Transmitting efficiency

New RE projects could address a major weakness

The National Committee on Transmission’s (NCT’s) approval for six transmission projects, worth Rs 64,000 crore and connecting green-energy installations, could mark the beginning of the end of a major bottleneck for renewable power (RE) projects. Currently, RE power accounts for just 12 per cent of generation. As yet, therefore, the Indian power system remains driven by coal, in spite of climate-change commitments. The NCT’s approval is part of a larger Rs 2.44 trillion plan to transmit 500 Gw of energy based on non-fossil fuels by 2030, connecting solar parks and wind-power plants to the national grid. Under the latest plan, the broad idea is to attract the private sector to these projects, which aim to connect renewable-energy zones (REZs) in Gujarat, Rajasthan, and Maharashtra, and hydroelectric power projects in Himachal Pradesh to the national grid. Each of these projects will be offered through “traffic based competitive bidding” (TBCB). Among them, the upcoming REZ at Khavda, Gujarat, has received the biggest tranche of the proposed investment budget at over Rs 41,000 crore, of which the transmission system for up to 15 Gw is already underway.

 

The current tranche of projects on offer represents a leap of faith; the largest tranche of RE transmission projects before this was offered in 2015 for eight projects worth Rs 50,000 crore. It seeks to address a serious gap in RE power planning that has brought many projects to a halt because of the unique nature of the RE power-generation cycle. Unlike generation from fossil fuels, RE power generation is inherently intermittent. For solar power it depends on sunrise, sunset, and cloud cover; for wind, the speed of the wind will determine the amount of the energy produced. The fitful and variable nature of RE power makes it difficult to integrate it with the transmission of power produced by conventional sources. The capacity utilisation of the transmission system varies between 20 per cent and 30 per cent, which raises questions about its economic viability. It is unclear how far the question of grid capacity utilisation (and the concomitant one of viability) will be addressed with the current REZ transmission projects. The broad RE transmission plan for 2030 had included the installation of 51.5 Gw of battery storage by 2030, to offer consumers 24x7 power from RE sources. Logic dictates that the current transmission projects will include this element.

 

With project tendering expected to begin this financial year, one key question that arises is the efficacy of the TBCB process. Though competitive bidding is an unexceptionable process in theory, the experience of the recent past suggests that the race to the bottom on power tariffs by bidders does not necessarily translate into efficient or workable projects. This was a key lesson from the Ultra Mega Power Projects (UMPP), the previous government’s ambitious attempt to create an exponential jump in power generation. Unrealistically low bids for power tariffs by winning investors buckled under the weight of sharply rising costs, especially for those projects based on imported coal. In solar power, competitive bidding on projects drove prices down so low that power purchasers often reneged on buying contracts with RE power generators in anticipation of even lower prices in subsequent project bids. It is critical that the NCT’s latest plan does not founder for similar reasons.