Duck at the Door…

India is rightly on the path of Renewable Power spree. GoI set an impressive target of 175 GW RE capacity by 2022 and 450 GW by 2030 with an aim of meeting 50% of new energy (GWh basis) requirement from RE sources by 2030. Current RE capacity is ~87 GW (as of end May 2020; source: CEA) with another 30 – 40 GW at various stages of development. The penetration of infirm RE has increased from about ~6% in FY 2016 to ~10% in FY    2020. However, we should not be oblivious of the incumbent issues to be faced going ahead on the renewable pathway.

As the proportion of renewable supply increases in the overall generation mix, the residual power demand, post accommodating infirm RE supply, to be met by contracted conventional supply sources fall significantly, particularly during high RE generation hours of the day. This residual demand profile resembles “duck” shaped curve. This leads to requirement of operating such conventional generation plants close to or even below their respective operating technical limitation during high RE supply hours. This scenario has already panned out in multiple countries across Europe, Australia, regions of USA. So, pertinent to ask - How far is India from the ominous Duck?

India’s power demand generally peaks in the evening (graph on the right) while the RE supply, particularly solar supply (which is more concentrated compared to other RE sources), peaks around 1200 – 1400 hours (afternoon) period. This trend will intensify as share of solar capacity in the overall generation mix increases driven by both relative economics and policy push (by 2030, solar is estimated to make 30-35% of total installed capacity as against current less than 10%). Considering the same, there has been an increasing trend of states shifting agricultural supply (only category which is potentially flexible in terms of demand shifting in a day) during solar hours. However, this strategy to align demand with incremental supply has its confines as agricultural demand makes only about 10-15% of the overall utility demand and T&D network capacity constraints restrict demand shifting. Thus this “duck curve mitigation strategy” can at best delay the inevitable by 1-2 years. Our estimate suggests that at national level, duck curve will be discernibly visible from FY2022 onwards particularly during monsoons. Interestingly, multiple states with significantly higher share of renewables in their generation mix are already witnessing duck shaped net demand curve. Currently, such demand variability is being managed by cycling of conventional generation plants primarily ISGS plants. For instance, Karnataka state with significant RE proportion in its generation mix, despite shifting its agricultural supply during solar hours, needs to resort to significantly variable scheduling of its ISGS capacity (graph below) to manage residual demand profile. Monthly average of intra-day variability of ISGS supply varies between ~0.6 GW (April, 2019) to 2.4 GW (Nov, 2019). Accordingly, the intra-day PLF of ISGS portfolio (for the proportion of capacity tied up with Karnataka) varies between 20% to 80% with average PLF being 55-60%.

Similar trend is also playing out in multiple other states including Rajasthan, Telangana and Tamil Nadu. The situation will aggravate as these states contract more infirm solar supply.

India’s ability to manage grid in such scenarios is still untested and the necessary resources like flexible generation capacity, energy storage, demand management etc. seem inadequate. As per a recent report by POSOCO in May 2020[1], India’s conventional generation capacity has limited flexibility with the report suggesting that only 36 units out of the 438 (~8%) thermal units analysed have achieved a minimum generation of 50% or lower, with only one unit (in Gujarat) operated at generation level of 40% or lower. Thus, unless adequate aforesaid RE integration resources are developed & implemented, RE curtailment is inevitable with increased RE penetration.

As per our estimate, based on above mentioned planned RE capacity target and CEA estimated India’s future demand projections, RE curtailment can increase to 10-15% by FY 2022 and >40% by FY 2030. RE curtailment is already a significant issue in many states in India including some of the ones highlighted above. Thus, it becomes imperative to realize that RE integration is a ‘now’ issue which needs effective mitigation strategy and its immediate roll-out.

Multi-pronged strategy is needed to address the above RE integration (or RE curtailment) issue and ensure that country’s power supply-demand balance is maintained along the most optimal path. Some of the key steps for the same could be:

1. Acknowledging the urgent need for flexibility – Though there is overall appreciation amongst statutory policy and regulation making institutions about the need for flexible energy sources particularly energy storage, there seems to be ambiguity about the urgency of the same. Above discussed indicators clearly highlight the increasing need for supply and grid flexibility and also present significant inadequacy of the same in our existing fleet.
2. Supply and grid flexibility assessment – To effectively manage the need for supply and grid flexibility, the focus now needs to shift towards time-based assessment of the same considering evolving power demand profile along with upcoming RE and non-RE supply characteristics. Central power system planning (CEA) and power system operation (POSOCO) institutions are best placed to develop standardized framework for assessment of supply flexibility and grid flexibility at state, region and at national level.
3. Enabling market reforms – Policy and regulatory reforms are necessary for creation of efficient & competitive market for development of requisite flexible RE based supply and grid capacity. One year back, SECI came out with RE based flexible peak power tender which is a transformative step in right direction. However, this piecemeal progress will not help us achieve even half of the required target flexible supply and grid capacity. Specific policy and regulatory directives formalizing time-based assessed supply and grid flexibility capacity targets as well as market structure in terms of eligible market participants, price discovery mechanism would lay the pathway for attracting sustainable investment for development of planned capacity. Few actionable steps that can be considered by policy and regulatory entities are:
   1. Formulation of Flexible RE procurement Plan for 2022 - 2030 period with specific supply-characteristics based year-wise targets and also broadening number of central tendering agencies (for conducting auctions).
   2. Development of framework for assessment of energy storage requirement at state, region and national level for grid management (including ancillary services, grid capacity deferment) by SLDCs, RLDCs and NLDC.
   3. Formulation of National Energy Storage Policy and Energy Storage Regulations

To summarise, the increasing issue of duck shaped net demand curve and its associated challenges is already visible in India and the issue of effectively managing it without resorting to RE curtailment shall aggravate as we continue adding renewable capacity. Thus, it is imperative that the statutory bodies undertake immediate steps to effectively address it now. Failing which, renewable sector shall witness issues (like rising curtailment, PPA avoidance) adversely affecting existing and future investments in the sector.

Views expressed are personal.

Authored by Manoj Tanwar (https://www.linkedin.com/in/manoj-tanwar-a238504) and Shatanshu Agrawal.

The article first appeared in ET Energyworld on 23rd August 2020.

[1] Flexibility Analysis of Thermal Generation for RE Integration in India