Context

Two recent auctions for wind/solar hybrid projects conducted were under-subscribed. However, we can believe that renewable hybrids can play a key role in helping India accelerate the decarbonization of power generation and lowering the cost of electricity in the medium term.

Facts

1. Bids totaling 1.56GW were awarded against a total of 2.4GW on offer. The discovered prices were marginally below the ceiling tariff of?2.70. 

2. India added 65-70GW of wind and solar capacity so far, with wind and solar contributing 9.5% of generated energy in 2019.

3. If the government target of 175GW is achieved by 2022, this share could exceed 15-16%.

Renewable energy – inherent challenges

1. It relies on intermittent sources, producing energy only when the sun is shining or the wind is blowing.

2. Its output is constrained to specific hours of the day.

3. Its use leads to lower utilization of transmission lines. This can create issues in matching peak power demand with renewable output and raise the costs of transmission. 

4. Countries with renewable energy penetration of 15% indicate that flexible energy resources that can rapidly ramp up or down are needed. These could include hydro or gas-based power, or energy storage solutions.

Renewable hybrids can be a solution

1. A hybrid system can combine wind, solar with an additional resource of generation or storage.

   1. In India, solar output is maximum between 11am and 3pm, while wind output is highest in the late evening and early morning.

   2. Peak demand for power is reached in the evening hours of 6-9pm, which cannot be catered to by either wind or solar.

   3. If we can store some energy during excess renewable generation hours and release it into the grid during peak demand hours, the combined “hybrid” system can produce 24×7 clean energy as per varying levels of demand in the day. 

2. The storage can take many forms, such as batteries, pumped hydro or mechanical storage through the flywheel. 

3. The intermittency of wind and solar could also be balanced by adding a fast ramping source of power such as an open cycle gas turbine. 

4. Hybrid systems are driven by reducing costs of battery storage and solar energy. 

5. An optimal combination of solar, wind and storage can deliver stable round-the-clock power at today’s costs of around ?6-7/kWh. Though this is significantly higher compared to baseload coal plants, lithium-ion battery costs are expected to fall from current $220-240/kWh to below $100 in the next 3-4 years.

6. Costs of solar energy have fallen from ?4.63/kWh in 2016 to ?2.50/kWh in the latest auctions and may fall as low as ?2/kWh in the next 3-5 years.

7. McKinsey’s proprietary modeling suggests that if the above improvements are factored in, wind-solar storage hybrid systems could generate round-the-clock power with cost as well as reliability levels comparable to existing coal-fired power plants in the next 4-5 years.

Ministry of new and renewable energy’s solar-wind hybrid policy, 2018 provides a framework to promote grid-connected hybrid energy through set-ups that would use land and transmission infrastructure optimally and also manage the variability of renewable resources to some extent.