Branching Out

Offshore, hybrid and storage technologies key to expanding wind capacity

The development of wind energy projects in India dates back to 1995. Since the turn of the century, these projects have been growing rapidly. Wind energy has dominated the Indian non-large-hydro renewable energy portfolio for the past two decades. But earlier this month, it was surpassed by solar energy.

Over the past five years, capacity additions for wind energy have slowed down considerably. This slowdown is evident from the fact that annual capacity additions have fallen from close to 6 GW in 2015-16 to just a little over 1 GW in 2020-21. The reasons for this are higher tariffs arising from issues of land availability, poor transmission networks and the poor financial performance of distribution companies, among others. The government has set a target of developing 60 GW of installed wind capacity by 2022. Bridging this gap and meeting these targets might sound ambitious, but may be doable if the country moves beyond conventional wind power set-ups.

Offshore wind in India

With big constraints on the development of onshore wind, efforts must be made to scale up offshore wind, a technology with immense scope in India. The Indian peninsula has a 7,600 km coastline with great potential, especially in the states of Gujarat and Tamil Nadu. The two states already house about half of India’s installed onshore wind capacity and have an estimated offshore wind potential of 71 GW.

The initiative to tap into India’s offshore wind potential started strong, but lost almost all its momentum with time. Starting in 2010, the National Institute of Wind Energy (NIWE) carried out a series of investigations over the next few years, which eventually led to the National Offshore Wind Policy in 2015. The institute also carried out two projects, Facilitating Offshore Wind in India and the first offshore wind project in India.

In 2018, the NIWE floated expressions of interest for the country’s first offshore wind project in the Gulf of Khambhat in Gujarat. The project garnered interest from about 35 major players at both the local and global levels, but the government could not finalise a tender. Despite strong stakeholder interest, the country has not made enough headway in overcoming the high costs of development for offshore wind. At the same time, attention is shifting away from Gujarat to Tamil Nadu as it is estimated to have a higher potential.

In November 2020, the Ministry of New and Renewable Energy reported that it was looking into setting up structures for power purchase agreements and offshore wind auctions. The approval of the proposed viability gap funding of Euro 800 million to fund the cost of the country’s first offshore wind project could be vital for a large offshore wind tender to materialise. Going forward, it could set the tone for further development off the country’s coast.

Repowering of wind plants

As wind power development in India started over three decades ago and about 60 per cent of the installed wind capacity today was commissioned before 2015, there is a strong case for repowering old wind turbines. According to a recent report by Idam Infrastructure Advisory, more than 10 GW of wind power capacity uses turbines with less than 1 MW capacity, and is located in wind-rich Class 1 sites. These turbines also have capacity utilisation factors (CUF) of 10-14 per cent, while the CUF of modern wind turbines can go up to 38-40 per cent. Further, about 2.5 GW of wind power capacity in the country uses wind turbines with capacities of less than 500 kW each. With the slow growth of new onshore wind projects, repowering old turbines presents a great opportunity to boost wind power capacity in the country. Additionally, modern-day turbines have individual capacities ranging typically from 2.5 MW to 3 MW.

The report goes on to highlight that one of the biggest barriers to a boom in the repowering market comes from the issues in maintaining captive status. Repowering these plants poses a challenge as commercial owners must consume at least

51 per cent of a plant’s generation to maintain its captive status. This could push them well below this threshold and owners would have to pay cross-subsidy charges, which are imposed in many states. At the same time, wind farms are often owned by a group of owners, which creates logistical issues as the concerns of multiple parties have to be addressed. These barriers can, however, be addressed as the potential benefits of repowering wind turbines are greater than the costs. Repowering turbines in Class 1 sites could offer an increased wind capacity of up to 15 GW, and if these efforts are made quickly, India could very well achieve its target of 60 GW of wind power by 2022.

Wind-solar hybrid projects

With the slowdown in wind projects, a new technology that is increasingly being adopted is wind-solar hybrid (WSH). States with strong potential for both wind and solar power, such as Gujarat, Tamil Nadu, Andhra Pradesh and Rajasthan, have already formulated policies for the technology and, based on estimates by JMK Research, about 11.6 GW of WSH capacity will be developed over the next three years. Further, a case can be made for developing more WSH plants as solar resources are more productive during the day and wind resources are more productive at night. With energy demand curves in India usually peaking once in the morning and once in the evening, WSH can address the gaps that stand-alone wind or solar cannot.

In a comparative analysis of WSH and stand-alone wind and solar carried out by JMK Research, a strong case was made for taking WSH technology forward. It was found that WSH has a CUF of 35-50 per cent, while for stand-alone plants, the CUF ranges from 16 per cent to 26 per cent. When it comes to project costs, WSH plants can be developed at a cost of Rs 46 million-Rs 48 million per MW, which is much lower than the development cost of stand-alone wind plants (Rs 55 million-Rs 60 million per MW) and only slightly higher than that of stand-alone solar plants (Rs 35 million-Rs 40 million per MW). The extra cost for WSH plants can be justified if they overcome the time-of-day restrictions that stand-alone wind and solar power face, and fulfil about 75-80 per cent of the energy demand.

So far, the Solar Energy Corporation of India (SECI) has issued tenders for about 12,860 MW of WSH projects, and about 4,290 MW has been auctioned. In December 2020, SECI announced the results of its most recent WSH auction, which discovered an L1 tariff of Rs 2.41 per kWh under Tranche III of the interstate transmission system tender. So far, only about

148 MW of WSH projects have been commissioned in the country, but JMK Research estimates that by 2023, the total installed WSH capacity could reach 5 GW.

Battery storage and RTC power

Another technology that can help overcome the intermittency challenge of wind energy is battery storage systems. Adding battery storage to WSH projects can help in achieving round-the-clock (RTC) power. In October 2019, SECI issued the first RTC tender for 400 MW, which was fully subscribed by ReNew Power at a tariff of Rs 2.90 per kWh, with an annual escalation of 3 per cent for 15 years.

The report by JMK Research modelled WSH projects with integrated storage, and estimated that the tariffs would be about Rs 4.97 per kWh in 2021. With falling battery costs, they could reach up to Rs 3.40 per kWh by 2030. These tariffs are much cheaper than those of new coal projects (Rs 4.50-Rs 6 per kWh), further highlighting the need to focus on integrating battery storage with renewable energy. As of today, the tariffs are not favourable enough for widespread adoption at utility scale, but policies can be shaped to encourage the adoption of energy storage systems in the commercial and industrial space. This can be a good starting point and can help energy storage systems grow until batteries become cost-competitive in the Indian renewable energy space.

Outlook

In the past five years, new wind power development in India has been extremely slow, making it all the more evident that the future of wind power in the country will involve deviating from conventional wind power set-ups. Offshore wind presents a great opportunity for creating new wind energy capacities, but it needs to overcome the challenges of finance and minimise offtaker risks. Repowering older wind turbines in Class I wind sites can create big capacity additions without having to deal with the land acquisition process. Further, recent tariff trends and research have found that WSH and storage can be important technologies in providing RTC power. If the country develops a favourable policy framework and strengthens the supporting infrastructure, wind power can once again dominate the Indian renewable energy space.

By Rithvik Kumar

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