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Editorial of the Day (10th Feb): Meeting Renewable Energy Goals

Context: India’s commitment to becoming greenhouse gas (GHG) neutral by 2070 involves significant expansion in renewable energy (RE), targeting 500 GW by 2030.

Progress and Policies for Renewable Energy

  • RE Expansion: India aims for 500 GW of RE by 2030, with progress including 72 GW of solar and 44 GW of wind power.
  • Power Purchase Agreements (PPAs): These projects typically involve 25-year power purchase agreements with state distribution companies (discoms).
  • Commercial and industrial (C&I) Capacity: An additional 32 GW has been added in commercial and industrial capacities.
  • “Must Run” Status: RE projects are given priority for power evacuation, barring safety concerns.
  • Supportive Measures: Include late payment surcharge waivers, interstate transmission waivers, and renewable purchase obligations.
  • Cost Reductions and Investment: Capital cost reductions, competitive bidding, and foreign investment have supported RE growth.

Challenges for Renewable Energy

  • Storage and Network Needs: Achieving the 500 GW target is challenging without adequate storage and extensive power exchange networks.
  • Surging Demand: Post-COVID demand increases and peak deficits, particularly during evening hours, pose challenges.
  • Discoms’ Hesitancy: There’s a shift towards long-term PPAs for solar and wind to meet the growing demand and deficits.

Market Trends

  • RE Reliability: Recent bids require RE generators to match hourly demand, making RE comparable to coal in reliability.
  • FDRE Bids: The introduction of firm and dispatchable RE bids by SECI necessitates a mix of solar, wind, and storage.
  • Storage Solutions: Pumped hydro is crucial for grid stability due to lower capital costs, with batteries also becoming important.

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Solutions and Strategies for Renewable Energy

  • Managing Intermittencies: Generators need to manage intermittencies with storage solutions like batteries, which may become more affordable due to incentives.
  • Excess Generation: Selling surplus power to C&I consumers or on power exchanges could address excess generation.
  • Merchant Sales: Trading excess generation requires structures for guaranteed floor prices to ensure bankability.
  • Central Agency Guarantee: A central agency could offer guarantees to enhance project competitiveness and support green hydrogen ambitions.

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