Hyderabad-based Greenko Group and Gurugram-based ReNew Power winning the bid to supply 1,200 MW of renewable energy is touted to be a game changer for the power industry.
The success of the auction in January shows that Indian renewable players are now finding it technologically and economically viable to ensure a steady supply of solar and wind energy using storage facilities and compete with their thermal counterparts.
Greenko will supply 900 MW of power and ReNew Power the rest. The plants have to be commissioned by December 2020. Greenko quoted a peak power tariff rate of ₹6.12 per kilowatt-hour (kWh) for one unit of electricity, ReNew Power quoted ₹6.85 per kWh. For the off-peak period, the price quoted was ₹2.88. kWh. Greenko will be using pumped-storage hydro plants for storage, while Renew will use lithium-ion batteries.
Earlier renewable energy had the status of a ‘must-run’ power. Essentially, it meant that power distribution companies like Tata Power or BSES Rajdhani had to use solar or wind energy whenever it was generated by automatically reducing the same amount of power originating from its coal-based power plants. That became a huge challenge because there is no existing technology that allowed ramping up or reducing thermal power in synch with the rise and fall of wind and solar energy.
Now, using pumped-storage hydro plants or lithium-ion batteries, a steady supply can be maintained. Rupam Raja, market director, India and SE Asia, Fluence Energy, says: “For the first time in India, renewable power can be scheduled for a particular period of time.”
In the case of pumped-storage hydro plants, when electricity demand is low, excess energy is used to pump up water and stored as potential energy. And when the demand is high water is allowed to fall on turbines, which then generates electricity.
Realising the fluctuating nature of renewable energy, distribution companies have always signed for their full requirement when they entered into any contract with a coal- or gas-based plant. They did not usually keep any reserve capacity for wind or solar power. That, however, too is likely to change because the distribution companies can now turn to renewable sources to meet growing demand.
“Now the distribution companies can directly buy renewable power for a certain time of the day without having to reschedule their thermal plants. Renewable power can now actually replace any fossil fuel-based plant,’’ says Raja.
Even in terms of costs the average cost of renewable energy (peak and non-peak hours) as far as Greenko is around ₹4.03 and those for ReNew power is ₹4.30. This is far lower than what BSES Rajdhani or Tata Power, which buys power from National Thermal and Power Corporation at ₹4.87. So, even on the price front renewable energy is the clear winner.
There is another point favouring renewables. Every distribution company has to follow what is called a renewable purchase obligation (RPO). Under this, the distribution company has to buy a certain percentage of their power from a renewable source. And, if they are unable to do so they have to buy renewable energy certificate at ₹1.20 per kWh. So that gets added to the cost, making renewable power a better bet for distribution companies.
Using renewable power for meeting demand in peak hours (two in the morning and four in the evening) will lead to rapid expansion of the sector, according to Raja. “Now, distribution companies can plan and run their operations with renewable energy,” he says.