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The hidden costs of green energy

The hidden costs of green energy

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The euphoria over solar power needs to be tempered. Dependence on coal-based power is here to stay for the next 2 decades

The focus on green energy is extremely laudable and India is on its way to achieving its 100 GW of solar energy by 2022. Other developments in the recent past have also been very encouraging. Tariffs of solar energy have plummeted to ₹2.44 per unit from high of ₹14 per unit not very long ago. The energy sector may well be under stress but solar power seems to be on the rise.

However, to say that renewable energy has already become cheaper than coal-based thermal energy “masks”, as Rahul Tongia from Brookings India puts it, “system level costs as well as disproportionate impact on selected state generators and stakeholders”.

Accordingly, before we blow the victory bugle let us examine the implications of what is happening.

1. What are the direct and indirect costs of the focus on renewable energy?

2. Who bears this cost?

3. Is the manner in which renewable energy mission being rolled out in the country sustainable?

Solar energy will play the most prominent role in the push for green energy. Not only does it have a larger share of India’s targets, it represents much of the growth of renewable energy.

There is no doubt about the fact that India is a “sun rich” country with bright sunshine available for better part of the year. However, there would still be issues that will need to be considered as we proceed towards increasing our dependence on solar energy.

(i) Sunlight, by definition, is available only during the day. Unlike the European countries that are pushing for green energy, the peak demand in India is during the evening when solar energy (unless stored) is not available. Storage and the cost thereof shall be key determinants for sustainability of solar energy, especially as it scales up in share.

Hydro power generation is a good complement and India has enormous potential. However, unfortunately, this potential has not been tapped, ironically on account of environmental considerations. The ongoing projects, like the one at Subhanshree in Assam, have languished and the delays have led to cost escalation that has perhaps made the project unviable. India even lags behind in deployment of pumped hydro capacity, the most proven and cost-effective large-scale storage technology today.

(ii) The first step for higher solar is improving predictions. However, even perfect predictions only go so far — we know monsoons reduce the output, and the sun sets every evening. India will have to step up its game for learning to balance variable renewables, like other countries have done. But we lack some tools to do so, such as flexible markets and dynamic pricing — most power is sold via static power purchase agreements (PPAs).

(iii) The highest PLF (Plant Load Factor) for solar power plants is considered to be only about 20 per cent, and many rooftops give less. Meaning thereby that out of the 100 GW installed capacity, this is only equivalent to 33 GW of thermal power (assuming it has 3x the PLF, of, say, 60 per cent). It only produces nearing 100 GW for a short while in the middle of the day.

(iv) Price “grid parity” will be another issue that will have to be resolved. To meet peak demand in the evening, some other source of power will required to be built. Similarly, when solar power is available (typically during the day) some other power source has to back down. Both have a cost, which someone has to bear.

(v) Rooftop solar plants sound exciting but would sound the death knell for the power distribution companies, who risk losing their best customers. These small localised plants will use grid-like battery as they (the solar plants) will be used only when the sun is shining. The “net metering” will enable them to push power into the grid when the requirement is relatively low and there is already “surplus” power. This could lead to what is termed as “utility death spiral”.

(vi) There are issues relating to setting up of solar plants as well as financing. Right now everyone seems to be rushing in, but there is some resistance from States (the discoms).

(vii) Does solar perform as envisaged? There are issues relating to maintenance of solar panels, especially in the context of dust and pollution. The quality of solar panels manufactured on mass scale is already causing problems. Land costs, availability, and bankability are also growing concerns, especially as we scale. Recall the 175 GW is only for 2022 — much more is to come in future years. The cost at which solar energy gets delivered is more than the cost at which it gets generated. The transmission cost at 20 per cent PLF will have to be factored in.

Storing solar power
What has been the response to these challenges? Yes, there is enormous amount of research taking place in the western world and China to find the “storage” solution that is critical to the sustainability of this “solar drive”. The rest of the world is waiting with bated breath as the power of solar energy is being unleashed.

However, no one seems to be bothered about the adverse impact on the coal-based power plants that provide for most of the energy requirements in the country. The generation companies (Gencos) are already in trouble on account of shortage of coal and demand growth not being good enough to service the investments made.

Thermal power under pressure
More than ₹1.7 lakh crore of capacity could become NPA. These Gencos are now being pushed further by ever increasing coal cess, statutory “backdown” to accommodate renewable energy and competition with a subsidised sector. And now there is amendment to the Electricity Act 2003 on the anvil that will make matters worse.

The proposed amendments bring in concepts like Renewal Energy Obligation (RGO) and Renewal Purchase Obligation (RPO) along with stringent penal provisions that will adversely impact the Gencos that are already under pressure.

Green energy is the way forward but it is not likely to end the need for coal-based thermal plants in India. Hence, it would not be advisable to promote it at the cost of pushing thermal power plants to become unviable on account of solar power.

The two have to co-exist and supplement each other. The dependence of coal-based thermal power plants will continue for at least the next couple of decades.

The writer is a former Coal Secretary.

Source: thehindubusinessline
Anand Gupta Editor - EQ Int'l Media Network

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