Renewable Energy – Wind, Tidal, Geothermal, etc.

[oped of the day] A cost-effective way to power generation

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Power generation and energy security

Op-ed of the day is the most important editorial of the day. This will cover a key issue that came in the news and for which students must pay attention. This will also take care of certain key issues students have to cover in respective GS papers.

Context

India has been aggressively expanding its power generation capacity. Today’s installed capacity of 358 GW is about four times what it was in 1997-98. It shows a doubling of capacity in each of the past two decades. 

Sources of energy

    • Drivers – The major growth drivers have been renewable energy sources such as solar and wind power, and investment from the private sector. 
    • Private – The private sector accounts for almost half the installed generation capacity. 
    • Renewables – For the last three years, growth in generation from renewables has been close to 25%. 
    • Aggressive targets – India aims to have the capacity of renewable of 175 GW by 2022 and 500 GW by 2030. Solar and wind power plants would account for much of the targeted capacity from renewables. 

Realising the renewable targets – Thermal challenge

    • %share – the thermal generation capacity accounts for about two-thirds of the installed generation capacity in the country. Though there is increasing awareness about the environmental impact of fossil fuels, the reliance on thermal plants is unlikely to end any time soon. 
    • Capacity
      • Plant capacities are large and therefore targeted capacity additions can be achieved by constructing fewer such plants. 
      • It would take 18 solar or wind projects to generate the same quantity of power as one thermal plant. 
      • Administrative overheads that would have to be incurred in setting up the multiple projects could significantly add to the cost.
    • Cost of projects – infrastructure projects have an inverse relationship between size and unit cost, indicating economies of scale. 
        • As the capacity of power plants increases, the average cost of power per MW reduces. 
        • The average cost per MW for a thermal plant is about 25% lower than that of a solar plant. 
        • focus on developing larger solar and wind power plants that can also exploit similar economies of scale.

Project ownership

    • Private sector – Over the last two decades, 63% of the total planned generation capacity has come from the private sector. 
      • Private investment in renewables accounts for almost 90% of investment in wind and solar projects. 
    • Cost of private solar power – Private sector plants have an average cost per MW that is 12-34% lower for all categories except solar. 
      • Lower capacity cost has a direct impact on electricity tariffs.
      • Capacity costs account for more than 90% of the levelized cost of electricity, irrespective of the fuel type. 
    • Creating additional capacity at a lower cost will play a big role in keeping electricity tariffs low. 

Marginal capacity costs

    • Additional capacity – Even as total capacity in generation has been growing, the cost of installing additional capacity has fallen. 
    • Reasons for the decline could be as follows :
      • Advances in technology have resulted in the construction of larger power plants. 
      • Compared to the 15-year period before 2013, power plants installed in the past six years have on average been significantly bigger
      • The economies of scale in power generation. 
      • An increasing share of private sector investment. The share of the private sector in capacity creation has been 70% in the last decade as compared to 46% in the decade before that.

Conclusion and way ahead

    • With economic growth, the demand for power in India is only going to increase further. 
    • China added generation capacity that was equal to a third of India’s total installed capacity in 2018. 
    • India should create generation assets with the lowest unit cost by optimising plant capacities and encouraging private sector investment
    • The declining marginal cost for capacity can be used to replace existing capacity with newer capacity that are more efficient.
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