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India needs hourly electricity tariffs: IEEFA

IANS  |  New Delhi 

With $100 billion of existing and proposed thermal power plants in financial distress and low cost but variable renewable capacity best able to meet targets, has an opportune moment to transform its sector by introducing day-ahead market pricing, the Institute for Economics and Financial Analysis (IEEFA) said on Tuesday.

A new briefing note, "Flexing India's system: Making the case for the right price signals through day-ahead market pricing", finds the current pricing system in is a largely flat tariff providing little incentive for network or consumer efficiency through load smoothing.

Tim Buckley, of the briefing note and IEEFA's of Energy Finance Studies in Australasia, told IANS that the pricing system also does not incentivise the ramping up of flexible, peaking power generation capacity to meet peaks in demand.

"India's generation and demand profiles have become 'peakier', meaning there is clearly more demand at certain times of the day such as evening or during hot weather periods," Buckley said in a statement.

"As India's economy grows, this peakier demand will become even more apparent, putting stress on consumers, businesses and generation systems currently struggling to meet those peaks."

The co-authors of the note found India's increasingly obsolete sub-critical coal-fired power fleet is not flexible enough to viably meet growing demand peaks with a shift in generation pricing.

"Coal-fired power stations cannot be ramped up and down quick enough to respond to peaks," Vibhuti Garg, energy economist, said.

"Pricing tariffs are also not available to incentivise network efficiency and flexible peaking power generation."

The total installations in reached 75 gigawatts (GW) by September 2018, representing 21 per cent of total installed capacity and generating a record high of 11.9 per cent of all electricity in the September 2018 quarter.

"India is going through a transformation, but the pricing signals have yet to catch up," said another Anil Gupta, with Enerfra Services Pvt Ltd.

"India needs that encourage flexible to meet the peaks in demand. This would help ensure grid stability as the share of continues to increase."

As India's reliance on renewable energy increases, notes there will be increased need for firming capacity to back up renewables at times of high demand.

Technologies that can provide this include pumped hydro storage, gas peaking plants, faster ramping, more flexible but lower utilisation coal fired power plant and battery storage.

Enhanced national and international grid interconnectivity will also play a role.

India is already planning a doubling of pumped hydro storage capacity and considering near term measures to promote gas peaking power generation, leveraging India's existing base of 25GW of largely

will get ever-cheaper as global production capacity continues to increase.

"Right now, however, a stronger price signal to incentivise fast ramping peaking power generators will help drive the roll-out of flexible that can meet India's future peak demand," Buckley said.

"India must introduce day-ahead market pricing tariffs to help manage peak demand while providing a better deal for consumers."

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, January 08 2019. 13:38 IST
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