In light of the ongoing demand and supply side transformations in the electricity sector, particularly the rise of renewable energy, reduction in storage prices, influx of new demand sources such as electric vehicles (EVs), arriving at an optimal energy mix has assumed major significance. This is even more so, as India works towards its INDC commitment of 40 per cent of fossil-free generation by 2030. In the session, “Changing Energy Mix”, Aniruddha Kumar, joint secretary, hydro, Ministry of Power; Jayant Kawale, former managing director, RattanIndia Power; and Dr Rahul Tongia, Fellow, Brookings India, shared their insights on the future energy mix, demand growth and supply requirements. Excerpts…
Meeting climate change targets
The intergovernmental panel on climate change has released a detailed study on the consequences of global temperature rising beyond 2 ºCelsius as compared to the pre-industrial era. India’s per capita emission is still one of the lowest in the world, 2 tonnes of carbon dioxide emission per capita as compared to 18 tonnes in the US. Despite this, as a responsible global citizen, India has agreed to significantly reduce its carbon intensity as well as increase the generation from non-fossil fuel sources. The two major commitments made by India to the world community are to reduce the carbon intensity of its GDP by 35 per cent by 2030 as compared to 2005 levels, and install at least 40 per cent of its total generation capacity from non-fossil fuels. Towards this, it has set an immediate target to install 175 MW of renewables by 2022. India is not only expected to meet the target of 40 per cent generation capacity from non-fossil fuel sources, but also exceed it by a huge margin. It is also expected to comfortably achieve the target of carbon intensity reduction by 33-35 per cent.
The key question is what should be the strategy to achieve these targets. We need to determine how much renewables can be added in view of our demand profile and how much our grid can accommodate. The capacity of the Indian grid to accommodate renewables needs to be looked into because one cannot solely depend on renewables despite having 100 per cent storage. Given the country’s demand profile, there are high seasonal variations and given our generation profile from different sources, even if we decide to have 100 per cent storage for renewable energy or solar energy during the daytime, we will never be able to achieve 100 per cent dependence on renewables. There will still be need for a large amount of conventional capacity.
Optimal generation mix for 2030
The Central Electricity Authority (CEA) has closely studied the generation profile of various sources (solar, wind, hydro, nuclear), as well as the load profile, rainfall patterns, etc. Based on these, it has come to a conclusion that the dependence on conventional sources will be as high as 50 per cent even by 2030. The all-India peak load is observed generally in the month of October. However, wind and hydro, which together peak in the months of June, July, August and September, are not available during the middle of October.
While long-term studies for the year 2029-30 have been undertaken to assess the optimal mix for meeting the peak electricity demand and energy requirement of the system, short-term generation despatch studies, on an hourly basis, have been carried out to assess the adequacy of various capacities to meet the demand at every instant at the lowest possible cost. The energy requirement for the year 2029-30 has been estimated at 2,400 BUs, as against 1,300 BUs at present. The study captures the hourly generation profile of the 8,760 hours in a year by 2030 in various scenarios (drought, cloud cover, etc.) and factors in various technical constraints. The study has concluded that the country cannot accommodate more than 350 GW of solar. Sensitivity analyses for contingency scenarios have also been carried out, considering the reduction/excess generation from solar, wind, etc.
The results of the studies show that the installed capacity by the end of 2029-30 will be 8,31,502 MW, including a coal and lignite-based capacity of 266 GW (32.1 per cent share), hydropower capacity of 73,445 MW (8.8 per cent), gas-based capacity of 24,350 MW (2.9 per cent), nuclear capacity of 16,880 MW (2 per cent), solar capacity of 300 GW (32.1 per cent) and wind capacity of 140,000 MW (16.8 per cent).
Outlook for hydro
Going forward, there could be a revival of the stranded PSU hydropower projects. Only when big-ticket hydro projects taken up by PSUs such as Subansiri and Dibang show signs of movement, the private sector can think of the hydropower sector in a big way. As of now, the private sector is restricted to small projects in Uttarakhand and Himachal Pradesh. The sector is awaiting the outcome of the stranded projects. Overall, there is cautious optimism as far as hydro is concerned.
Storage
Since the sun does not shine at night and the wind is not so reliable, one will have to depend on coal for 24×7 reliable power supply. But the degree of reliance on renewables will depend on the technological development of storage. In moving from 23 per cent renewable share currently to almost 55 per cent or so by 2030, the cost of storage will be a key concern. If solar plus storage costs become comparable to coal, then there will be a fundamental shift in the energy mix.
Future outlook
We are moving away from a command and control way of getting the optimal mix to one where we need to organically get an equilibrium based on economics, security and a number of constraints. A study done by Brookings India shows that the demand till 2030 could grow 6.1-6.2 per cent depending on a lot of assumptions, GDP being one of them. This analysis builds on a bottom-up modelling of India’s electricity demand in 2030, after accounting for scenarios of captive use, electric vehicles, 24×7 supply and other aspects of growth and development directly affecting power (irrigation, housing, manufacturing, space cooling, mobility and cooking). When netted out, these numbers are comparable with CEA numbers. Further, to meet the future demand, the study showed that even in a high renewables growth scenario (that is 450 GW by 2030), coal-based generation capacity will be needed. Even though it will have a much lower growth rate as compared to historical trends, coal will not be completely phased out unless renewable energy exceeds 500 GW. The growth in coal-based generation from now till 2030 is estimated to be in the range of 1-2 per cent per year.
The country has more than 200 GW of coal-based capacity and another 35-40 GW is under construction. The country will not be adding much capacity except if we retire old plants and substitute them by new plants. Hence, our incremental dependence on coal is going to be minimal. Much of the increased demand will be met through renewables.
Arriving at an optimal energy mix is not a technical issue, but is a policy decision and even a political choice at times. Going forward, we need better signalling. Time of day is one of the biggest gaps in getting the right capacity at the right time. Smart demand response and EVs will be the second major change in the power sector going forward. Third, while targets drive investments, they need to be backed by appropriate frameworks and mechanisms.