along with solar capacity, but at lower tariffs. To this end, blending of wind power with an appropriate amount of solar power is recommended. The MNRE also expects to provide long-term visibility of wind projects in the country with this scheme.

Key features of the scheme

The total capacity to be awarded under the scheme is 2,500 MW. The individual minimum project size allowed at one site is 50 MW. A single bidder cannot bid for less than 50 MW. Further, the rated power capacity will need to be at least 80 per cent of the total contracted capacity for wind power projects and maximum 20 per cent for solar projects. Also, these projects will be set up without any central financial assistance. The developers will have to declare the annual capacity utilisation factor (CUF) of the project at the time of submission of bids and the declared annual CUF should not be less than 30 per cent. The calculation of the CUF will be on a per annum basis.

The guidelines have also mentioned that solar and wind projects will be located at the same or nearby locations. The wind and solar components will inject power into the ISTS grid through a single metering point. The guidelines have clarified this with the help of an example. In the case of a 100 MW blended wind power project, the wind component of 80 MW or more and the remaining 20 MW or less of solar component will supply power through a single metering point. This means it will not be possible for the developer to have a wind project in one state and the solar project in a different state.

Further, wind power project developers will be free to install wind and solar PV capacity as per their design to achieve the required output and meet the requirements of auxiliary consumption. However, the developers will not be allowed to sell any excess power from the hybrid project to any entity other than SECI, unless it refuses to purchase the generated electricity. For the sale of power from these blended projects, SECI will charge a trading margin of Re 0.07 per kWh from the procurer.

The power procured from the project may be used for the fulfilment of solar and non-solar renewable purchase obligations (RPOs) by the consumers of electricity in proportion to the rated capacity of the solar and wind power plants. The buyers of electricity generated from these projects will be required to provide a payment security mechanism to protect the interest of generators. This may be done through a letter of credit, a payment security fund, or state government guarantees.

Conclusion

The use of blended power has become common in India to bring down tariffs and solve the issue of intermittency associated with renewable energy. The blending of renewables with thermal power has been considered promising in India. To this end, in March 2020, SECI issued a tender for the procurement of 5 GW of RTC power from grid-connected renewable power projects, bundled with power from coal-based thermal projects. Going forward, there are also talks about blending solar power with gas.

The government has also floated a few wind-solar hybrid tenders. Most recently, in January 2020, SECI issued a tender for setting up 1,200 MW of ISTS-connected wind-solar hybrid power projects under Tranche III of its ISTS programme. The success of wind-solar hybrids in general has been limited due to the lack of good sites, tariff caps on tenders, stringent tender requirements, difficulty in management of grid fluctuations. In view of these challenges, the future outlook for the blended wind power scheme seems uncertain at present. However, as there has been a lull in tendering activity in the wind power segment, it is quite possible that developers will bid aggressively once these tenders are floated.

Going forward, tenders for wind-solar hybrids should have a storage component as well. The tariff for storage-based tenders is perceived to be high right now, but the storage component will be necessary for hybrid wind-solar power to compete with thermal power.

By Sarthak Takyar

GET ACCESS TO OUR ARTICLES

Enter your email address