From UPSC perspective, the following things are important :
Prelims level : CERC
Mains level : Paper 3- Renewable energy markets
The article takes stock of the progress India made on renewable energy capacity and the steps taken for its trade through the creation of green markets.
India increasing share of renewable energy
- As a signatory to the Paris Climate Agreement, India is committed to increasing its share of renewable energy capacity to 450 GW by 2030.
- India has an installed renewable energy capacity of 89 GW.
- India has today become the most attractive destination for investment in the renewable sector.
- During the last six years, has attracted over Rs 4.7 lakh crore of investment, including FDI of about Rs 42,700 crore.
- India witnessed 20% CAGR growth in the renewable generation since FY16 while total electricity generation saw 4.3% growth in the same period.
- The current levelised cost of energy (LCOE) for large scale solar in India is around Rs 2.5 per kWh, compared to ~Rs 12 in 2010.
- Waiver of inter-state transmission charges for the sale of solar and wind power, the renewable purchase obligation (RPO) trajectories for states, focus on maintaining the sanctity of contracts, permitting FDI in the renewable sector have accelerated the progress.
Trading in renewable power
- Most renewable power generation companies in India are committed to selling their power to consumers—mostly discoms under the long-term Power Purchase Agreements (PPAs).
- It is also a matter of gratification that most generation companies have adopted a robust system of forecasting and scheduling of power.
- It is in this context, the CERC was approached for creating a market for green energy.
- Ultimately, the CERC approved trading of renewable energy contracts under Green Term Ahead Market (GTAM) on the energy exchange.
- The green market commenced trade on August 21, in day-ahead contingency (DAC) and intra-day contracts in both solar and non-solar segments.
- The green market has now launched two more options—daily and weekly.
- This will further strengthen the market and allow participants to buy green energy through contracts available for trade in all the segments.
- The energy will be delivered to the market participants leveraging the national, regional and state-level transmission and distribution network.
- With robust value proposition such as transparency, competitive prices, flexibility, and payment security and financial savings that the exchange market offers, a pan-India green market has the potential to drive and facilitate the country to meet its renewable energy targets.
- The green market will ultimately encourage green generators to adopt multiple models of sale and trading.
Going forward, the introduction of new segments such as green day-ahead market, long-duration green contracts, contract for difference (CfD), etc, will play a crucial role in furthering sustainability goals, and ensuring that all the renewable energy generated within the country is dispatched in the most efficient manner through a pan India wide exchange-based energy markets.