The Solar Energy Corporation of India (SECI) has played a disruptive role in the renewable energy sector, as is evident from the steep decline in solar tariffs discovered in its recent tenders. After having conducted large auctions in the solar and wind power segments, the organisation is now set to play a bigger role in the renewable energy sector in emerging segments such as energy storage and hybrids. In a recent interview with Renewable Watch, Jatindra Nath Swain, managing director, SECI, talks about the evolution of the Indian renewable energy sector over the past decade, the key risks and hurdles, the emerging opportunities and the major advancements in policy and technology that will shape the sector in the years to come…
What have been the major highs and lows in the renewable energy sector over the past decade?
The most critical development has been the introduction of the National Solar Mission (NSM) and setting of the 175 GW target to be achieved by 2022 on the part of the government. These moves set the path for the transformation of India’s renewable power development. Large-scale tenders for solar power under various schemes and standard bidding guidelines for setting up projects in market mode combined with procurement of power at the central level have brought in investments from around the world and resulted in quick expansion of solar installed capacity. Solar tariffs have become affordable and at par or even lower than those of conventional power today.
Opening up of the wind energy segment for supply of wind power to non-windy states has been another major development. The shift from the feed-in tariff regime to the auction-based tariff determination mechanism has created additional demand and resulted in an increase in wind power generation capacity. It has also helped in reducing wind power tariffs from Rs 4.50 per kWh to Rs 2.44-Rs 2.50 per kWh. All this has been made possible due to strong policy and regulatory support in the form of waiver of inter-state transmission system (ISTS) charges and losses on solar and wind projects, a transparent bidding process, evolution of the letter of credit-backed payment mechanism and the payment security mechanism. All these enabling policy measures have facilitated the setting up of large-scale projects as well as interstate transfer of power.
On the downside, there have been attempts by states to renegotiate PPAs. Although this has dampened market sentiment from time to time, but with the resolution of issues, investors are now ready to invest in the renewable energy sector.
How has the role of SECI evolved since its inception? What have been the major achievements for the organisation?
SECI was incorporated primarily as an implementation agency for the NSM, and it is playing that role till date. However, with time and evolving market, SECI’s role has expanded to become that of a central power procurement intermediary for solar and wind projects. Its mandate now covers all renewable energy sources including energy storage. Moreover, with the share of renewables increasing in the power sector, SECI is looking forward to playing an important role in facilitating grid integration, through energy storage systems.
The successful tendering and power procurement methodology adopted by SECI is its major achievement due to which investors from all over the world are keen to enter the Indian renewable energy sector and do business with SECI. Another achievement is the speed with which the company has diversified and scaled up, by way of incorporating knowledge of different domains. This is crucial for survival in today’s dynamic world. As a business entity, we always have to keep learning and taking steps for the future.
Is the renewable energy sector moving in the right direction to achieve the set targets? Are the targets achievable, especially in light of delays due to the pandemic?
The renewable energy sector is moving in the right direction for achieving targets. The progress and the issues are regularly discussed at the highest levels, and problems that come up from time to time are being resolved.
The impact of Covid-19 is not yet fully known. Project implementation has been delayed by five to six months, however, it is unlikely to have long-lasting implications on the renewable energy sector.
“SECI is looking forward to playing an important role in facilitating grid integration, through energy storage systems.”
What are the key drivers, risks and hurdles in the renewable energy sector at present?
The renewable energy sector is expanding on the back of a strong policy push and increasing climate consciousness globally. India’s commitment to reduce carbon emissions and achieve energy security are key drivers for the renewables sector.
Affordability of solar and wind energy has made it more acceptable to discoms but grid integration and intermittency issues remain. These bottlenecks will most likely be resolved with technological interventions at both project level and grid level. An appropriate regulatory framework is being evolved to ensure grid discipline. Renewable energy is also facing hurdles in the form of less-than-expected growth in demand for electricity. However, the push for “Atmanirbhar Bharat” is likely to improve the demand for electricity and consequently the demand for renewable power.
In addition, there are issues with respect to different state-level schemes and policies with regard to land, clearances, etc. that have to be streamlined. A mismatch in the time it takes to develop renewable energy projects and power evacuation infrastructure is another challenge at present but that is also being overcome. Finally, the dependence on neighbouring countries for supporting supply chains, mainly for solar projects, is also a concern, and the country needs to enhance its indigenous manufacturing capacity to counter the risk involved.
“The successful tendering and power procurement methodology adopted by SECI is a major achievement, due to which investors from all over the world are keen to enter the Indian renewable energy sector and do business with SECI.”
Which emerging technologies (energy storage, hybrids, green hydrogen) will assume the centre stage in the next 10 years?
Both hybrids and energy storage are very important technologies in the context of optimising renewable energy generation and supply. These technologies are going to prove critical in making renewable energy firm and flexible, and in the next five years, both of these will play a major role in renewable energy expansion.
Green hydrogen, meanwhile, is still very new and will take time to get accepted in the country. However, a lot of research and development is going on in improving electrolyser design and efficiency, and this will determine by when green hydrogen can start playing a significant role in energy storage, industrial processes and long-haul transportation. Green hydrogen will give a big boost to renewable energy development in the country. A lot will depend on how quickly the green hydrogen policy is formulated.
Both these kinds of tenders, plain solar or wind versus hybrid or round-the-clock (RTC) – are different and cater to different kinds of demands of discoms based on their load patterns. RTC, for example, is meant for base demand (24-hour supply). Renewable energy with assured peak power supply is aimed to meet peak demand. Meanwhile, solar without storage can meet daytime loads while wind power output is seasonal. Thus, in both the cases discoms have to play the role of an aggregator.
Solar and wind tenders are acceptable to discoms, regulators and bidders as they are aware of the tender conditions. Hybrid and RTC tenders are relatively new to the market and we are in the process of creating awareness about these tenders.