Forecasting and scheduling of renewable energy in India

Karnataka Electricity Regulatory Commission (KERC) has mandated Forecasting and Scheduling (F&S) for wind and solar assets in the state with penalties for deviation from the 1st of this month. The current regulations are applicable to all wind generators with a cumulative capacity of 10MW and above and all solar generators with an installed capacity of 5MW and above.

F&S2015

Why need F&S?

The concern raised by the lobby of wind developers might seem justified against penalties for deviations which add to the cost of energy, but a stringent F&S mechanism will only enable the grid to accept more Renewable Energy (RE).

F&S could reduce RE curtailment

Increasing RE will lead to local and system level congestion in the existing Indian grid and it will be essential to curtail wind and solar during those periods. Curtailment generally is attributed to the grid’s inability to absorb RE generation but what goes unnoticed is the surplus generation from RE that is beyond what is forecast and scheduled leading to a shortage of grid transfer capability. A significant part of RE curtailment is in fact considered economic in that case.

Adding flexibility to the system in the long run

  • Accurate F&S will lead to creating an economic system where utilities could offer tariff incentives to increase consumption during peak wind/solar generation periods.
  • It could also lead to efficient use of traditional power assets.
  • A better inter-state coordination in managing power demand and delivering other grid ancillary services will become a possibility. Regional co-ordination has been a key to the success of RE integration in US.

Regulatory dimension

The regulator’s objective of delivering energy at the lowest possible cost shall always remain. At times, the intermittent nature of RE has caused the thermal power plants to provide flexibility by operating at a lower PLF thereby adding to the cost of energy and not to mention associated emissions (which is against the climate commitments). The F&S regulation will enable to enforce a better grid discipline by managing congestion which will provide value to the generators in the long run.  The next step for the regulators at state level would be to narrow the deviations by reducing the band and increasing the penalties. There is also a need for synchronisation of intrastate and interstate F&S regulations for better accounting and settlement.

The F&S regulations are not new for RE in India, Indian Electricity Grid Code made provisions in 2010. The current regulations based on the proposal from CERC in 2015 have been under draft across a few states. Rajasthan, Gujarat and Tamil Nadu have even implemented F&S on a voluntary basis. Karnataka has once again led the way in official implementing a timely regulation (with penalties) although it is likely to lose again on the market to other states that come up with a better regulation like Tamil Nadu’s proposal of a narrow band of ±10% for wind and ±5% for solar. One thing for sure can be guaranteed, a better grid discipline.

Energy as a Service

In the last few weeks two big announcements caught my attention. Incidentally both of them happened to be Electric Vehicle (EV) charging stations. The first one garnered more attention because the union Minister for Roads inaugurated what was claimed to be ‘ The first public EV charging station’ in India (Nagpur). Following that, India’s largest power generating company NTPC announced its foray into EV charging stations.  Interestingly these are not the first EV charging stations, they are quite a few and in fact a website hosts a list of all such stations. Most of them are Mahindra showrooms considering they have the only 2 EV models manufactured in India.

Are we in a hurry or already late?- The missing gaps

The development in this space are encouraging but is this model sustainable or is it just a stop-gap arrangement tiding the wave of excitement in this sector? Before concluding on that here are a few open points:

  • The Electricity Act (2003) doesn’t permit sale of electricity unless you are registered as a distribution licensee. In this case, the energy resale to charge batteries is categorically not allowed.
  • Standards for charging stations are yet to be formalised. Public charging stations have to be compatible with a host of vehicles and chargers. Automotive Research Association of India (ARAI) has only recently finalised the standards for AC charging while the DC charging standards are yet to be announced.
  • Chargers

    The range of standards: Cty-IEA EV outlook 2017

  • Bharat Charger: The charger for India, a DHI initiative under the vision to get an all-electric fleet by 2030 has proposed a standard for charger. The initiative is laudable considering the grand vision but we are yet to have a final specification on that.

Energy as a Service (EaaS)

In spite of having a few gaps in the system both at the regulatory and technical front it is quite interesting to see the so called ‘public EV charging stations’ springing up in the country. As in any nascent market development it could be due to either of the two reasons; there is a significant demand for these or the businesses’ are keen to be front-runners in this space. I believe it is more of the latter and a little probe into these businesses have confirmed the same. While the developed world is trying to create a market for these, India has already begun what will be called ‘Energy as a Service (EaaS)’ business model.

evHow else does one account the amount of electricity dispensed at these stations to charge the batteries without being termed a ‘resale’? Only the ones being setup by Tata Power Delhi Distribution could escape being termed a resale. (However the 5 stations setup by them offers charging free of cost to Mahindra vehicles). The charging stations at Mahindra showrooms are as expected, ‘free’ with the costs in built in the sale. Similarly the charging station at Nagpur is an exclusive model developed in partnership with OLA.

The EV charging stations although not a perfect model for EaaS, is a good starting point. In due course, the charging stations would start differentiating in terms of the source of power, charging frequencies, time of charging etc. which would provide customers a wide range of choice, something we have been used too in other new-age services. However, in order to create a sustainable business model, the charging stations have be to be compliant within the regulatory and technical frameworks in due course.

Is solar power development sustainable?

RE20173I got an opportunity to speak at the Times Renewable Energy Expo, a Renewable Energy (RE) conference in Pune this past week. I was privileged to be part of the panel featuring Dr Chetan Singh Solanki, Prof. IIT Bombay who has pioneered the adoption of solar power in rural communities. The theme of the panel was ‘Pace of RE scale-up in India’.

I represented India Energy Storage Alliance (IESA) and spoke about integration of energy storage with RE. The intent was to emphasise the need for energy storage in providing flexibility to the grid under increasing penetration of renewable energy. Being intermittent and seasonal, wind and solar energy do have its drawbacks. In spite of being a clean source of energy, the intermittent nature stresses the traditional fossil fuel plants and forces them to operate below optimal efficiency thereby increasing the operating cost and associated emissions. The message was well received by the audience comprising of project developers, researchers, policy makers and RE enthusiasts. But, the burning topic throughout the conference was ‘Are the record low solar tariffs realistic?’

The drop in solar prices

The recent bids in Bhadla that resulted in record low tariffs of ₹ 2.62/kWh and ₹ 2.44/kWh in a span of 2 days was a major discussion point. The drop from ₹ 3.15/kWh to ₹ 2.44/kWh (23%) in a month was never expected. (Read more about why there are no more outliers in solar)

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Module costs

The drop in solar prices is attributed to the decline in module prices which is true but it hides the bigger picture. In a recent publication by Bloomberg, an Altman Z score analysis(see below) of the module manufacturers reveals a gloomy picture. Only one company lies above the mark with three others in ‘just safe’ zone while the rest have all indications to go burst. Incidentally Solar World just announced the beginning of its end. (Also, interestingly Bloomberg lists most of these companies under Tier 1 suppliers).

IMG-20170517-WA0002

Is the development sustainable?

Wind recently witnessed an intense debut reverse bidding and if the indications are right, it could well follow the solar route albeit at a lower rate. So the big question then turns out to be, ‘Is RE development sustainable?’ ‘Can companies and the stakeholders sustain this in the long run?’ I have due respect to all the experts in the big corporations who are winning projects at this price, I wouldn’t challenge their acumen. At a personal level, I just have a few points to say why I believe this development is not sustainable in the overall gambit of things.

  • There is intense corporate competition, with no long term visibility and the urge to develop large portfolios in a short time is driving the bids.
  • How can module manufacturers who are financially weak be trusted to produce quality product that performs for 25 years?
  • Supply is just one side, on the other side low tariffs is also driving down installation costs. There is an even bigger pool of ‘installation experts’ who offer manpower services at any price asked for (What about the logic that says your pay increases as you build expertise?).
  • And, the last one, preserve natural resources. I personally feel this is a huge problem, we don’t want to destroy land (and water) resources on projects whose performance is going to decline rapidly every year.

Renewable Energy development that is sustainable is the need of the hour!