Highway to Hybrids

Innovative tenders and declining costs to give an impetus to the segment

Wind-solar hybrid projects are finding favour with many players in the renewable energy space. They offer a viable solution for blending renewable power generated through two different sources to take advantage of their complementarities. The benefits include space optimisation by co-locating wind and solar plants as well as cost synergies by sharing infrastructure and personnel. Since India has a vast solar power potential, wind-solar hybrid projects have an enormous possibility in states with a good wind resource such as Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The wind-solar segment is evolving and progressing fast on the back of developments such as innovative tenders, state-level policy support and the national wind-solar hybrid policy. Renewable Watch takes a look at the key developments, upcoming projects and future outlook for the segment…

Policy environment

The Ministry of New and Renewable Energy released the National Wind-Solar Hybrid Policy in May 2018. Under the policy, the government has set a target of setting up 10 GW of wind-solar hybrid capacity by 2022. The policy provides a framework for the promotion of large-scale wind-solar hybrid projects. As per the policy, wind-solar hybrid projects may be used as captive plants, for sale to a third party through open access, and for sale to discoms through competitive bidding or at the average power purchase cost under the renewable energy certificate mechanism. It focuses on the effective utilisation of land and transmission infrastructure to reduce variability in power and improve grid the stability. Under the policy, additional transmission charges have been waived for the hybridisation of existing wind and solar power plants. Hybrid plants can be set up with an energy storage component to reduce variability. In order to make the term more inclusive, an amendment was issued in August 2018, in which the term “storage” was redefined in the policy to include any form of storage such as batteries. In addition to the national policy, states such as Andhra Pradesh and Gujarat came out with state-level policies for wind-solar hybrids in 2018. Rajasthan also released a wind-solar hybrid policy in 2019, in conjunction with its wind power policy. The state has set a target of installing 500 MW of wind-solar hybrid capacity by 2021-22. However, the policy requires the projects to be registered under the Rajasthan Renewable Energy Corporation by paying a substantial fee. This could be a deterrent in setting up projects as it would affect the viability of these projects. Karnataka and Kerala have issued drafts and are yet to formalise them. Other states with a promising wind and solar power potential are also contemplating dedicated policies for wind-solar hybrids.

In October 2020, the MNRE issued tariff-based competitive guidelines for procuring power from wind-solar hybrid projects. These guidelines are expected to help in the procurement of power from interstate transmission system (ISTS) connected wind-solar hybrid plants. The projects will be selected through a competitive reverse auction process in order to make the procurement process more transparent. An important feature of these guidelines is that in case the Solar Energy Corporation of India (SECI) is unable to sign a power sale agreement within six months from the issuance of the letter of award for the project, the project will stand cancelled. As per the guidelines, the minimum allowed size for these hybrid projects is 50 MW at a single location. Further, the annual capacity utilisation factor (CUF) should not be less than 30 per cent.

Hybrid synergies

The CUFs for stand-alone wind and solar power projects are lower compared to those a wind-solar hybrid projects. As per the national wind-solar hybrid policy, as well as the first two ISTS auctions for wind-solar hybrids by SECI, the rated power capacity of one resource should be at least 25 per cent of the rated power capacity of the other resource. However, the new guidelines have changed the figure to 33 per cent. Since wind usually has a larger share in hybrid projects, this would ensure that more solar capacity is incorporated in the mix. Since there are fewer good wind sites available, having a smaller share of the wind component in a hybrid project may offer more options to developers to select project sites. Alternatively, retrofitting of existing wind farms with solar capacity could be explored.

The transmission infrastructure has been crucial for the renewable energy sector. With co-located hybrid power plants, common infrastructure such as substations can be utilised to transmit more power. Co-locating the two sources helps resolve the issue of land, resulting in greater capacity per unit area. Infrastructure synergies such as balance of plant, land availability and evacuation infrastructure result in cost savings and can help reduce the levellised cost of energy. The addition of a storage component to hybrids can help reduce the uncertainty associated with solar and wind power, and increase despatchability, especially considering their complementary nature.

Progress so far

Since 2018, SECI has tendered three traches of ISTS-connected wind-solar hybrid projects. Of the three tranches, allocation for the first two has been completed. Both Tranche I and Tranche II were undersubscribed, primarily due to low tariff caps in tenders. The tariffs discovered for the first two tranches ranged between Rs 2.67 per kWh and Rs 2.69 per kWh. SECI had originally announced the tender for Tranche III in December 2019, although it was delayed multiple times. The most recently revised deadline for the submission of bids for this tender was November 11, 2020. Since the earlier tariff caps resulted in low enthusiasm during the bidding process, the ceiling tariff for the third tranche was raised slightly to Rs 2.88 per kWh.

SECI is also in the process of developing various types of hybrid renewable tenders to make renewable power more despatchable given the increasing demand for round-the-clock (RTC) power with higher CUFs. It issued the first tender for renewable energy with a storage component in August 2019 and the first RTC tender in October 2019. SECI also introduced 2,500 MW of ISTS-connected blended wind power projects in March 2020. The blended power mandates a wind component of at least 80 per cent and a solar component of 20 per cent.

Other than SECI, the state agencies have also come up with hybrid tenders. These include an 80 MW tender by Maharashtra State Electricity Distribution Company Limited (MSEDCL) in September 2019. Private players such as Adani have also issued a tender for wind-solar hybrid projects. Adani Electricity Mumbai Limited (AEML) floated a 700 MW tender, which has been fully subscribed and won by Rosepetal Solar Energy Private Limited at a tariff of Rs 3.24 per kWh. Tata Power is also developing a utility-scale wind-solar hybrid project. Tata Power Green Energy Limited received a letter of award from Tata Power Mumbai Distribution in July 2020 to develop a 225 MW hybrid renewable project.

A total of 148.8 MW of wind-solar hybrid capacity has been commissioned to date. In April 2018, India’s first wind-solar hybrid project (with 50 MW of wind and 28.8 MW of solar) was developed on a pilot scale by Hero Future Energies. In June 2020, Continuum Wind Energy installed a 55 MW hybrid power plant in Periyapatti, Tamil Nadu while CleanMax installed a 15 MW solar-wind hybrid project for Food Corporation Cargill in July 2020. The Continuum and CleanMax projects are based on the third-party sale/open-access model. Currently, Adani is the front runner in the wind-solar hybrid space with a total capacity allocation of 1,690 MW, followed by Greenko having 900 MW, ReNew Power with 820 MW, JSW Solar with 810 MW and SB Energy with 450 MW.

Challenges and outlook

Alongside opportunities, there are significant roadblocks to overcome in the wind-solar hybrid segment. The higher cost of hybrid projects and low tariffs are key hurdles. However, with falling costs of solar and wind technologies and scaling up of hybrids, the cost of hybrid projects is expected to decline. As per a recent report, IEEFA and JMK Research expect India’s total wind-solar hybrid capacity to grow to nearly 11.7 GW by 2023, reflecting a compound annual growth rate of 223 per cent from 2020-23. The report includes the use of a financial model to project tariff trends under different scenarios. The wind-solar hybrid tariffs range between Rs 2.49 per kWh and Rs 2.57 per kWh, depending on the ratio of components. However, adding a storage component increases the levellised tariff substantially to Rs 4.59 per kWh. This is not a viable tariff at present, but with falling storage costs it is expected to become a promising option in the future.

Even though experience in this segment is limited, there exists a healthy pipeline of projects. There are new and innovative tenders coming up that aim to tackle intermittency of renewable power by mixing different technologies. With an evolved policy environment, lower costs of renewable energy technologies, better transmission and evacuation set-up and more operational projects on the ground, hybrid projects are expected to usher in a new era of reliable and affordable renewable power.

By Meghaa Gangahar



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