8. SYSTEM INTEGRATION OF VARIABLE RENEWABLE ENERGY
Electricity networks and grid infrastructure
International experience shows that electricity networks and interconnections (intraand inter-regional) bring multiple benefits to the power system, notably improved security of supply, improved efficiency and better integration of variable renewable resources (IEA, 2014; IEA, 2016). Electricity networks enable system flexibility by allowing a broader set of flexible resources to be shared across different geographical regions. Interconnection capacity allows for an increase in demand to be met by a generator in a neighbouring region when local generation resources are already at maximum output. Moreover, electricity networks allow other flexibility options to be shared across a wider area, such as a large energy storage facility. As such, interconnections play a very important role in providing flexibility as power systems transition toward higher VRE integration phases. VRE resources typically have a smoother aggregate profile that is easier to integrate across a larger region. Today, significant flexibility resources are still being underutilised due to transmission and interconnection bottlenecks, a situation likely to worsen with high renewables deployment of 450 GW.
The risk of renewables investment outpacing transmission and interconnection capacity is high. In the international context a typical interconnector infrastructure project (transmission connecting countries/regions) takes about ten years to develop and build, and calls for significant amounts of research and numerous studies before permits are granted by regulators and final investment decisions are made by investors. By contrast, the development of renewables can take less than one year. This issue has been fully acknowledged by the GoI.
Over past decades India has successfully built out its interstate transmission system and since 31 December 2013 the country has operated a single synchronously operated grid. The government put in place a concerted action programme to plan and build interstate transmission lines and connect renewable energy resources. The Green Energy Corridors plan shows that transmission lines can be built relatively swiftly in two to three years following the competitive bidding process; however, projects can sometimes, notably at the state level, can take longer than five years due to rights of way issues in densely populated areas. Another positive experience is that renewable generation does not pay transmission charges (for a limited period in time), when they connect to these interstate transmission lines, which fosters “grid-friendly” deployment.
Interconnectivity across regions has increased sharply in India – it has added an average of 21 000 circuit kilometres of transmission lines (220 kV and above) every year since 2012. The total amount of capacity added over the past seven years is equivalent to the entire high-voltage grid of Germany. Despite major investment in large-scale interstate grid integration, important state transmission lines across India remain congested and constrained. Total interregional transmission capacity amounted to 75 GW on 31 March 2017. However, the available transmission capacity on a daily basis does not exceed 35% of total transmission capacity and actual usage is around 25%, according to POSOCO. Besides, much of the renewable energy deployment is taking place at the lower-voltage level of transmission and distribution. At state level there are multiple barriers to financing transmission investment, including land acquisition, permitting and lack of financing. The risk of solar, wind and other flexible resources being locked behind transmission bottlenecks is higher for state infrastructure-connected projects. Further infrastructure buildout will be critical to balancing a higher level of supply-side variability at a time of rising shares of VRE. Given the long timeframe for project development, it is important for
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8. SYSTEM INTEGRATION OF VARIABLE RENEWABLE ENERGY
policy makers to proactively lead public engagement and promote a sense of confidence that projects are in the public interest of all citizens.
Case study – Green Energy Corridors
The Ministry of Power (MoP) has directed CERC to provide early regulatory approval for a transmission investment of “national importance” (necessary to integrate and meet the renewables target for 2022).
In 2015/16 the MoP sanctioned investment in both the intraand interstate transmission systems under the Green Energy Corridor scheme to remove system integration barriers for large-scale renewable energy projects. The project is being implemented by the respective state transmission utilities in the eight VRE-rich states of Tamil Nadu, Rajasthan, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Himachal Pradesh and Madhya Pradesh. The scheme incentivises wind and solar developers to connect directly to these Green Energy Corridors by promising zero transmission charges until 2022 for the projects connected to these lines.
To date, two phases have been implemented: Phase I included investment in intrastate and interstate transmission and REMCs to integrate a total of 33 GW of renewable energy. Phase II aims to connect 100 GW of solar and 60 GW of wind generation capacity by 2022. In total, by 2020, 9 400 circuit kilometres of transmission lines and substations (19 000 MVA) are planned.
The state transmission utilities introduced a competitive bidding process to implement the corridors. Such intrastate transmission investments have been funded by 20% equity from the central government, 40% grant from National Clean Energy and Environment Fund (NCEF) and 40% soft loan, whereas, the interstate transmission schemes are funded by 30% equity from Powergrid and 70% soft loans. Loans have been provided by the German Kreditanstalt fuer Wiederaufbau and the Asian Development Bank.
Mitigating electricity network connection risk has been identified as a priority to manage the cost and integration of VRE generation. India’s Ministry of New and Renewable Energy (MNRE) introduced a solar park policy under the overall target of 100 GW of additional solar generation by 2022. Transmission lines are needed to connect these solar parks, which should be strategically located to ease VRE integration challenges and reduce system flexibility needs. The policy has successfully attracted investors by removing obstacles to transmission connection, including risks related to permitting and rights of way.
The weighted average tariffs awarded for projects within the different solar parks have declined between 2015 and 2017 under the policy (Figure 8.9). The policy also encourages hybrid projects incorporating wind or storage with PV systems to provide improved flexibility and reduce variability. As of August 2017, 36 solar parks in 21 Indian states with an aggregate capacity of around 21 GW had been approved and were at various stages of development.
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