Creating a Balance

A mix of options needed for sustainable renewable energy integration

As India moves forward on its renewable energy journey, developing a robust grid network that can accommodate high volumes of renewables has become a massive task – one that is still far from being achieved. On one side, there are inadequate power evacuation and transmission systems in renewable-rich states, leading to delays in project

completion and a general wariness amongst developers. On the other side, there are variability issues associated with renewable generation, impacting short- and medium-term grid operations and power supply. In fact, the intermittency of renewable power generation is proving to be far more challenging than incomplete transmission systems, which would be surely built sooner or later.

Traditional power systems are designed to balance energy demand with assured power supply from conventional power plants at constant voltage and frequency. However, energy dynamics are changing with the increasing share of renewable power along with the integration of electric vehicles and distributed energy systems. This may lead to voltage and frequency fluctuations as well as a demand-supply mismatch. According to a Central Electricity Authority (CEA) report, daily net load swings of 80 GW can be expected with a renewable energy base of 175 GW. Thus, the energy demand and supply dynamics, transmission system capabilities and grid balancing mechanisms need to be carefully assessed to accommodate such sharp dips and peaks in energy generation profiles without harming grid operations.

In light of this, at a recent industry event, the power minister, Raj Kumar Singh, talked about the government’s plans to tender 4,000 MWh of energy storage as power banks. These massive storage systems will act as ancillary reserves for managing fluctuations in renewable power generation at the grid level.

Renewable Watch explores some of the key grid balancing options available in the Indian context…

Energy storage systems

Energy storage systems, when implemented on a grid scale, can significantly resolve grid integration challenges pertaining to intermittent renewable energy. They not only have the capability to store excess power for minutes, days and even weeks, but also help ensure the quality of power supply. While various storage technologies are commercially available, battery-based storage devices and pumped storage are the most commonly used ones.

Owing to the high penetration of renewables-based power, battery-based storage technology has evolved rapidly, with technologies such as nickel-chromium, redox-flow, sodium-sulphur and vanadium flow batteries gaining popularity, besides the dominant lead-acid and lithium-ion ones. With fast ramp rates, low installation time and unlimited start-stops, battery-based energy storage can prove to be a game changer in addressing India’s grid-related issues. While battery costs used to be a limiting factor earlier, the costs for certain chemistries have dropped significantly to make them viable on a small scale, with a host of tenders being launched and projects being commissioned. However, prices must drop further to make batteries affordable on a multi-GW scale.

Apart from batteries, pumped hydro storage power plants can be used to provide peaking power and maintain system stability. They offer additional benefits of spinning reserves, frequency regulation in case of sudden load changes, voltage support and black start facility. Large and flexible pumped storage capacities are cost effective and technically proven to efficiently help balance the grid. As of May 2021, 3,306 MW of hydropower

capacity was in pumping mode, whereas 1,480 MW of constructed capacity was not. Another 1,500 MW was under active construction. Making all these pumped hydro projects operative should be a key priority for the sector. These projects can serve as buyers of power in case of excess renewable generation and as sellers in case of deficiency.

Bundling of power resources

Around 10 years back, solar power with tariffs as high as Rs 15-Rs 16 per unit had to be bundled with cheaper thermal power from NTPC’s coal power plants through a quasi feed-in tariff mechanism. Today, the situation has reversed and solar power tariffs are well below Rs 2.50 per unit. Meanwhile, wind power tariffs are less than Rs 3 per unit currently. Thus, discoms should ideally prefer solar and wind power over the more expensive thermal power, which is expected to become costlier with rising coal prices. However, fewer hours of availability and seasonal variations limit their uptake to a certain level.

On the positive side, wind and solar

power have complementary generation patterns, with solar energy being available during the day and peaking around noon, and wind energy being available from late evening to early morning and peaking at night. Thus, hybridising these two sources can help balance the peaks and troughs, and maintain a somewhat constant power output throughout the day. Further, the bundling of solar and wind with energy storage, hydropower or even thermal power can help ensure a more reliable grid and balanced power supply. The combination of two or more power sources can ensure optimised usage of land, transmission and power infrastructure.

For this reason, the government has started laying emphasis on the setting up of large-scale hybrid systems for round-the-clock power. Over the past two years, several successful auctions have been launched with highly competitive tariffs. Going forward, a more diverse energy generation mix will ensure a robust grid. The CEA’s Report on Optimal Generation Capacity Mix for 2029-30 estimates an installed power capacity of 817 GW by the end of 2029-30, comprising a mix of energy resources – 76 GW of hydropower, 292 GW of thermal, 18 GW of nuclear, 280 GW of solar, 140 GW of wind and 10 GW of biomass along with a battery energy storage capacity of 108,000 MWh.

Flexible coal plants

Coal-based power continues to account for roughly 70 per cent of India’s total energy generation. As the country moves ahead with its ambitious renewable energy uptake plans, the role of coal power plants will change from a baseload power source to a supportive resource for balancing renewable energy generation. However, coal-based power projects face some limitations in achieving flexibilisation unlike gas-based or hydropower plants that have flexible power generation capabilities. To achieve flexible operations, coal-based power plants will have to change their operation regime and undergo physical, operational and regulatory modifications to help balance the renewablesrich grid.

In the future, these power plants will be operated at low plant load factors and will require retrofitting. Thus, costs will be incurred not only on the capex end but also on the opex side. While there will be a one-time expenditure to make the plant suitable for low-load operation, operational costs will increase as components will deteriorate at a faster rate. There will, moreover, be additional costs on account of an increase in the heat rate, auxiliary power consumption as well as oil consumption owing to frequent starts and stops.

Making coal-based power plants flexible is imperative for India’s energy transition to green energy, especially till a large energy storage or green hydrogen market is developed. Moreover, the huge coal-based power infrastructure should be utilised optimally instead of letting it become obsolete. To promote flexibilisation amongst thermal power producers, a viable tariff mechanism can be designed with higher incentives for flexible projects capable of ramping up and down their capacities based on grid requirements.

Interregional connectivity

A key challenge with renewable energy resources is that they are not evenly distributed across the country and are location specific. Further, land availability and political will determine a state’s progress in terms of renewable energy expansion, leading to a geographically skewed proliferation. This creates issues in grid management, often hindering the large-scale deployment of renewables in resource-rich states. Thus, it is important that renewable power is transported via advanced transmission systems to renewable-deficit states to create a balanced distribution of resources.

To this end, in 2012, the government conceptualised the green energy corridors project for the synchronised integration of renewable energy into the grid. Phase I of the project involves the development of transmission infrastructure to facilitate the flow of 33 GW of renewable energy in eight renewables-rich states, while Phase II primarily involves the development of a transmission system to cater to ultra mega renewable power parks. Although planned as the most important link in India’s renewable energy journey, this massive project is still far from completion due to hiccups in implementation. The failure of transmission projects to keep pace with renewable energy project development has led to periods of heavy curtailment for many solar and wind power projects, resulting in substantial revenue losses.

Over the past few years, the government has been making efforts to address this mismatch between renewable energy generation and transmission projects through launching rounds of competitive bidding for transmission. Further, in June 2021, the Ministry of Power extended the waiver of interstate transmission system (ISTS) charges on the transmission of electricity generated from solar and wind sources till June 30, 2025. The waiver of ISTS charges has also been allowed for hydro pumped storage plants and battery energy storage projects as well as for trading of green electricity. Moreover, initiatives are being taken to transport renewable power to neighbouring countries through cross-border networks. One Sun One World One Grid is one such scheme conceptualised by the Indian government.

Ancillary markets

To manage the uncertainty associated with renewable energy sources in terms of energy generation, reserves (unutilised but available generation capacity) are needed. There are usually three levels of responses to manage this uncertainty – primary, secondary and tertiary. While the primary response is automatic and carried out locally by measuring the frequency in seconds, secondary and tertiary responses take a few minutes. The secondary response is carried out after getting a signal from a central control centre and the tertiary response is a higher level of reliability service.

All these response mechanisms are continuously evolving. Automatic generation controls and tertiary response are now being commonly used to cater to larger balancing requirements, and address scheduling and forecasting errors. Ancillary services now also include essential reliability services, which are important in real– time grid operations as they are not planned unlike power procurement, but help address the mismatch between planned and actual demand and supply.

Realising the importance of ancillary services, in May 2021, the Central Electricity Regulatory Commission (CERC) issued the draft CERC (Ancillary Services) Regulations, 2021, to provide mechanisms for the procurement, deployment and payment of ancillary services for maintaining grid frequency close to 50 Hz. The draft regulations mandate the estimation of secondary and tertiary reserves ancillary services by the nodal agency, in coordination with the regional and state load despatch centres. They make provisions for components such as energy storage and demand-side resources to provide ancillary services. Once finalised, the regulations will go a long way in maintaining a stable grid.

Renewable energy markets

Renewable power procurement in India is largely based on competitive bidding through long-term contracts with discoms, while a small percentage is based on intra-state open access and captive arrangements. However, the past few months have witnessed a growing interest in developing competitive market-based instruments for renewable power trading similar to European countries, which have a higher renewable energy share in their energy mix along with deeper market penetration. In August 2020, the CERC approved the launch of the Indian Energy Exchange’s green term-ahead market (GTAM). In March 2021, Power Exchange India Limited, too, launched the GTAM on its transaction platform. Moreover, in April 2021, the Ministry of Power announced that it will establish an integrated day-ahead market at the power exchanges with a separate price formation for renewable energy and conventional power. Renewable energy trade through the power exchanges will ensure payment to generators, unlock the untapped renewable energy potential, help meet renewable power obligations, reduce power curtailment, and mitigate the discoms’ price risk in long-term power purchase agreements (PPAs).

Such market mechanisms for green power trading enable the much-needed immediate short-term contracts between renewable generators and willing buyers instead of depending only on long-term contracts. They provide an avenue for generators to sell power at competitive prices, especially in the case of surplus power generation, which is not covered under the PPAs. Further, buyers can meet any shortage in their power requirement through green energy. Discoms can also buy and sell power in the markets to manage the deviation due to large-scale intermittent renewable generation.

Green hydrogen

Green hydrogen is produced through the electrolysis of water by using renewable energy for providing the electric current. It has become the centrepiece of the global energy transition due to its versatile nature and wide range of applications. It can be transformed into electricity or synthetic gas for industrial use. It can also be used in mobility. It is easy to store green hydrogen in compressed hydrogen tanks, which are lighter and easier to handle than many battery-based energy storage devices. Further, the existing natural gas pipelines and infrastructure can be modified and used to transport hydrogen.

Green hydrogen production is an ideal solution to absorb surplus solar or wind power, which cannot be supplied to the grid and would otherwise be wasted. Thus, it can manage the fluctuations in generation patterns and address intermittency issues. In the Indian context, green hydrogen production will most likely be driven by solar power initially as solar tariffs have dropped to an all-time low. Wind power use for hydrogen production will catch up shortly, and will depend on the affordability of offshore wind in the country. Green hydrogen can help accelerate India’s energy transition. Several green hydrogen projects have been proposed recently and large technology players have started entering the Indian market. Meanwhile, the government has started policy formulation with a green hydrogen mission along with a large auction on the avenue.


The variability of renewable energy has both technical and commercial implications. To address this problem, proper forecasting and scheduling of solar and wind generation are required. To this end, the CERC has defined a framework for forecasting, scheduling and imbalance handling of renewable energy generating stations at the interstate level. Further, several states have released their forecasting, scheduling and deviation settlement mechanism (DSM) regulations, which mandate solar and wind power developers to pay DSM charges in case of under- and overinjection against the scheduled energy generation.

Many studies suggest a centralised approach for forecasting and scheduling, under which a grid operator or utility receives forecasts for all the grid-connected renewable energy assets. This operator or utility then consolidates all the forecasts to accurately predict generation patterns. Given the importance of centralised forecasting and monitoring of renewable energy generation, many renewable energy management centres have been commissioned in India with advanced systems such as SCADA, visualisation tools, display units, and corresponding hardware and software for accurate forecasting and scheduling.

However, improved forecasting, scheduling and deviation settlement frameworks alone are not enough. Better transmission planning along with efficient coordination among various energy sources, energy storage systems and demand response mechanisms must be ensured to match energy demand with supply. Moreover, adequate frameworks need to be developed, under which various sources of renewable energy along with energy storage and green hydrogen can be integrated through market-based mechanisms as well as bundling of power to seamlessly meet the energy demand. Going forward, emerging concepts such as virtual power plants and peer-to-peer trading through blockchain also need to be evaluated.

Overall, renewable capacity expansion and energy generation have no meaning without a proper grid system to transport the energy. Thus, rapid renewables expansion must be supplemented by a capable grid and associated power systems for a seamless and sustainable green energy integration.

By Khushboo Goyal


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