Renewable energy problems in India – emerging Kashmir

Solar, wind and other forms of renewable energy (RES), excluding hydro and nuclear, accounted for 30 percent of total generating capacity and about 14 percent of total energy generated in 2022-23. RE was the second largest after coal in terms of both generating capacity and power generation. The share of renewable capacity and power generation is expected to increase exponentially in the coming decades. The media and academia are portraying this shift away from coal towards renewable energy sources for power generation as a transition to a cheaper system that will reduce and ultimately eliminate emissions of coal and other local pollutants, and will also serve as a means to lower electricity rates and renew India’s power companies (distribution companies or discoms). The basic argument is that when Discoms replace expensive long-term power purchase agreements (PPAs) for coal-based power with short-term, flexible and cheap PPAs for electricity generated from renewable sources, they will not only lower the electricity tariff to the benefit of consumers but also erase financial problems of Discoms. The fundamental economics of electricity and market-oriented restructuring efforts of Discoms may challenge these expectations. The economics of electricity are shaped by the laws of physics. The laws of electromagnetism that describe the physics of electricity generation limit its storage, transmission and flexibility. Because storage and flexibility (available in the form of primary energy such as oil) are complex, electricity must be viewed as a heterogeneous good in time and space. Put simply, this means that you cannot say that “electricity is electricity” in the same way that we would say that “milk is milk”. In India, electricity generated during peak demand hours, i.e. 6 a.m. or 6 p.m., is more valuable than electricity generated at 12 p.m. or 12 p.m., when demand is low. Electricity produced by solar panels in Delhi, which is a large and concentrated load center, has a different value than electricity produced by similar solar panels in the desert of Rajasthan. In both cases, the short-run marginal cost of electricity generated is close to zero, but the marginal value of electricity generated in Delhi is much higher. A current that can be turned on and off at will has a greater value than a current that cannot be easily turned on and off. The same applies to the mining part, where different primary sources such as coal and solar produce different commodities with different heterogeneity and marginal value. These attributes are not taken into account when assessing the relative merits of electricity with different marginal values ​​and costs. This contributes to the narrative that the transition to a low-carbon economy is also a transition to a low-cost system. If renewable energy developers rely solely on market forces to recover all of their costs, there is a high probability that they will lose money. The case of decentralized (off-grid) solar power generation projects operating in rural India supports this claim. Even if the project receives equity financing in the form of grants or aid, the rate for stand-alone solar with storage is comparable to or higher than the rate for diesel-generated power. The village of Dharnai in Bihar’s Jehanabad district was declared energy independent in 2014, when a 100 kW (kilowatt) solar microgrid project by Green Peace began providing electricity to over 2,000 villagers. Today, the power plant is a “makeshift” cattle shed. The solar microgrid introduced in the remote Sundarbans islands by the West Bengal government in collaboration with the private sector a decade ago was hailed as an example for the rest of the country a decade ago and has now been abandoned. In both cases, most poor rural households switched to reliable and convenient grid electricity. The poor economics of standalone solar projects that lack the backing of grid electricity or financial aid strength, and the economics of the poor who place greater importance on convenience and cost, explain why less than 3 percent of operating solar projects in India are off-grid. network. Grid-connected projects use a system designed for conventional energy that has enough capacity to meet the highest (peak) demand and is also flexible enough to vary generating capacity in response to changes in demand. The fate of off-grid renewable energy projects suggests that switching to low-carbon electricity is not a step towards a cheaper system. It also shows that recovering the additional costs associated with renewable energy systems from the taxpayer or payer (electricity consumer) is likely to be difficult in India. In Europe and California, where the share of renewable energy is high, higher costs are passed on to consumers’ bills, which rise even as wholesale prices fall. This has led to a gap between market prices and underlying costs and a gap between wholesale market prices and consumer prices.