To ease energy transition, ramp up storage, strengthen transmission

Why in the News

India’s power sector has moved from perpetual deficit to a glut during solar hours, with renewables now about 53% of installed capacity. The daytime surplus is wasted because the grid cannot store it for the night, when deficits persist.

What is the new mismatch in India’s power supply?

1. What it is: India now produces more power than it needs during solar hours but falls short at night. It is like a tank that overflows at noon and runs dry by evening.
2. Night-time deficits: Shortfalls after dark come from unplanned coal plant outages, heavy air-conditioning load and low reservoir levels for hydro.
3. Solar curtailment: Operators first cut coal plants, sometimes to their minimum technical load, the lowest safe output. They then back down, or cut, solar generation too, which is a national waste.
4. Machine wear: Frequently ramping coal units up and down shortens their working life.
5. The takeaway: Consumers barely feel the glut, but the sector pays for it: the problem is now the timing of supply, not too little capacity.

How did India move from chronic deficit to surplus?

1. Shortages of the 1990s: Peak deficits ran at about 15% and energy shortages about 10%, with frequent power cuts and voltage drops at dusk.
2. Power exchanges: Electricity exchanges, markets selling power for immediate delivery, opened in Delhi and Mumbai around 2008. Their spot prices rose manifold, so developers invested heavily, mainly in coal plants.
3. Coal boom: A little over 1,00,000 MW of coal capacity was added in the decade to 2020, roughly what India built from Independence to 2010.
4. Solar push: Solar took off around 2015. Renewable capacity including large hydro is now a little under 292 GW.
5. Deficits closed: This capacity growth cut peak and energy deficits to about 1% to 2%.

What did the Electricity Act, 2003 and the coal boom leave unresolved?

1. Unbundling: The Electricity Act, 2003 allowed overstaffed, inefficient State Electricity Boards (SEBs) to be split into separate generation, transmission and distribution companies. The split took years in some States because it became politicised.
2. Regulatory commissions: The Act created electricity regulatory commissions to set tariffs independently. Governments kept control of tariffs anyway, so distribution stayed financially unsustainable.
3. Stranded assets: Banks lent to coal developers lacking power purchase agreements (PPAs), long-term contracts to sell power, or fuel linkages, assured coal supply. Plants sat stranded, so banks’ non-performing assets (NPAs), unpaid loans, rose.

What does balancing the grid now require?

1. Storage: Batteries and other storage absorb surplus daytime power and release it at night, so coal plants ramp less often.
2. Transmission: A stronger transmission system carries surplus power to where it is needed.
3. Demand-side management: Shifting when consumers draw power lets demand match the hours of plentiful supply.
4. Flexibility market: A market mechanism should reward flexibility, the ability to raise or cut output quickly.

Challenges

1. Slow pumped storage: Pumped storage, which pumps water uphill with surplus power and releases it through turbines later, is time-consuming to build.
2. Unviable bid prices: Storage prices set in competitive bids are said to be non-remunerative, too low to cover costs, so many projects may never be built.
3. Weak distribution finances: Loss-making distribution companies delay payments to producers, deterring investment.

Way Forward

1. Viable storage bids: Regulators should redesign storage auctions so winning tariffs cover project costs.
2. Early pumped storage pipeline: The Centre and States should start pumped storage projects early, given their long build times.
3. Smart grids: Distribution companies should expand smart grids to move load into solar hours.
4. Tariff independence: State governments should leave tariff-setting to regulatory commissions.

Conclusion

India’s power problem is no longer how much capacity it has but when that capacity can deliver. Unless storage becomes financially viable, the country will keep discarding solar power it has already paid to build.

Key numbers

1. Capacity versus demand, 1990-2000: installed capacity grew about 5% a year; demand grew 7% to 8%.
2. Unelectrified population: about 40% of Indians lacked electricity thirty years ago (World Bank).
3. Solar capacity: about 162 GW.

Government Initiatives for Renewable Energy Integration

1. Green Energy Corridors: Strengthen transmission to integrate large-scale solar and wind power into the grid.
2. Battery storage viability gap funding: A government grant covering part of project cost supports battery energy storage to firm up renewables.
3. Revamped Distribution Scheme: A scheme of about ₹3 lakh crore funds distribution infrastructure, smart metering and loss reduction.
4. National Solar Mission: Drives grid-connected solar parks and off-grid solar pumps and rooftops.

Matching Previous Year Question

“[2024] Recently, the term “pumped-storage hydropower” is actually and appropriately discussed in the context of which one of the following? (a) Irrigation of terraced crop fields (b) Lift irrigation of cereal crops (c) Long duration energy storage* (d) Rainwater harvesting system ANSWER: (c)”