Gas power can partner and integrate more renewables into the national grid. It can meet seasonal and peak power demand
The global energy system is transforming at a scale and pace never experienced before. The recent announcements by Prime Minister Narendra Modi during the COP26 summit will usher in a new investment climate within the country. Targeting net-zero emission by 2070, and reaching 500 GW of non-fossil fuel capacity and fulfilling 50 per cent of energy requirement from renewable energy by 2030 would require development of robust infrastructure.
The idea is to move towards a more resilient energy future that is self-sustaining and dynamically able to shift to meet the supply-demand gap.
Technically, increasing penetration of wind and solar will make the Indian grid susceptible to complexities of frequency and voltage fluctuations. This will happen due to unanticipated sudden loss of power generation, leading to reduced system inertia. These natural and anthropogenic events may also lead to grid instability and blackouts.
Given the nature of each technology (viz. solar, wind, gas, coal) and the dynamic power supply and demand situation, it is prudent for grid operators to identify the correct technology that will help manage the grid and support their long-term needs. According to IEA, India has a higher requirement for flexibility in its power system than almost any other country in the world.
At the global level, decarbonising the power sector is among the foremost priorities for nations in the walk towards net-zero. India must take this transition in a smooth, reliable and affordable manner.
In India, as of 2020, around 60 per cent of the power generation was from coal power plants. From an environmental, technological and economic standpoint, new coal additions look unsustainable. The governments around the world have realised this and are deciding against any big investments in building new coal-based power plants, while marching towards meeting their respective emission reduction commitments.
However, closer home, some of the policy actions continue to promote high carbon emitting fuel types for power generation and turn a blind eye to the benefits of gas power. For example, as per draft NEP (National Electricity Policy) 2021, new coal power plants will continue to be added and deadlines for coal plants to comply with emission norms will be pushed forward.
Even in a forward looking tender like Round-the-Clock (RTC) power, coal is still the first choice and the evaluation is one dimensional taking only the weighted average tariff as the criteria. The environmental and systemic attributes of technology like ramp rates, turn-down, etc., are not considered. To ensure a successful renewable transition, wind and solar need a right partner, which can offset their disadvantages and help in the smooth operation of the grid. Gas-based power generation is perfectly suitable in this situation.
It has been a lost decade for gas power, mainly due to questions on availability and affordability of gas. However, the value proposition that gas power is able to offer owing to flexibility, quick start-up, deeper turn down levels and faster ramp rates is a key enabler to integrate more renewables into the national grid and meet seasonal and peak power demand.
Gas turbine technology-based power generation can balance grid and supply power at competitive prices both in standalone generation as well as when bundled with RE power.
Green hydrogen is attracting a lot of interest lately and there is a strong push to bring down its cost of generation and make it affordable. It’s encouraging to see that the government aims to increase the share of natural gas in the country’s primary mix from 6 per cent to 15 per cent by 2030. Investments in building gas pipeline network and new gas import facilities to link all States with the currently operational six gas terminals will address the availability concerns.
In the short term, there are a few key issues which need to be addressed:
Shorter PPA (power purchase agreement) term aligning gas contracts is needed to enable gas power plant developers to procure gas at reasonable prices. Gas contracts today are not available for a 25-year horizon, and going for long-term contracts risks the build-up of more uncertainty in the pricing which impacts the final cost of electricity.
It would be reasonable to link CERC escalation index, to reflect market and benchmark, with least volatile sources like Henry Hub.
Gas infrastructure is available and underutilised. It would be encouraging if regulatory and policy interventions can help incentivise utilisation of this infrastructure.
Gas-based hybrid power plants may just be an apt technological solution to aid and accelerate India’s renewable energy transition. These two seemingly dissimilar technologies may just have in them the most complementing characteristics which can continue to support the grid in its operations while continuing to significantly decarbonise the sector and provide electricity at an affordable price.
The writer is CEO, GE Gas Power South Asia