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System Friendly
Procurement Through
Round-the-Clock (RTC)Opportunities and Challenges for
Transition to 450 GW of RE
Anurag Mishra,
Energy Team Leader, USAID/India
June 12, 2020
Partnership to Advance Clean
Energy -Deployment 2.0
(PACE-D 2.0 RE) TA Program
• The last 5 years have seen significant transformation in the Indian RE Sector – converting India into a RE Power House:
• Last 3 years saw RE generation growth of around 25% annually
• Significant cost reduction in key RE technologies (Wind & Solar) – making these more cost competitive than gas and coal
• India has now one of the most robust RE development Eco-systems in the world
• India plans to install 175 GW by 2022 and 450 GW of RE by 2030, generating 55% of its electricity
• Strong support from the private and public sector –from consumers to investors to developers making these achievable
• This rapid change, in the energy mix will have a significant impact on the sector and constituents
38,959 45,924
57,244 69,022
78,111
61,719 65,781
81,548 1,01,839
1,26,759
2014-15 2015-16 2016-17 2017-18 2018-19
India's RE Capacity & Generation Growth between 2014-19
Installed Capacity (MW) RE Generation (MUs)
Renewable Energy - key role in India’s Power Sector
22GW23GW
10GW 5GW 3GW
2GW7GW
18GW 12GW 9GW
0%
20%
40%
60%
80%
100%
FY15 FY16 FY17 FY18 FY19
Capacity Addition Trend – RE Focused
Thermal & Hydro RE
6/12/2020 FOOTER GOES HERE
1. Prove RE Technology Reliability
• Solar PV
• Wind
• Small Hydro
• Wind (On-shore)
• Bio-fuels2. Attain Generation Cost Competitiveness
• Small hydro
• Wind
• Solar PV
• Biomass (still evolving)
3. Seamless Integration with the Grid
• System Friendly Procurement – RTC, Peak Supply through energy storage
• Green Energy Corridors
• Solar Parks and RE Hybrids
• Storage
4. Drive India’s economic growth through cheaper and reliable energy
• High penetration of RE
• Generation responding to demand of grid and consumer on standalone basis
• Long term goal – 175/450 GW– we are at stage 3, with RE ready to scale but faces grid integration challenges
• One solution for managing grid integration - better manage RE procurement at the systemic level
India’s Journey to High Renewable Energy Future
A Growing Challenge
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Forecasted Wind
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CSP Forecasted
Variable Uncertain Location Specific
The biggest challenge to meet round-the-clock power through renewable resources is its nature
1. Higher Penetration- More Variability- High Integration Costs
6/12/2020
Challenges with the Current Approaches (1/2)90GW-175GW-450GW
1. Higher Penetration-
More Variability- High
Integration Costs
2. Burden on Grid
Management and
Operations
3. Impact on Existing
Resources
More reserves
High transmission
capacity
Better voltage control
Higher cost of thermal
assets
Higher system flexibility for
balancingE.g. of a unilateral 700 MW Solar
procurement by a state & its impact on
the supply curve
1. Higher Penetration- More Variability- High Integration Costs
6/12/2020
Challenges with the Current Approaches (2/2)90GW-175GW-450GW
4. Struggle of
Discom’s/Consumer’s in
Managing RE Integration
5. Planning for of RE
Procurement
6. Focus on LCOE vs overall
Cost of Supply to
consumers
• Limited understanding of generation profiles of various RE sources
• Managing variation in RE generation is expensive
• Demand side management approaches are not fully utilized
• Sizing RE to respond to present & future demand
• Identifying the best actors who can analyze, develop and supply RE to better match and manage demand
• Understanding system
level costs of integrating
stand alone RE critical
• Purchasing low cost single
source RE does not
necessarily lead to low
cost of power supply
System Friendly Procurement- A Cost-effective Solution
System Friendly Procurement - supply of power from a
portfolio of energy sources to meet the requirements of
DISCOMs/Consumers while maintaining a maximum share of RE
Manages variation
in RE generation
at supply side –
unburdening
consumer/ utility
Manages supply
with demand
profile across
various time slots
and seasons
Determines
optimal capacity
requirement of RE
sources- cost
Shifts
responsibility of
managing
portfolio of assets
to suppliers
Types of System Friendly Procurement• Time-slot based procurement• Round the Clock Power• Time based Incentives and penalties• Hybrid Systems• Virtual Power Plants• Location Signal
Benefits
India’s successful use of Round-the-Clock Power Model
• National Guidelines for Round-the-clock (draft) and
Hybrid Projects
• Three SECI Tenders of 6,600 MW capacity
• High market interest- 4 bids for 400 MW & 3 bids for
1200 MW. Both tender were oversubscribed. 5000 MW
results awaited
• Competitive price- Rs 2.90 kWh, for 400MW tender
• MNRE’s Vision
– may now hold auctions only
for RTC and hybrid projects.
Objectives • To provide RTC power to the DISCOMs through bundling of RE power with thermal power
• To scale up renewable capacity additions and achieve economies of scale.
• To facilitate fulfilment of RPO requirement of the obligated entities
Technologies Technology agnostic, use of ESS and thermal is permitted
Project
structure
• Developed under Build-Own-Operate model
• PPA will be with SECI for 25 years
Tariff • To be determined through competitive bidding
• Composite tariff - Composite Fixed Charges(70 %) + Composite Variable Charges(30 %), indexed
to relevant fuel price index of CERC
• Alternative tariff mechanism - 51% RE tariff + 30% variable thermal tariff + 19% fixed thermal tariff
Power supply
conditions
• Minimum 51% from RE, to be assessed on a yearly basis
• Developer has to provide meet the demand at least 80% of the time in a year. However on a
monthly basis the developer has to meet for 70% of availability
• Penalties 25% of PPA tariff on shortfall – below 80% availability in a year; less than 51% of RE in a
year
• Developers to be compensated for curtailment
Key features of MNRE’s RTC Scheme Guidelines (draft 2020)
Common features • Can be developed anywhere in the country
• Tariff based competitive bidding, PPA for 25 years
• Selection of RE technologies is left to developers
• Minimum 51% RE, 80% availability/year and 70% availability/month
Tender 1: 1200 MW ISTS-
Connected RE Projects with
assured Peak Power Supply in
India (ISTS-VII)
The developer has to supply energy during Peak Hours with RE using storage
• Two-part tariff- “Off-Peak Tariff” fixed at INR 2.88/kWh and Peak Tariff
• Minimum annual CUF of 35%. Penalty- 25% of cost of shortfall, calculated as PPA tariff.
• Greenko- 900MW with pumped storage; INR 4.04/kWh avg tariff & INR 6.12/kWh peak tariff
• ReNew Power - 300 MW with battery energy storage; INR 4.30/kWh avg tariff & INR 6.85/kWh peak
tariff
Tender 2: Round-the-Clock
Supply of 400 MW RE Power to
NDMC, New Delhi, and Dadra
& Nagar Haveli under Tariff-
based Competitive Bidding
(RTC-I), Oct-2019
100% RE supported by energy storage round the clock
• Single part tariff
• Penalty = Equal to the PPA tariff, on generation shortage.
• ReNew Power - INR 2.9/kWh tariff with an annual escalation of 3% for first 15. Estimated levelized cost
of energy about INR 3.5 – 3.6/kWh
Tender 3 - Supply of 5000 MW
RTC Power from ISTS-
connected RE Power Projects,
complemented with Coal based
Thermal Power in India (RTC-II)
Round the clock supply from RE and thermal
• A minimum of 51% of annual energy should be from RE sources
• Penalty =25% of cost of shortfall (<80% annual supply and <51% RE supply), calculated as PPA tariff
• Tariff for bidding structure (One part or two part)
• Tariff for payment = Composite tariff with fixed tariff + variable tariff
Highlights of recent RTC Tenders of SECI
Allow buyers to leverage the strengths of
developers and solution providers to achieve their
desired outcome
RTC procurement can be designed as
per the need of the buyers
• Fixed (Continuous) Demand
procurement
• Slot wise Fixed Demand
procurement
• Real time Demand procurement
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Fixed-Demand Procurement
Slot 1 Slot 2 Slot 3 Slot 4
Real Time-Demand Procurement
Slot wise Fixed Demand Procurement
• Developers have better understanding of
generation profiles of various technologies and
geographies
• Developers can leverage new technologies and IT
to design better integration methods
How RTC helps address RE Challenges?
Model Benefits Challenges
Fixed
(Continuous)
Demand
procurement
• Simple procurement model
for the supplier and buyer
• Expected to receive high
responses from suppliers
• Meeting peak demand – surplus power disposal
• Not meeting peak demand - buyer needs to find other
avenues for procuring power – difficulty in
management
Slot wise Fixed
Demand
procurement
• Higher potential to meet
peak demands
• Same as above, but in lesser degree
• Comparatively complex
• Optimizing slots VS expected tariffs
• Structuring procurement
• Potentially higher cost of power
Real time Demand
procurement
• No surplus power, no
shortfalls
• Granular load curve forecasting needed - modelling
• Additional flexible generation capacity reserves
needed
• Difficult to monitor the contracts
• Comparatively much higher expected cost of power
Comparison of RTC Design Options
6/12/2020
Buyers
Priority- low tariff OR high RE share
RE share beyond a certain % (say 50%) can increase
the cost as due to larger RE surplus
Procurement Options
• Demand management matching with RE generation
pattern can lead to higher RE and cheaper cost
• Fixed demand procurement is the easiest option
for contracting and monitoring
Seasonality
Higher seasonal variation would need higher thermal
and energy storage, and hence more expensive
Tolerance limit
DISCOMs have higher tolerance limits as compared
to industrial consumers
Developers
Liquidity of wholesale markets
RTC would involve buying and selling on wholesale
market for better optimization-consider the liquidity
of the wholesale markets while selecting portfolio
Selection of generation sources and
geographies
• Profiles of various geographies need to be
leveraged for cheaper costs
• Transmission constraints need to be considered for
selecting project locations
Feasible Balancing solutions
• Chemical energy storage-shorter gaps (few hours)
• Pumped-hydro- longer gaps (seasonal)
• Gas based or thermal support- improving reliability
Key Considerations for RTC Procurement
Short to medium term Long term
Objective Integrate renewables with grid Make renewables 100% responsive to demand
Requirements Generation curve needs to be more
predictable
100% flexible to suit the needs of the
consumer/ Discom
Technology Buyers should be technology agnostic as long
as minimum RE requirement is met
Should target 100% renewables (or any
feasible technical maximum)
Project structure • Plants within a project need not be co-
located.
• Capacity of project/plants should not be
defined. Only demand needs to be defined.
• Short term purchases from the exchanges
and merchant plants should be allowed.
• Move away from project based approach to
aggregator based approach. A developer
should be able to buy from existing plants
Regulations • Tighter forecasting and scheduling
requirements for RE
• How do you address F&S requirements
• Remove must run status of RE – allow it to
be used as base and/ or peaking load
• Allow energy aggregation rather than
project specific approach
Procurement • All upcoming PPAs should be system
friendly procurement
• Re-structure all generating capacity to
system friendly procurement
How can we Improve System Friendly Procurement?
Anurag Mishra
Energy Team Leader | US Agency for International Development
American Embassy
Chanakyapuri, New Delhi – 110021 | Tel: +91 – 11 - 24198000
•