Innovative solutions to ensure round the clock energy generation, reducing variability in renewable power generation and achieving better grid stability
Innovative solutions to ensure round the clock energy generation, reducing variability in renewable power generation and achieving better grid stability
Business Model Description
Solar-wind hybrid projects, or hybridisation of existing solar and wind plants to allow 24 hour electricity generation (resulting in reduced variability of energy generation), with the rated power capacity (maximum output / generation) of one source of energy to be at least 25% of the rated power capacity of the other source. Such hybrid projects would lead to savings in capital cost (in comparison to cost incurred on standalone solar and wind projects), with improved utilisation of common infrastructure such as land, approach roads and evacuation infrastructure.
Expected Impact
Reduction in carbon emissions by supplementing Renewable Energy production through hybrid methods that can improve grid stability.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- India: Central India
- India: Western India
- India: South India
Sector Classification
Renewable Resources and Alternative Energy
Development need
India ranks 9 in Climate Change Performance Index (3.1) and is one of the most vulnerable countries in the world to global warming.
It is also highly vulnerable to climate-induced natural disasters, that make communities vulnerable based on their socio-economic and geophysical characteristics.
Power generation from renewable energy sources in India reached 101.84 billion units in 2018 and 126.76 billion units in 2019. Going forward, renewable energy is expected to account for ~55% of the total installed power capacity by 2030 (3.3).
Nationwide lockdown created disrupted supply chains across sectors and intensified the urgency for India to become self-sufficient to meet its energy needs and reduce its dependency on import of crude oil for generation of electricity, as well as transport facilities consumption.
Policy priority
India plans to add 30 GW of renewable energy capacity along the desert region on its western border, covering the states of Gujarat and Rajasthan.
The Delhi government has decided to shut down the thermal power plant in Rajghat and plans to develop it into a 5,000 KW solar park.
A new Hydropower policy for 2018-28 has been drafted for the growth of hydro projects in the country.
The Government of India has announced plans to implement a USD 238 million National Mission on advanced ultra-supercritical technologies for cleaner coal utilisation.
Gender inequalities and marginalization issues
As per SDG India Index report by Niti Aayog (3.2a), 99.99% (3.2b) households have access to electricity and 17 States and all UTs (except Lakshadweep) had shown substantial progress in respect to achieving SDG 7 (Affordable and Clean Energy), resulting in a cumulative score of 70 on 100 for India for SDG 7.
Women benefit from clean energy used for cooking as it helps them save the time spent gathering dirty fuels such as firewood or cow dung, and reduces exposure to indoor air pollution (responsible for 3.8 million premature deaths a year). (8.34)
Investment opportunities introduction
The Government of India (GoI) has set a target to achieve renewable energy capacity of 175 GW by 2022 and 450 GW by 2030. As of 30 April 2020, India’s installed RE capacity stands at 87.26 GW (3.7), which includes 34.81 GW of solar, 37.74 GW of wind, 9.86 GW of biomass and 4.68 GW of small hydro. To achieve its target of 175 GW of renewable energy capacity by 2022, the government has estimated an additional investment requirement of USD 100 billion over the course of the next 3 years (3.8), which would require increased capital inflow from both Indian and international investors. As per Foreign Direct Investment (FDI) Policy, up to 100% FDI is allowed under the automatic route for renewable energy generation and distribution projects subject to provisions of The Electricity Act, 2003 (3.9).
Key investment deals in Indian RE sector amounted to USD 8.4 billion (3.10), of which 48% was in generalised renewable energy, 41% was in solar, 10% was in wind, while 1% was for storage or solar pumps.
Key bottlenecks introduction
In India, power demand has reduced by 25-30%. This decline in demand coupled with reduced collection of payments and slow economic recovery will adversely impact already stressed Distribution Companies (DISCOMS) by creating a cash gap of approximately USD 5 billion. (3.12)
Alternative Energy
Development need
India's Total Primary Energy Demand (TPED) is expected to grow by 63% by 2030. Concomitantly, India's contribution to the world's energy-related total CO2 emission is expected to rise from 6.7% to 10.6%. Therefore, achieving low-carbon energy security is critical for India. (3.2a) This can be achieved through greater adoption of renewable energy-based sources of electricity, as well as increase in the usage of electricity-based vehicles since as much as two thirds of deaths from air pollution in India can be attributed to exhaust emissions from diesel vehicles, responsible for nearly 385,000 deaths in 2015. (3.3)
India appears to be lagging behind on its targets for SDG 13 (Climate Action) with a score of 60 on 100, due to its dependence on coal resources for energy consumption, which still accounts for about 57% of electricity generation. Moreover, ~75% of India’s electricity is generated from fossil fuels, and the power sector is responsible for half of India’s CO2 emissions. (3.4)
Solar and Wind represent 90% of the country's capacity growth, which is the result of auctions for contracts to develop power-generation capacity that have yielded some of the world's lowest prices for both technologies. There is a need to innovate models that can harness the different sources of energy available in India with the potential to contribute to the overall energy mix and replace dependence on fossil fuels. (3.5)
Policy priority
The Rajasthan government in its Budget 2019-20 exempted solar energy from electricity duty and focuses on the utilization of solar power in its agriculture and public health sectors.
The Ministry of New and Renewable Energy (MNRE) has decided to provide custom and excise duty benefits to the solar rooftop sector, which in turn will lower the cost of setting up as well as generating power, thus boosting growth.
The Indian Railways is making increased efforts through sustained energy efficient measures and maximum use of clean fuel to cut down emission levels by 33% by 2030. The Indian Railways plan to generate 500 MW energy through roof-top solar panels and so far, 100 MW of solar plants have already been commissioned on roof-tops of various buildings, including 900 railway stations. (3.11)
Gender inequalities and marginalization issues
Electricity being a key ingredient for any modern production infrastructure, gaps in energy supply often act as a barrier to productive investments in rural and semi-urban areas. Distributed renewable energy and cleantech solutions can effectively bridge such energy gaps in an environment-friendly way. This facilitates local value addition by creating more productive investment opportunities, specifically in micro enterprises, while also creating demand for skilled and semi-skilled manpower. (3.13) Making such shifts will align with COVID-19 measures announced by GoI to spur growth of MSMEs to improve domestic manufacturing and production capacities.
Investment opportunities introduction
The Government of India (GoI) has set a target to achieve renewable energy capacity of 175 GW by 2022 and 450 GW by 2030. As of 30 April 2020, India’s installed RE capacity stands at 87.26 GW (3.7), which includes 34.81 GW of solar, 37.74 GW of wind, 9.86 GW of biomass and 4.68 GW of small hydro. To achieve its target of 175 GW of renewable energy capacity by 2022, the government has estimated an additional investment requirement of USD 100 billion over the course of the next 3 years (3.8), which would require increased capital inflow from both Indian and international investors. As per Foreign Direct Investment (FDI) Policy, up to 100% FDI is allowed under the automatic route for renewable energy generation and distribution projects subject to provisions of The Electricity Act, 2003 (3.9).
Key investment deals in Indian RE sector amounted to USD 8.4 billion (3.10), of which 48% was in generalised renewable energy, 41% was in solar, 10% was in wind, while 1% was for storage or solar pumps.
Key bottlenecks introduction
Lack of financing for Renewable Energy Service Company (RESCO) firms, despite financial incentives being offered by the Indian policy and regulatory ecosystem. (8.31)
Solar Technology and Project Developers
Pipeline Opportunity
Innovative solutions to ensure round the clock energy generation, reducing variability in renewable power generation and achieving better grid stability
Solar-wind hybrid projects, or hybridisation of existing solar and wind plants to allow 24 hour electricity generation (resulting in reduced variability of energy generation), with the rated power capacity (maximum output / generation) of one source of energy to be at least 25% of the rated power capacity of the other source. Such hybrid projects would lead to savings in capital cost (in comparison to cost incurred on standalone solar and wind projects), with improved utilisation of common infrastructure such as land, approach roads and evacuation infrastructure.
Business Case
Market Size and Environment
> USD 1 billion
10GW is under construction or being tendered.
The Global Wind Solar Hybrid (WSH) Energy Storage Market is set to grow from its current market value of more than USD 1 billion to over USD 1.5 billion by 2024. (11.7)
India has ~100 MW of hybrid facilities at present, and ~15 GW of combined wind and solar capacity is expected to be installed by 2025. As of June 2020, around 10 GW of project capacity is already under construction or being tendered, and will start feeding the grid by 2024. (11.8)
Not only is reliability enhanced via a WSH system, but the size of battery storage is also significantly reduced which makes logistics more feasible. Based on an analysis of all the factors that may influence the global WSH system market, the market is projected to expand robustly between 2016 to 2023. (11.10)
Indicative Return
15% - 20%
WSH projects would lead to savings in capital cost (about 7-10% in capital investments in comparison to standalone solar / wind projects) (11.5), with improved utilisation of common infrastructure (land, approach roads and evacuation infrastructure). (11.1)
WSH assets are expected to operate at higher debt coverage metrics (compared to a standalone wind or solar plant), achieve savings in operating cost and incur a lower cost for complying with the forecasting and scheduling regulations, which would further boost the returns for the developers.
Thus, the IRR for a WSH plant is higher by ~10% (compared to IRRs for standalone solar or wind projects which are estimated to be 9-11% [11.6]), with other factors (like funding structure, cost of debt, power purchase agreement terms and operation and maintenance cost) remaining the same. (11.1)
Investment Timeframe
Long Term (10+ years)
Such projects generally have an operating life of approximately 25 years based on PPAs issued. (11.11)
Market Risks & Scale Obstacles
Business - Business Model Unproven
Capital - Limited Investor Interest
Fragmented market ecosystem
Impact Case
Sustainable Development Need
Neither solar, nor wind-based power plants can generate electricity round the clock. However, hybridisation of solar and wind technologies would help in minimising the variability in energy generation, leading to high grid stability. (11.1)
WSH (Wind Solar Hybrid) systems provide round-the-clock power solutions since the batteries connected to them are able to efficiently, store energy and provide a backup at the time of an electricity outage, or during the night. (11.2)
Individually, Plant Load Factor (PLF) for a wind plant is ~28%, while that for a solar plant is ~18.7%. Thus, the total PLF for a WSH project would be ~41.8%. (11.3)
Hybridisation of the wind and solar assets is likely to lower the capital cost by 5-7% compared to the cost of standalone wind and solar assets, thus improving the returns for developers. (11.4)
COVID-19 has further underscored the need for India to become self-sufficient in its energy consumption and thus, moving towards renewable sources of energy for electricity production.
Gender & Marginalisation
Electricity being a key ingredient for any modern production infrastructure, gaps in energy supply often act as a barrier to productive investments in rural and semi-urban areas. Distributed renewable energy and cleantech solutions can effectively bridge such energy gaps in an environment-friendly way. This facilitates local value addition by creating more productive investment opportunities, specifically in micro enterprises, while also creating demand for skilled and semi-skilled manpower. (3.13) Making such shifts will align with COVID-19 measures announced by GoI to spur growth of MSMEs to improve domestic manufacturing and production capacities. Women benefit from clean energy used for cooking as it helps them save the time spent gathering dirty fuels such as firewood or cow dung, and reduces exposure to indoor air pollution (responsible for 3.8 million premature deaths a year). (8.34)
Expected Development Outcome
Improve returns with round the clock energy generation, reduced variability (in energy generation) and improved PLFs. (11.3) Reduce capital costs in comparison to cost incurred in standalone solar or wind projects (11.1)
Improve efficiency (compared to standalone plants) by achieving maximum power injected into the transmission line and maximising the utilisation of the evacuation capacity.
Increase reliability of energy supply for commercial and residential users Reduced carbon footprint through increased use of renewable energy sources for power generation
Gender & Marginalisation
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
7.3.1 Energy intensity measured in terms of primary energy and GDP
13.2.1 Number of countries with nationally determined contributions, long-term strategies, national adaptation plans, strategies as reported in adaptation communications and national communications
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Public sector
Indirectly impacted stakeholders
Planet
Corporates
Outcome Risks
Technical challenges in integrating the two-generation sources and setting up systems to manage the generation from wind and solar resources may be a challenge for developers to deal with.
Impact Classification
What
Provide round the clock production of clean energy based power, reduce carbon footprint, improve the efficacy of usage of transmission infrastructure and land, attaining better grid stability.
Risk
Technical challenges in integrating the two generation sources and setting up systems to manage the generation from wind and solar resources, may be a challenge for developers to deal with.
Impact Thesis
Reduction in carbon emissions by supplementing Renewable Energy production through hybrid methods that can improve grid stability.
Enabling Environment
Policy Environment
Budget 2020-21 proposed USD 3.11 billion for the power and renewable energy sector. (8.23)
India's “National Wind-Solar Hybrid Policy”, introduced by the Ministry of New and Renewable Energy (MNRE) in 2018, aims at optimising and improving the efficacy of the usage of transmission infrastructure and land, which in turn will mitigate inconsistencies associated with the generation of renewable power and help in attaining better grid stability and stimulate the development of solutions and technological advancements in the field of wind-solar hybrid power generation. (11.12 and 11.5)
In 2019, Solar Energy Corporation of India (SECI) issued a request for selection (RfS) document for the development of WSH projects (Tranche-I) under which letters of award (LoA) were issued for 840 MW capacity. RfS for Tranche-II was issued in March 2019. (11.5)
GoI launched a160 MW solar-wind-BESS (battery energy storage systems) hybrid Project at Ramagiri, Andhra Pradesh - As an initiative for promoting innovation in renewable energy, SECI is developing a 160 MW of solar-wind hybrid power plant with battery storage in Andhra Pradesh, with World Bank financing. The project site has been identified and the required land is under acquisition. Techno-commercial feasibility assessments of the project have been undertaken. Framework PPA has been signed between Andhra Pradesh DISCOM and SECI. RfS for selection of Engineering, procurement and construction (EPC) contractor has been issued in August, 2018 and bids are under evaluation. (11.5)
WSH has received strong support from the central public sector undertaking SECI and several state governments. SECI intends to set up 5 GW of solar and wind projects with storage under the EPC mode over the next 10 years, adding to the country’s total of 37.69 GW of wind energy capacity and 35 GW of solar capacity as of fiscal 2020. (11.13)
Among the states, Andhra Pradesh formulated a Wind-Solar Hybrid Power Policy in 2018 and has set a 5 GW generation target from WSH projects by 2022. Other windy states such as Gujarat and Maharashtra have also identified land parcels to develop WSH projects. (11.13)
Financial Environment
Financial incentives: The GOI has announced a capital subsidy of 1,324 per kW to encourage the installation of wind–solar systems. Out of the total annual budget, a minimum 10% of the allocation is to be utilised for research and development (R&D) purposes. A budget of USD 7 million has been allocated under the scheme for the development of the sector. (11.9)
Other incentives: Decreasing solar and wind component cost coupled with increasing demand for clean fuel energy will further complement industry growth. With advancements in technology, the manufacturing costs of solar panels, wind turbines, wind blades and batteries have witnessed a significant price drop since 2012. (11.9) MNRE has proposed a draft policy to install solar wind system of 10 GW by 2022 which will favour industry growth. Low cost financing for hybrid solar wind projects have also been introduced by the financial institution and Indian Renewable Energy Development Agency. (11.9) In 2016, India introduced the National Wind-Solar Hybrid Policy to achieve installations of 10 GW hybrid by 2022. The country also announced to invest USD 155 million to construct a 160 MW WSH project. (11.15) As per MNRE's Annual Report 2018-19, Wind-Solar hybrid projects of 840 MW were auctioned through transparent competitive bidding by SECI, with discovered minimum tariff for hybrid projects at Rs.2.67/unit. (11.5)
Regulatory Environment
The MNRE is in charge of the development of solar, wind and other renewables in India. Under the MNRE are the National Institute of Solar Energy, the National Institute of Wind Energy and the Indian Renewable Energy Development Agency (IREDA), which functions as a non-banking financial institution providing loans for renewable energy and energy efficiency projects. (11.14) In October 2019, MNRE issued the Draft Guidelines - “Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Solar Hybrid Projects” - under the National Wind-Solar Hybrid Policy. The Guidelines provide a framework for the promotion of large grid-connected wind-solar PV hybrid systems for optimal and efficient utilisation of transmission infrastructure and land, reducing the variability in renewable power generation and achieving better grid stability. (11.11) In January this year, SECI invited bids for 1.2 GW wind-solar hybrid capacity under its Tranche-III tender for RE projects. (11.13)
Marketplace Participants
Private Sector
Investors: Softbank, EverSource Capital Group. Corporations: Origin Renewables Private Limited, include developers like Adani Green Energy Limited and ReNew Power, Hero Future Energies.
Non-Profit
The Indian Wind Power Association (IWPA) was set up in 1996 as a non-profit organization. The Association, which began with 21 members, now has 1,570 members spread all over India.
Target Locations
India: Central India
India: Western India
India: South India
References
- (3.1 https://www.climate-change-performance-index.org/country/india#:~:text=Donate-,India,Emissions%20and%20Energy%20Use%20categories. "3.2a https://niti.gov.in/sites/default/files/2019-12/SDG-India-Index-2.0_27-Dec.pdf 3.2b https://saubhagya.gov.in/" 3.3 https://www.ibef.org/industry/renewable-energy-presentation 3.4 https://www.carbonbrief.org/analysis-indias-co2-emissions-growth-poised-to-slow-sharply-in-2019 3.5 https://energy.economictimes.indiatimes.com/energy-speak/the-future-of-renewable-energy-in-india/3016 3.6 https://inc42.com/resources/electric-vehicles-the-segment-of-choice-to-invest-in-2020/ 3.7 https://www.ibef.org/industry/renewable-energy.aspx 3.8 https://energy.economictimes.indiatimes.com/news/renewable/another-100-billion-investment-required-to-meet-175-gw-re-target-MNRE-secy/73806002 3.9 https://www.investindia.gov.in/foreign-direct-investment 3.10 https://psuwatch.com/india-36-gw-renewable-energy-target-450-gw-2030-ieefa 3.11 https://www.livemint.com/news/india/train-journeys-could-leave-zero-carbon-footprint-by-2030-here-s-how-11594684996911.html 3.12 https://energy.economictimes.indiatimes.com/energy-speak/renewable-energy-new-normal-and-impact-of-covid-19/4167#:~:text=are%20being%20observed.-,In%20India%2C%20at%20present%20power%20demand%20has%20reduced%20by%2025,40%2C000%20cr. 3.13 https://energy.economictimes.indiatimes.com/news/renewable/covid-19-re-look-clean-energy-for-resilient-india/75299079
- (11.1 https://www.eqmagpro.com/wind-solar-hybrid-systems-may-raise-project-irr-by-upto-10-percent/ 11.2 https://solartechnologies.com/advantages-disadvantages-hybrid-solar-energy-systems/#:~:text=1.,inverter%20to%20provide%20you%20backup. 11.3 https://www.pv-tech.org/editors-blog/hero-launches-indias-first-solar-wind-hybrid-project#:~:text=Not%20only%20does%20this%20smooth,the%20solar%20PLF%20is%2018.7%25. 11.4 https://energy.economictimes.indiatimes.com/news/renewable/hybrid-wind-solar-assets-may-lower-capital-costs-by-5-7-study/65756328 11.5 https://MNRE.gov.in/img/documents/uploads/0ce0bba7b9f24b32aed4d89265d6b067.pdf 11.6 https://www.financialexpress.com/economy/government-estimates-9-11-per-cent-irr-for-renewable-projects/1030770/#:~:text=far%20this%20fiscal-,The%20ministry%20of%20new%20and%20renewable%20energy%20has%20proposed%20internal,said%20in%20a%20draft%20report. 11.7 https://www.evwind.es/2018/08/17/hybrid-solar-wind-energy-storage-market-size-set-for-continued-growth-over-2024/64246 11.8 https://www.pv-magazine.com/2020/06/11/india-set-to-add-15-gw-of-wind-solar-hybrid-capacity-in-five-years/ 11.9 https://www.gminsights.com/industry-analysis/hybrid-solar-wind-market 11.10 https://www.transparencymarketresearch.com/solar-wind-hybrid-system-market.html 11.11 https://www.saurenergy.com/solar-energy-news/seci-issues-rfs-for-1200-mw-wind-solar-hybrid-projects#:~:text=SECI%20shall%20enter%20into%20PPA,entire%20term%20of%2025%20years. 11.12 https://economictimes.indiatimes.com/small-biz/productline/power-generation/decoding-the-national-wind-solar-hybrid-policy/articleshow/71742000.cms?from=mdr 11.13 https://www.saurenergy.com/solar-energy-news/india-to-add-15-gw-of-wind-solar-hybrid-power-over-next-5-years-crisil 11.14 https://niti.gov.in/sites/default/files/2020-01/IEA-India%202020-In-depth-EnergyPolicy_0.pdf 11.15 https://www.evwind.es/2018/08/17/hybrid-solar-wind-energy-storage-market-size-set-for-continued-growth-over-2024/64246 11.16 https://www.financialexpress.com/infrastructure/modis-ambitious-wind-solar-hybrid-projects-witness-a-slow-beginning/1734535/#:~:text=Wind%2Dsolar%20hybrid%20projects%20were,175%20MW%20capacity%20by%202022.&text=The%20tepid%20response%20to%20the,2%2C500%20MW%20to%201%2C200%20MW. 11.17 https://solartechnologies.com/advantages-disadvantages-hybrid-solar-energy-systems/