India Needs More RE In Power System To Meet Climate Goals: IEEFA Report

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A new report by the International Energy Economics and Financial Analysis (IEEFA) asks that India accelerate integration of renewable energy into its power system to meet its climate goals. 

The report recommended four broad measures to increase RE penetration into the power system.

The report said that between 2016 and 2022, the share of renewable energy generation in India’s total energy mix increased merely by 6.5 percent. But the share of renewable capacity during the same period rose by 13.6 percent. The report said that India is rapidly adding renewable energy (RE) faster than fossil-fuel sources but needed to ramp up to meet its climate goals.

The report recommended four broad measures to increase RE penetration into the power system. These included–introducing demand-side measures like time-of-use tariffs, developing a well-connected national grid, deploying various energy storage options for grid balancing services, and converting its fossil-fuel-powered fleet to operate flexibly.

One of the immediate levelers the report suggested was to introduce effective time-of-use (ToU) electricity tariffs to change consumption patterns to suit more renewable energy integration and lower grid balancing requirements. “India should adopt a step-wise approach of introducing dynamic ToU electricity prices across consumer segments to reap the benefits,” the report said. 

The report also notes that the union government has started to take some demand-side measures by recently issuing guidelines for a range of tariff variations to be achieved from normal tariff during solar power generation and peak periods, which is 10-20% lower and 10-20% higher, respectively. 

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“Still, India needs dynamic ToU tariffs rather than static ones. Studies suggest that successfully implementing a dynamic ToU pricing regime can reduce peak demand by 5-25%,” the report’s author Charith Konda, Energy Analyst from IEEFA, said.  

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The report said another level is developing a well-connected, inter-regional national grid that optimizes unevenly distributed renewable sources. It said that India is already working to build transmission infrastructure to evacuate 500 GW of proposed renewable energy capacities by 2030. The report said that this would help integrate more RE power from remote regions and provide grid stability. 

It also said that the country should widen the scope of energy storage systems and use the same to provide a variety of grid balancing services rather than confining them to only ensure firming RE power. 

Finally, the report also finds that the Indian government’s plan to convert coal-based power plants to operate flexibly to accommodate more renewable energy may hold some benefits of lower capital expenditure requirements and reducing the curtailing of variable renewable energy in the medium term. 

“Running coal plants flexibly can save already-established coal power plants from getting stranded. It also increases the per unit cost of coal power, making renewable energy plus storage more competitive in the merit order dispatch system,” said Konda. 

“Converting India’s coal power fleet to run flexibly will lead to some technical, financial, and regulatory/contractual challenges. The solutions include identifying suitable plants for conversion into flexible plants based on technical and financial parameters, redesigning coal power purchase contracts, and developing markets that allow flexible operations,” he added.

Share of renewable energy in India’s energy mix. Source: IEEFA Report