We can make the best use of low-cost renewable electricity if we can simultaneously create a market, which enables price discovery, for capacity availability
During this decade, we have achieved major successes in the electricity sector. These include the creation of more than enough electricity generation capacity — over 340 gigawatt (GW) — to meet our peak demand, which was about 170 GW in 2018, as well as 100 per cent village electrification and the soon-to-be achieved universal household connectivity. These are extremely significant milestones and reflect the commitment of the Indian state to ensure electricity access for all.
Yet, our task is not complete and challenges remain. Tomorrow’s policy challenges are to ensure that electricity flows on the wires to every household during each of the 8,760 hours of the year and that electricity prices and electricity-use efficiency is such thatevery householdis able and willing to pay for the electricity that they use. These challenges are accompanied by the opportunity of falling prices of renewable electricity, so much so that solar and wind electricity now cost less than coal electricity, at least when the sun is shining or the wind is blowing.
Exploiting this opportunity, however, requires us to manage the flexibility of our system so that low-cost renewable electricity during the day and during windy hours can be seamlessly substituted by reliable coal-based electricity, demand reduction opportunities, hydro, and battery storage. Some opportunities are self-evident: Setting up a system that enables solar electricity to be provided at rural substation and feeders supplying agricultural pump would enable daytime electricity supply to farmers at low prices, while simultaneously doing away with the need for more expensive electricity to be transmitted and distributed over long distances with large losses.
Other opportunities require planning, changes in the electricity market rules, and technological upgradation. For example, coal plants can provide the electricity needed during non-sunlight and non-windy hours. However, they would need to ramp down quickly in the morning as the sun comes up, and ramp up in the evening as the sun goes down. This would need both operational and technological changes. It would also mean that the capital costs of these plants are met completely, whereas their cost of electricity generation alone (coal to electricity conversion costs) are not based on how much electricity they supply. The good news is that many coal power stations already operate with power purchase agreements of this kind. However, the bad news is that many of the newer – and more energy efficient – coal power plants do not have agreements covering their capital (or capacity availability) cost.
Moving ahead, therefore, we can make the best use of low-cost renewable electricity if we can simultaneously create a market, which enables price discovery, for capacity availability. It would bring out the efficient coal power plans today or storage capacity, such as batteries, tomorrow. Our analyses suggests that together – the low cost renewable electricity, backed by high reliability capacity (whether coal or batteries) – can provide electricity to consumer at a price no more than today’s price by the mid-2020s. It enables us to move towards a low and ultimately zero carbon electricity future, especially as the renewable-storage combination becomes cost competitive with coal electricity and as the existing coal capacity retires over the next three decades.
There is, thus, a need for multi-stakeholder engagement that will discuss, debate and promote actions needed for the seamless integration of low-cost renewable electricity. The Energy Transitions Commission is a step in this direction. As can be expected, there are many actions that are needed. Keeping the broad needs for seamless transitions in energy use in perspective, we have put together the views and thoughts of domain experts, industry representatives, and policy analysts on the next steps that are needed (including those discussed in this article) in a collection of essays, “Green, Reliable, and Viable”. We believe that now is the right time to focus on clear and crisp actions that can enable India to provide low-cost, reliable electricity with reducing carbon emissions to everyone.
DISCLAIMER: The views expressed are solely of the author and ETEnergyworld.com does not necessarily subscribe to it. ETEnergyworld.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.
About Ajay Mathur
Ajay Mathur is the Director General of The Energy & Resources Institute (TERI) and a member of the Prime Minister’s Council on Climate Change. He was earlier the DG of Bureau of Energy Efficiency (BEE). Mathur was also the Indian spokesperson at the 2015 climate negotiations at Paris.
Source: energy.economictimes.indiatimes
