India needs a range of options to unlock the full flexibility of its power system

The IEA Clean Energy Transitions Programme (CETP) supported this analysis, notably through the contribution of the United Kingdom.

India’s power system is undergoing a transformation towards cleaner energy, driven by the rapid deployment of solar PV and wind power. The integration of variable renewable energy into the power system is a priority; the flexibility currently embedded in the system was essential in maintaining grid stability when citizens switched off their lights to “challenge the darkness of Covid-19” on 5 April 2020.

As deployment of variable renewables accelerates to meet India’s ambitious renewable energy target of 450 GW by 2030, the need for power system flexibility will also intensify. The increasing proportion of renewables will redefine how the power system is organised, planned and operated. A diversity of options for power system flexibility will be needed, including battery and hydro storage, as well as increased planning and co-ordination across various levels of government.

India is the third-largest energy consuming country in the world. Its electricity demand is expected to continue to expand, driven by further industrialisation, population growth and urbanisation. With per capita energy consumption still only around one-third of the world average, India faces the challenge of expanding reliable and affordable energy access while meeting growing electricity demand. At the same time, India is striving for a low-carbon electricity system with high shares of variable renewables to meet its ambitious economic, social and climate objectives. To achieve these goals, system flexibility will need to increase significantly.

Flexibility – the ability of a power system to balance demand and supply at all times – can be provided by a range of resources with varying levels of maturity and present uptake. Flexibility sources include variable renewable energy itself, conventional thermal and hydro generation, storage, demand response (cooling and heating, and smart charging of electric vehicles) and advanced flexibility options such as the use of hydrogen. Flexibility needs will increase much faster than electricity demand itself, driven by rising shares of solar PV and wind power as well as variable load patterns from electric vehicles and higher cooling demand..

In 2019, renewable energy reached 25% of India’s power generation capacity. Solar PV and wind increased from 4% to 12% of total electricity generation in only three years from 2016 to 2019. This rise is consistent with global trends. The global country average for variable renewables’ share of generation is 7%. As the share of variable renewables rises, system integration and flexibility become higher priorities for policy makers, system planners and operators. 

The IEA has developed an approach that represents in six phases the integration of variable renewables and their impact on power systems. Most countries are still in phases 1 or 2, where low levels of variable renewables have limited impact. A handful have reached phases 3 or 4, where variable renewables have a considerable impact on system operation and can sometimes make up the majority of generation. The IEA framework can be used to identify phase-specific challenges in the deployment of variable renewables and prioritize measures to support system flexibility. 

On a national level, India was in Phase 2 as of late 2019. At state level, the picture is very diverse. Andhra Pradesh, Gujarat, Karnataka, Rajasthan, Tamil Nadu and Telangana are already facing significant system integration challenges at Phase 3. Maharashtra, Madhya Pradesh and Punjab have entered Phase 2. The vast majority of Indian states still are in Phase 1.

India aims to deploy 175 GW of renewables by 2022, including 100 GW of solar PV and 60 GW of wind, as well as small hydro and bioenergy. This objective will be scaled up to 450 GW by 2030, making system flexibility a key priority of policy makers and system operators in India. However, not all states are in the same phase of system integration and some face greater challenges than others. In the coming years, the IEA expects more states to enter Phase 3 and several to enter Phase 4, which will significantly change how their power systems are operated. Co-ordination between the national and state levels, as well as between the public and private sectors, will be critical in achieving success.

The IEA is working with the government of India and leading states on system integration of variable renewables. In February 2020 the IEA, in partnership with the government think tank NITI Aayog and the NGO Prayas Energy Group, organised the Maharashtra Power System Transformation Workshop to inform the Maharashtra state government’s actions for system integration of solar PV and wind.

The Covid-19 pandemic has had a substantial impact on India’s electricity system. When India started its lockdown on 25 March 2020, power demand fell by 17% compared with the beginning of March. Demand further declined by 28% on 28 March, marking the lowest demand of the month.

As demand fell, renewable energy generation continued because of its “must-run” status, and played a larger role in the electricity mix. Renewable energy’s daily share of national generation went up to 12% on 31 March, one of the highest levels of recent years. Meanwhile conventional sources of flexibility became less available, notably coal-power plants, due to a drop in overall industrial demand.

The prime minister of India appealed to citizens to “challenge the darkness of Covid-19” by switching off electric lights on 5 April 2020 at 9 pm for nine minutes. This event highlighted the flexibility of India’s electricity system by recording a total reduction in all-India demand by 26% within half an hour. Hydro power was the largest source of flexibility, reducing its generation by 18 GW in 25 minutes. Other sources of flexibility were gas- and coal-based generation (7 GW in 30 minutes) along with wind generation.

This event illustrates the value of dispatchable hydro power and pumped storage hydro as the often overlooked workhorse of flexibility. The critical role of hydro power in providing system flexibility is underlined in the IEA India 2020 Energy Policy Review. Distributed resources such as hybrid PV systems with battery storage are another underutilised way to provide cost-effective and reliable aid to system operation.

The challenges of Covid-19 could provide a critical opportunity to push for reforms to build more resilient electricity infrastructure. There are several ways to strengthen power system flexibility:

Promote supply flexibility. Dispatchable generators, the dominant source of flexibility, reduce power output or shut down completely when output of variable renewables is plentiful or when demand is low. Similarly, they can start up rapidly when availability of variable renewables falls or demand increases. The reduced demand during India’s lockdown highlighted a challenge that power systems face when low demand combined with high generation of variable renewables requires other power plants to cut their generation to very low levels.

Regulations can be used to increase supply side flexibility, such as the Central Electricity Regulatory Commission regulation, which reduces from 70% to 55% the minimum generation level of coal-fired plants run by the central government. This has improved the capability of these coal plants to run at low levels to support integration of variable renewables, and will have increased benefits if extended to state-level plants. It is also important to implement measures that make deployment of variable renewables more accommodating to the system. Solar PV and wind can have complimenting outputs and smoother variability if plants are spread geographically, limiting both uncertainty and variability of supply.

Pursue efficient grid planning. Grid reinforcement is essential to accommodate India’s growth in energy demand and deployment of renewables. Advanced network development, co-ordination of planning at state level, and enhanced analytical and planning capabilities are indispensable to identify local solutions. Policy support is needed to implement these solutions in a timely manner and overcome possible medium- to long-term challenges.

Integrated planning – which takes into account generation, transmission and other flexibility resources across regions – increases efficiency and prevents grid congestion from becoming a barrier to deployment of renewables. Comprehensive planning processes can allow early connections to be focused in locations where the existing grid is sufficient. This allows efficient grid expansion and targeted incentives to investors. An excellent example of regional co-ordination is the Green Energy Corridors scheme, which enables transmission of renewable energy from regions with high concentrations of renewables to high-demand centres.

Accelerate demand-side flexibility, distributed energy resources and storage. The Indian power system’s history of outages has led many consumers to install diesel-fired back-up power. More recently, the high cost of diesel and the falling costs of both solar PV and batteries have favoured the deployment of hybrid PV and battery systems. Such systems provide an enormous opportunity to boost the flexibility of the power system.

An increasing role in improving flexibilty is also emerging for grid-scale battery storage and smart charging of electric vehicles. Thermal storage can provide system benefits by absorbing surplus solar output during the day and alleviating the strain of peak cooling demand in the evening. To realise the flexibility potential of these sources, which remains largely untapped, targeted measures are required. These could include improving the connectivity capabilities of relevant appliances, introducing incentives for flexibility from the demand side, and enabling the participation of third-party players such as aggregators.

Market reforms are also a key component in making the system more flexible. To fully activate a diverse set of flexibility options, wholesale and retail electricity market reforms should include appropriate price signals and a robust regulatory framework. The launch of the Real Time Market on 1 June 2020 can facilitate improvements in market operations closer to real time, while complementing the integration of variable renewables.

The central and state governments in India have already made the integration of higher shares of variable renewables a priority. Flexibility needs will grow in the coming years. For Indian electricity stakeholders it will be vital to manage the implementation of national policies at state level and improve co‑ordination between the state and federal level, as well as among states. As people and industry resume normal activities following the Covid-19 crisis, the government of India will focus on managing the continuing increase in electricity demand, meeting its ambitious renewable energy targets and facilitating the clean energy transition. The need to encourage a diverse range of flexibility options should be a key consideration as part of the government’s power market reforms.