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India’s Pathway to Meet Renewable Energy Targets
Context:
India’s energy transition will primarily focus on the use of solar photovoltaic (PV) technology for the next 25 years.
India’s Renewable Energy Transition:
- India’s energy transition will focus on solar photovoltaic (PV) technology for at least the next 25 years.
- Wind-based capacity will also experience significant growth, complementing solar energy.
- Deeper renewable energy penetration is vital for ensuring India’s energy security and decarbonisation.
- If renewable energy integration is managed prudently, it will result in greater cost-effectiveness.
Standing Committee Report on Wind Energy in India:
- Wind Energy Potential: India’s exploitable wind potential is over 200 GW, but only 41 GW (20%) is installed as of May 2022.
- Solar-Wind Hybrid Projects: Recommended promoting hybrid projects to harness a potential of over 50 GW.
- Non-Payment by Discoms: Rs 14,247 crore in overdue payments; NPAs in wind power projects amounted to Rs 600 crore.
- Offshore Wind Power: Recommended exploring the 70 GW offshore wind potential in Gujarat and Tamil Nadu.
Challenges in Meeting the 500 GW Target:
- Despite impressive capacity additions in renewable energy (RE), the annual addition rate is insufficient to meet the 500 GW target.
- Major challenges include the supply chain for solar modules and cells, as well as difficulties in acquiring land for large-scale projects.
Issues with Unsold Renewable Energy Inventory:
The Solar Energy Corporation of India (SECI) and other RE implementing agencies (REIAs) currently have around 18 GW of unsold renewable energy inventory.
DISCOMs’ Challenges in Renewable Energy Integration:
- DISCOMs face difficulty in accurately forecasting energy demand beyond a 10-year period.
- There are challenges in adjusting coal-based power plants to handle fluctuations caused by renewable energy sources.
- The cost of meeting renewable energy obligations is creating upward pressure on consumer tariffs.
Rooftop Solar and PM-KUSUM Projects:
- With the installation of 10 million rooftop solar plants and PM-KUSUM projects in rural areas, India could add around 50 GW of renewable energy over the next three to four years.
- This expansion in rooftop solar will reduce demand from the central power grid.
India’s Solar Waste Handling Policy:
- Lack of Solar Waste Policy: India does not have a dedicated policy for managing solar waste from used solar panels or manufacturing processes. Solar waste is currently treated as part of electronic waste.
- Global Solar Waste Estimates: IRENA estimates global photovoltaic (PV) waste will reach 78 million tonnes by 2050. India is expected to be one of the top five contributors to PV waste.
- Government Response: A committee led by the MNRE Secretary is working on an action plan for a circular economy to manage solar waste through reuse and recycling. A pilot facility for solar panel recycling has been set up in Gummidipoondi, Tamil Nadu.
- Solar Panel Life and Waste Generation: Solar panels have a lifespan of 25 years. India’s solar industry, which began around 2010, is still in its early stages, but waste is generated during transportation, installation, and operation.
Mismatch Between Renewable Contracts and DISCOM Needs:
- Renewable energy contracts currently provide peak power supply for two hours in the evening, while DISCOMs require peak supply for 4 to 6 hours.
- System operation reports reveal that many states did not reduce coal-based power generation during low-cost solar hours, missing opportunities for cost savings.
Renewable Purchase Obligation (RPO):
- The Renewable Purchase Obligation (RPO), under the Electricity Act 2003, mandates DISCOMs, open access consumers, and captive power producers to source a set percentage of electricity from renewable sources.
- RPO Targets : The Ministry of Power established a 21% Renewable Purchase Obligation (RPO) target for 2022, with 10.5% designated specifically for solar energy.
- Compliance Issues: As of March 2022, 55% of states did not meet their Renewable Purchase Obligation (RPO) targets.
New Approach for Integrating 500 GW of Renewable Energy:
- To integrate 500 GW of renewable energy without increasing consumer tariffs, a fresh approach is required based on equitable sharing of demand and price risks between power producers and DISCOMs/grid operators.
- Renewable energy plants should be exposed to market-based dispatch mechanisms within manageable limits, while receiving minimum revenue protection support.
Flexibility for DISCOMs in Renewable Energy Selection:
DISCOMs should have the autonomy to choose the most cost-effective renewable energy options, as long as they meet Renewable Purchase Obligation (RPO) compliance requirements.
Optimisation of Renewable Energy Costs:
- DISCOMs should procure their own energy storage solutions instead of relying on bundled solar-plus-storage PPAs, allowing for optimization based on existing generation contracts and demand patterns.
- Long-term power purchase agreements (PPAs) covering up to 70-80% of optimised renewable energy demand will be necessary to manage market price volatility.
Contracts for Difference (CFDs) for Supporting Innovation:
Contracts for Difference (CFDs) should be designed to incentivise renewable energy plant owners to innovate, such as offering colocated storage solutions and supporting the electricity system during periods of high peak demand.
