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this to less than 6 GW, and storage eliminates all these periods. VRE curtailment due to some generation constraints (such as must-run generation) is about 5 TWh over the course of the year in 2040, meaning that more than 99% of all available wind and solar generation is utilised (assuming economic dispatch in year 2040). These flexibility options help to remove barriers that might otherwise limit further deployment of renewables in India. Regulation needs to support an adequate level of capacity to provide supply security, flexibility and stabilisation services to the grid, while avoiding excessive costs to the consumer or to the government, by way of subsidies.
IEA flexibility analysis – A scenario outlook to 2040
This section provides a quantitative analysis developed by the IEA of the four flexibility resources (generation, transmission, storage, demand-side response) available to the Indian power system in the future. The section reflects the World Energy Outlook 2018 New Policies Scenario (the IEA scenario that assumes that existing and agreed policies will be implemented, but to-be-announced new policies are not included).
Recent analysis has identified battery storage as the main and often only new source of power system flexibility. There is little analysis of India’s power system that has considered flexibility from demand response and price signals, regional integration or even VRE, even though all of these can be cost-effective flexibility options under certain policy and technology conditions. Besides, the local value of these flexibility options is not taken into account in these analyses. To bridge the gap the IEA is working with the State of Gujarat on a state-level analysis to quantify the contributions from the different flexibility options in the power system.
Assessment
System integration of variable renewables is a topic of growing importance, which concerns the flexibility of both the existing power system and new resources of flexibility. While at low shares of VRE power system security concerns are typically low, at higher shares, such as witnessed in the renewables-rich states in India, system inflexibility can become a barrier for further VRE expansion.
As of 2018 India is in Phase 2 of the IEA System Integration of Renewables phase assessment. However, a more in-depth review of the Indian power system at state level shows a very diverse picture. Six states are already facing significant system integration challenges at Phase 3 and several states have entered Phase 2, while the majority of Indian states still belong in Phase 1. In the future, the IEA expects several Indian states to enter Phase 4 and Phase 3 of system integration, which will bring about significant changes to how their power systems are operated.
The central government and several state governments are well aware of the challenge and have made significant efforts to promote system integration. However, not all states are in the same phase and some face more challenges than others. A significant
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opportunity exists to improve the flexibility of their power systems with the exponential increase of renewables, as India moves towards the implementation of its 175 GW target of renewables by 2022. National and state-level co-ordination and public and private sector co-ordination will require the collaboration of a broad range of players: over 600 generators, more than 30 transmission licensees, more than 70 distribution utilities, more than 30 system operators (load dispatch centres), 2 power exchanges and 43 traders.
Looking ahead, promoting the adoption of ongoing national reforms at the state level will be crucial. This is likely to require a concerted effort to build a shared understanding of the nature and benefits of the proposed mechanisms. Reform will only be able to move forward if states have confidence that it will actually maintain or even increase their DISCOMs’ access to reliable and affordable power.
The critical system integration challenges and opportunities can be grouped into the following three categories: system operation; market design; and developing all sources of flexibility.
The central government and regulators are already addressing many of these areas, but further effort is needed to ensure implementation at state level and co-ordination across regions.
Advanced system operation
Advanced system operation practices, such as better scheduling and forecasting of VRE, will help grid operators to commit or de-commit generators to accommodate changes in wind and solar generation more efficiently and prepare for extreme events when renewable generation is unusually high or low.
The ongoing introduction of Renewable Energy Management Centres (REMCs) is a critical step towards advanced system operation practices. REMCs activities include enhancing the operational flexibility of power plants, making efficient use of the transmission grid and ensuring that VRE power plants have the capability to provide system services. This includes the adoption of state-of-the-art automated load and renewable energy forecasting systems.
India has started improving the co-ordination of scheduling and dispatch between neighbouring states, which will allow better access to least-cost generation and flexibility (a first step towards regional economic dispatch). Additional system flexibility can be provided by expanding the balancing areas to have imbalance netting over larger areas and reduce costs by tapping into a larger pool of balancing resources/demand. The REMCs are an excellent tool, but their success also depends on the capacity of the dispatch centres at the state level (who do not yet schedule or dispatch in an economically efficient way) and the ability of transmission utilities to fast-track transmission investment and remove congestion. Improving system development and planning capabilities at the state level should be considered a top priority.
The responsibility for grid codes is shared between the central and state levels of government, an arrangement that needs to be harmonised to ensure that VRE plants have incentives to provide state-of-the-art system services. However, with increasing deployment of VRE, the requirement for renewables generators to provide grid services such as AGC and operational data will become very important in the coming years.
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Upgraded connection requirements and codes need to cover all technologies (VRE, conventional generation, storage, and distributed and demand-side resources) so that transmission licensees and system operators have greater flexibility resources at their disposal.
Improving electricity market design
The design of wholesale power markets plays a critical role in ensuring reliable system operation along the three time frames of resource adequacy, flexibility and stability.
The 2018 CERC proposals for wholesale market reform represents a step towards a more flexible power system. To achieve reliable market price signals in India, a higher level of liquidity of power markets will be essential. Furthermore, shorter settlement times and trading closer to gate closure time (plus the introduction of gate closure), can enable better management of variable generation.
Market operations also have a critical impact on making technical flexibility potential available in practice. Market price signals can be the key incentive to accessing the full flexibility capabilities of existing coal, gas turbine, hydro and PSH generation. Such signals could be provided through: a) the development of a new tariff structure that specifies a performance criterion (ramping), and that addresses the value of coal, gas and hydro; and b) the development of model power purchase agreements for renewable energy that move away from must-run status.
The ongoing retail market reform and separation of the DISCOMs’ retail and distribution activities are targets to ensure retail competition. This competition, if implemented, can bring forward further demand-side innovation and increased demand-side flexibility, especially if coupled with time-of-use price signals. As explained in Chapter 7 on electricity, retail market reform should focus on rationalising pricing structures and methodologies across India and phase out cross-subsidies or indirect subsidies.
Flexibility resources
New CERC regulations have already provided greater coal plant flexibility by reducing minimum operating levels for coal plants, increasing the availability of storage devices through the broadening of ancillary services and reserves, and promoting flexibility from wind and solar plants as well as PSH. CERC guidelines for state-level regulators should provide for the wider application of these regulations, which only are relevant for central plants to date.
Network development and planning co-ordination at state level and enhanced analytical and planning capabilities are indispensable for understanding possible mediumto longterm challenges and developing options in a timely manner. An excellent example of regional co-ordination is the Green Energy Corridors scheme that enables transmission of renewables from regions with high concentrations of renewable energy sources towards high-demand centres. Financing of Phase 3 of the scheme needs to be swiftly approved to ensure sufficient progress for system integration.
In states approaching Phases 3 and Phase 4 of system integration, unlocking the contribution of advanced flexibility measures – such as demand-side response and storage
– becomes crucial, as with the rising deployment of decentralised rooftop solar PVs and EVs more focus will be required on addressing integration issues at the distribution grid level.
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