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Cover Story | February 2017

Green Grid Gap

Green Energy Corridor planned to carry ´intermittent´ solar and wind power from producers to consumers efficiently, is yet to catch up with the pace of capacity creation.

Following climate commitments made at the Paris Summit, green seems to be the catchword for the Indian government as it gears up to achieve 175 giga watts (GW) of clean energy by 2022. It has already embarked on solar parks development with an outlay of `13,000 crore and boost local manufacturing of solar panels with a `21,000-crore package. Close on the heels of a watershed year of 2016, the government is set to switch gears in 2017 to make India a hub for one of the largest installations of clean energy sources. However, evacuation infrastructure that is specially required for highly intermittent renewable power is still lagging behind, threatening to hamper the growth of the renewable energy programme in the short term.

India has committed that it will achieve 40 per cent cumulative electric power capacity from non-fossil fuel based energy resources by 2030 with the help of transfer of technology and low cost international finance, including from Green Climate Fund. With 46.33 GW installed renewable power capacity by end-October 2016, the renewable power has a share of about 15 per cent to the total installed capacity. During 2016-17, a total 3575 MW capacity has been added till October, taking cumulative renewable capacity to 46,327 MW. Recently, Union Power Minister Piyush Goyal said expanding the Green Energy Corridor (GEC) is the central government´s mission.

´Solar installations in India are expected to reach over 4 GW in 2016, compared to 2.3 GW installed in 2015. Of the 4 GW to be installed in 2016, 3.7 GW are expected to be utility-scale projects,´ says CEO and co-founder, Mercom Capital Group, a global clean energy communications and research firm. Mercom also reiterated its 2017 solar installation forecast of over 9 GW. Cumulative installations including large-scale and rooftop projects in the country have reached 9.6 GW by December 2016, it estimates.

Now, in terms of wind power installed capacity India is globally placed at 4th position after China, USA and Germany, backed by 28,279 MW of installed capacity. About 3,191 MW of wind capacity was added from January-October 2016.

The Government has set a target of 175 GW renewable power installed capacity by the end of 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power.

Wind and solar sources do not produce energy around the clock and are ´intermittent´ in nature. The difficulty associated with integrating variable sources of electricity into grid stems from the fact that the power grid was designed around the concept of large, controllable electric generators. Today, the grid operator uses a three-phase planning process to ensure power plants produce the right amount of electricity at the right time to consistently and reliably meet electricity demand. Because the grid has very little storage capacity, the balance between electricity supply and demand must be maintained at all times to avoid a blackout or other cascading problem.

Intermittent renewable sources are challenging because they disrupt the conventional methods for planning the daily operation of the electric grid. Their power fluctuates over multiple time horizons, forcing the grid operator to adjust its day-ahead, hour-ahead, and real-time operating procedures.

For example, solar energy is inherently only available during daylight hours, so the grid operator must adjust the day-ahead plan to include generators that can quickly adjust their power output to compensate for the rise and fall in solar generation. Clouds can also cause disruption in solar generation. Furthermore, power plants that typically produce electricity all day every day might instead be asked to turn off during the middle of the day so that the energy produced from solar can be used in lieu of fossil electricity.

Fast fluctuations in output from wind or solar energy do not only disrupt the hourly load-following phase of grid planning, but also the second-to-second balance between total electric supply and demand. Today, the grid operator sends a signal to power plants approximately every four seconds to ensure the total amount of power injected into the grid consistently equals the total power withdrawn. This data collection and dissemination process has to be hastened when renewable power is inducted into the grid. Hence the importance of specific grid for renewable power flows.

The project
To address the fluctuations in the renewable power supply, the government in 2013 announced a National Green Corridor Programme (NGCP) worth Rs.43,000 crore to enable the flow of renewable energy into the national grid network.

In order to integrate such high penetration of renewables into the grid, effectively, several actions have to be taken such as bringing flexibility in the conventional generation, frequency control, maintaining generation reserves, introduction of ancillary services, forecasting, scheduling, deviation settlement mechanism, balancing mechanism, robust data telemetry and communication systems, establishment of Renewable Energy Management Centres (REMCs), augmentation and strengthening of transmission system as well as compliance to regulations and standards by renewable generation.

The project was envisaged by Power Grid Corporation of India Limited (PGCIL) as a dedicated transmission network for renewable energy across different renewable energy potential states. Today, even as the solar and wind generation systems are picking up growth pace, the transmission system is yet to be put in place.

Two green corridor transmission networks are proposed under the project - Firstly, construction of the inter-state transmission network for connecting renewable energy-rich states under Green Corridor-I will be completed. Besides, a Green Corridors-II for solar parks is also started which is connecting solar parks in different states including Andhra Pradesh, Madhya Pradesh, Karnataka, Rajasthan and Gujarat. Ministry of New and Renewable Energy (MNRE) sanctioned 34 Solar Parks of capacity 20,000 MW in 21 states are under various stages of execution. The intra-State grid upgradation would be taken up by PGCIL, while the inter-State network would be developed by State utilities.

The green-energy corridor is part of the country´s plans to boost transmission capacity to enable a seamless flow of electricity from clean electricity producing states to consuming states that face power shortages.

With the new government revising the targets five times, a secondary plan for solar parks was also drafted along with revised transmission plan. According to industry estimates, the cost of connecting 27 solar parks is close to Rs.55,000 crore. Last year, seven more parks were added, taking the cumulative capacity to 19,900 megawatt, according to MNRE.

PGCIL has sought a Loan assistance of US$ 1,000 million from the Asian Development Bank (ADB) comprising of Sovereign guaranteed loan of US$ 500 million and Non-Sovereign loan of US$ 500 million. The loan would be utilised for funding of the transmission projects including a project under Green Energy Corridor projects in next 3-4 years. There is an argument from some trade bodies in the sector that opening these mega projects in green corridors for private investment would bring down power rates as it was seen in case of solar projects.

The intra-state GEC scheme involves a government grant of 40 per cent, 40 per cent loan and equity of 20 per cent, while the interstate scheme involves 70 per cent loan and 30 per cent equity.

Goyal informed parliament that under the framework of cooperation between the Government of India and Government of Germany, KfW, Germany is providing soft loan to the tune of Euro 1 billion for the project.

A total sanction of USD 1,300 million (about Rs.8,850 crore) has been received from the World Bank, KFW, ADB and NDB which will enable SBI, PNB, Canara Bank and IREDA to fund such projects at an interest rate of less than 10 per cent.

The Ministry of Power is also planning to launch renewable energy fund under the National Investment and Infrastructure Fund (NIIF). The ministry is also working on this USD 2-billion fund to attract private players to invest in the sector.

While the government officials were stating earlier that the inter-state transmission network will be ready by the end of 2018, the new deadline is said to have been postponed to 2020. This has lead to project developers expressing concerns about solar park integration into the grid in time, without which many completed solar and wind projects might have to wait for grid connectivity. Over the next three quarters, solar projects of approximately 9 GW are expected to be commissioned.

´Solar project developers across the country are struggling with evacuation and transmission issues, which account for huge losses and contributes to increased project costs,´ said a report from Mercom.

The concern is that the infrastructural development under the GEC is slow; it is not at par with the pace of tenders coming out. Solar projects of capacity 20,904 MW were tendered in 2015-16. Of these, 11,209 MW of capacity already awarded.

The way forward
Planning of different projects relating to the same programme at the same time has been the Achilles heel of national planning in the country. Somehow an urgent solution is called for in the power sector as economic growth in incumbent of regular power supply without any distortions. In that context, GEC seems to remain a dream project even after the first report on the programme was prepared by PGCIL in 2011, worries the renew industry.

Even in introduction of smart grids and smart metering in the country, the industry is far behind schedule. Using SCADA technologies that could provide information on almost real-time basis could have been deployed in the grids to track demand and supply and to save losses arising from surplus electricity produced.

Side-by-side, the government should think of introducing innovative incentivised tariff systems for end-users based on peak production and peak demand tendencies observed on a regular basis. This will one way benefit the end-users who are conscious of adjusting their consumption based on the system requirements, and increasing the overall demand for power.

In 2017-18, the government is eyeing 20,450 MW power capacity addition from renewables, including 15,000 from solar, 4,600 MW from wind, 750 MW from biomass and 100 MW from small hydro power (of up to 25 MW), taking the total Renew power capacity to 69.80 GW. Considering that commissioning of new capacity apace calls for urgent steps to complete inter-state transmission projects linking all solar and wind farms on a war footing.

- BS Srinivasalu Reddy

´Transmission issues threaten renew growth pace´
Raj Prabhu, CEO and co-founder, Mercom Capital Group

On need for transmission expansion
We are forecasting installations to reach over 9 GW in 2017 which would put the Indian solar sector in the big leagues along with China, the United States, and Japan. However, there are significant headwinds in terms of transmission and evacuation issues that could threaten the pace of growth.

Indian government agencies have announced solar tenders of ~3,781 MW during Sep-Dec 2016 and auctioned about 1,311 MW. Auction activity has slowed over the last three months.

The major concerns for the industry are currently around transmission, evacuation, curtailment, timely payments and the outcome of the goods and services tax (GST).

On progress of solar installations
Solar installations in India are expected to reach over 4 GW in 2016, compared to 2.3 GW installed in 2015. Mercom reiterates its 2017 solar installation forecast of over 9 GW. Cumulative installations including large-scale and rooftop projects in the country have reached 9.6 GW.

Of the 4 GW to be installed in 2016, 3.7 GW are expected to be utility-scale projects and about 275 MW are expected to be rooftop projects. The country´s solar development pipeline is now more than 14.2 GW with about 6.3 GW of projects tendered and pending auction.

On panel price changes
The project development landscape has changed significantly over the last quarter largely due to Chinese module price declines. The average selling prices (ASPs) of Chinese modules in India have declined approximately 10 percent since August and by about 30 percent over the last 12 months.

This decline in prices has provided a much-needed boost to developers that won projects at low bids and were struggling to make project economics work.

On Solar Share
India´s share of solar generation continues to grow with 16.7 percent of new power generating capacity added in 2016 (as of November 2016). Solar accounted for almost one percent of electricity generated from April-October (FY2016-2017), 50 percent more than all of FY2015-2016. The top 10 states account for approximately 90 percent of all solar installations and pipeline; they are: Tamil Nadu, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Madhya Pradesh, Punjab, Karnataka, Maharashtra, and Uttar Pradesh.

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