India’s rapid renewable energy capacity additions are straining grid operations while contributing to rising power supply costs due to mismatch with the demand growth, Ghanshyam Prasad, Chairperson, Central Electricity Authority (CEA) said on Friday. The country achieved 50% of its installed electricity capacity from renewable energy sources earlier this year. India has set a target of 500 GW of renewable energy capacity by 2030.
However, India is building transmission based on potential renewable energy generation rather than actual capacity or demand and this approach has led to skyrocketing transmission charges, which is concerning state power utilities, Prasad said at a forum organised by The Energy and Resources Institute (TERI) in New Delhi.
He further said that the country is likely to add over 40 GW of renewable energy this year, adding that without demand, the surplus would be very difficult to manage.
This mismatch between lack of adequate transmission infrastructure and renewable energy capacity building has kept grid absorption uncertain, leading to delay in signing of power purchase agreements for the commissioned RE capacity.
“To address these challenges, the CEA will revise transmission plans every six months to reflect real-time developments, and is working with the India Meteorological Department to improve localised weather forecasting for solar and wind generation,” Prasad said.
He also stressed on the need for carefully planned grid integration and resource adequacy planning at both national and state levels, allowing distribution companies to anticipate future requirements and tie up generation resources accordingly.
Unless this happens, “clean energy developers may face situations where capacity is built but cannot be evacuated or sold,” he said.
Prasad also pointed out that the country must continue to invest in coal, nuclear, hydro, and gas alongside renewables to maintain grid security and reliability.
“Until we see the system holistically — planning, execution, grid operation, and cost — we will go wrong,” Prasad said.
As per industry players, the slow progress in commissioning key transmission corridors and the prioritisation challenges under General Network Access coupled with Available Transfer Capacity congestion have further deepened the mismatch between generation growth and transmission readiness.
In addition to these, execution challenges, exposure to fluctuating equipment prices, supply chain concerns on equipment availability and cost of capital are the key headwinds for developers in the near term. Also, development of cost competitive storage capacities remains important for RE integration, Icra had said.
The government earlier this week said that it is actively exploring mechanisms to optimise transmission capacity and improve the contracting framework for renewable energy (RE) projects with stakeholders, to enable efficient addition of RE capacity to the grid.
According to the ministry, the feasibility of signing power purchase agreements (PPAs) and power sale agreements (PSAs) for certain awarded capacities will be reviewed. The ministry did not rule out cancellations of some of the awarded projects that are stranded, but indicated that it will only be the last resort.