Hybrid and RTC projects to boost India’s RE and energy storage market
The global hybrid energy market, including energy storage, is projected to touch $40 billion by 2025. It is an opportunity that India has capitalized upon, earlier than others.
Renewable energy has witnessed rapid growth in capacity addition over the last decade and non-conventional power generation as a percentage of total energy mix across the world. But renewable energy sources come with a crucial rider: intermittency. Dependence on external factors—primarily weather conditions such as wind speeds and direction, and the intensity of sunlight—limits renewable energy sources from supplying continuous and uninterrupted power.
India has taken the lead in addressing the concern of intermittency in the power supply. The Ministry of New & Renewable Energy (MNRE) has been adopting a variety of measures to boost project investments in renewables over the past few years. The most recent scheme for encouraging round-the-clock (RTC) power is a pioneering one that aims to smoothen the intermittent nature of renewable energy by promoting hybrid energy and battery storage integrated (HES) projects.
The advantages of HES approach
The HES approach helps maximize the benefits of renewable energy projects by combining the day-time generation from solar and wind-dependent turbines, with seasonal capacities of hydropower, which, in turn, is complemented by all-day power generation from thermal plants—thus ensuring round-the-clock power supply.
This is a step in the right direction to optimize the levelized cost of energy while also aligning energy availability to requirements across the day. The decision is expected to lead to co-located wind and solar projects and the faster adoption of DC coupling mechanisms. The move will utilize landmass adjacent to wind project locations (after considering shadow effects and other technical corrections) to locate solar power projects. This is a faster way to achieve India’s renewable energy target of 175 GW by 2022 and 450 GW by 2030, as set forth by the government.
A hybrid energy mechanism that includes a combination of thermal power, hydropower, solar, biomass, and wind energy projects is the future of renewables. This will support addressing peak time demand while balancing energy costs and ensuring optimal usage of assets.
An existing solar installation, for example, can integrate wind turbines to deliver cumulatively better plant load factor (PLF). Similarly, a wind farm can be supplemented by a solar PV system to harvest the benefits of both the natural energy sources from the same land.
Challenges and solutions
Combining renewable energy, thermal and hydro generation can cause frequency and voltage disturbances due to mismatch of load demand and generation curves. There are frequency and voltage variations beyond allowable limits as required for a stabilized grid operation.
Infrastructure development initiatives such as transmission systems expansion, sub-station improvements, controlling line losses, and smart grid systems to address technical challenges of power evacuation will be vital for this model to deliver effective results.
Besides, energy storage systems behind the meter as also attached to generation and transmission assets are expected to provide better response control in case of fluctuations.
Energy storage is a big component of the emerging transformation story in renewables. According to a report by consultancy firm Wood Mackenzie, battery-based energy storage capacity is likely to increase over eight-fold from the current 3 GW to 26 GW by 2030, just across the five major European power markets—Britain, Germany, France, Italy, and Spain. Similarly, other developed and emerging markets are seeing great potential in energy storage.
India is estimated to install an energy storage capacity of over 40 GWh in the next five-seven years. This will have a significant impact on distribution network stability, as well.
Energy storage primarily helps energy arbitrage, peak shifting, and auxiliary services to the grid. Globally, it is proven that storage adds revenue streams for project investors/developers over and above power supply arrangement as with traditional power purchase agreements (PPA).
Stationary storage system costs are rapidly going down in tandem with a reduction in battery prices. During the past decade, global battery prices have reportedly dropped by around 87%. This trend is likely to further continue, thanks to a reduction in Capex for battery manufacturing, better technology options, and evolving supply chain mechanisms. BloombergNEF estimated in December 2019 that battery prices could come down by 35% over the next three years.
Overall market potential
The global hybrid energy market, including energy storage, is projected to touch $40 billion by 2025. It is an opportunity that India has capitalized upon, earlier than others. India’s goal of installing 175 GW capacity of renewable energy systems by 2022 will help build a new energy security architecture for the country. During the current pandemic, when the country’s renewable energy targets appear daunting, this policy shift towards hybrid energy and storage systems could provide the necessary thrust.
According to the MNRE, based upon the availability of land and solar irradiation, the potential of solar and wind energy in the country is around 750 GW and 300 GW, respectively. However, the current installed capacity in solar and wind energy stands at 35 GW and 38 GW, respectively (as of February 2020). This reiterates that we have enough potential to harness these green energy sources.
With economies of scale, the cost-benefits of solar and wind power have improved substantially today. While these are known to be intermittent and unpredictable to an extent, a hybrid approach will help address and mitigate these limitations completely. It will put India on the path to making faster and more efficient progress towards meeting its ambitious renewable energy targets and setting benchmarks for the rest of the world to follow.