The physical manifestations of climate change are increasingly visible across the globe, and India is not untouched. More than 50% of India’s population is now living in areas categorized as hotspots for extreme climate events. Acknowledging this fact, India has set ambitious targets and is taking bold measures to address the risks. At COP26, India set out its plan to help slow down and halt global warming, with a 2070 net-zero target. India now aims “To put forward and further propagate a healthy and sustainable way of living based on traditions and values of conservation and moderation, including through a mass movement for ‘LIFE’– ‘Lifestyle for Environment’ as a key to combat climate change”. As per the revised NDC targets (Aug-22) India will reduce the Emissions Intensity of its GDP by 45% by 2030, from the 2005 level, and achieve about 50% cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030. To meet these targets huge expansion of India’s RE capacity as well as transmission capacity will be required. Solar capacity worth 260GW and wind capacity worth 107 GW need to be created by 2030. It is estimated that the total fund requirement for the period 2022-2027 is estimated to be Rs 14.31 trillion, whereas the total fund requirement
for the period 2027-2032 has been estimated to be Rs 17.16 trillion.
To meet these future electricity requirements, demand assessment is an essential prerequisite for the planning of generation, capacity addition, and corresponding transmission and distribution system. Accurate planning of capacity addition for the future is primarily dependent on an accurate assessment of future electricity demand. Central Electricity Authority (CEA) prepares National Electricity Plan (henceforth called NEP) following the National Electricity Policy and notifies such Plan once in five years. The draft NEP 2022 includes detailed capacity addition requirements during the years 2022-27 and perspective plan projections for the years 2027-32. As per the projections made the capacity requirements for the FY26-27 and FY31-32 have been pegged at 623GW and 865GW respectively. Corresponding electrical demand has been projected at 1874 BUs and 2538 BUs respectively.
The projected electrical energy requirement and peak electricity demand on all-India basis is estimated as 1,874 BU and 272 GW for year 2026-27 and 2,538 BU and 363 GW for year 2031-32 respectively. Under construction plants comprising 25,950 MW of thermal power plants, 10,903 MW of hydro power plants, 1,580 MW of pumped storage plants and 7,000 MW of nuclear power plants have been considered for the studies during period of 2022-27. Additionally, a likely capacity of 8,700 MW of nuclear power plants, which are at under various stages of construction (or in advanced stages of development) are likely to benefit during period 2027-32. The retirement for period 2022-27 has been considered as 4,629 MW.
The capacity addition required during 2027-32 to meet the peak demand and energy requirement for the year 2031-32 is 243,042 MW comprising 18,134 MW of conventional capacity addition (coal 9,434 MW, nuclear 8,700 MW) and 224,908 MW of renewable based capacity addition (large hydro 10,888 MW, solar 147,400 MW, wind 53,100 (onshore- 43,100 MW and offshore 10,000 MW), biomass 1,500 MW, PSP 12,020 MW) excluding 5,856 MW of likely hydro based imports. All India installed capacity is likely to be 622,899 MW at the end of year 2026-27 and 865,941 MW at the end of year 2031-32. It is seen that apart from under construction coal-based capacity of 25GW, the additional coal-based capacity required till 2031-32 may vary from 17 GW to around 28 GW. It is also seen that the BESS (5-hour) requirement in 2031-32 is varying from 51 GW to 84 GW (based on the scenario considered).
Renewable purchase obligation (RPO)
The RPO regime in India started in 2011 with the announcement of Benchmark RPO hence coming a long way since its introduction. In July’22, the Ministry of Power (MoP) issued Renewable Purchase Obligation (RPO) and energy storage obligation trajectory till 2029-30. According to this order, the total prescribed RPO will progressively increase from 24.61% in 2022-23 to 43.33% by 2029-30. This includes Wind RPO, Hydropower Purchase Obligations (HPO), and other RPOs.
The MoP has stated that wind RPO will only be satisfied by energy generated by wind power projects that are operational after March 31, 2022. The HPO will only be fulfilled by electricity generated by large hydro projects, including pumped hydro, that is operational after March 8, 2019, and continue until March 31, 2030. Other RPOs can be satisfied using electricity generated by any renewable energy generating plant other than wind and hydro. Imported hydropower will not be counted toward HPO compliance. Any deficit in meeting other RPO each year can be made up for the extra energy utilized by wind power plants completed after March 31, 2022. The energy storage obligation will be calculated in energy terms as a proportion of total electricity consumption and will be regarded as satisfied only when at least 85% of the total energy stored in the energy storage system is obtained from renewable energy sources each year. For energy storage, which has been introduced, the targets will increase from 1 % during 2023-24 to 4%by 2029-30.
Penalty for non-compliance of RPO
At present, there is no penalty imposed on the non-fulfilment of RPO but as per the changes proposed in the Electricity Act (Amendment Bill) 2022, fulfillment of RPO Trajectory prepared by MoP has been made compulsory by the distribution authority and in case of obligated entity (distribution licensees) has not complied the RPO specified, the penalty for the shortfall in the purchase would be as follows:
- The first year of Default: 25 P/kWh< Penalty < 35 P/kWh
- During the subsequent year of Default: 35 P/kWh< Penalty < 50 P/kWh
Correlating the NEP projections and RPO requirements
Correlating the projected capacity and demand with the RPO obligation for the year 29-30 (table 3) shows that through generation available from Hydro and Wind would be sufficient to meet the HPO and Wind RPO, Other RPOs (including Solar Biomass, Excess Hydro & Wind generation) may not be met and will fall short of the obligation by about 3%.
Further studying the regional distribution of RE generation at present and the capacity addition anticipated, it is observed that though RE Capacity and its allocation will be more than sufficient in some states, states where either the power requirement is large or the potential of the RE sources is limited (particularly Eastern and some western states, see Table – 5), will not be able to meet the RPO. This leads us to the important question that whether such states will have access to sufficient inter regional transmission capacity to import the RE power from other regions.
Analyzing the projection made in NEP, it is observed that the Eastern region will need to import around 10 GW of RE power from other regions to meet its RPO. Comparing it with the projections for inter-regional transmission capacity for 29-30 shows that the inter-regional transmission capacity will be sufficient to fulfill the RPO of the eastern region. A state-wise RE power availability as of Nov’22 is presented in Table 6 which shows the key RE deficient states.
- If the capacity addition in the RE segment is achieved as projected by NEP 2022, the RPO obligation trajectory will be fulfilled up to 40% as against the target of 43.33%.
- The Solar Capacity addition of about 33 GW/Year will be required to reach the capacity of 260 GW by FY 29-30 from the present capacity of 54 GW. This asking rate is more than three times the best-achieved capacity addition rate of 10 GW/yr., which is difficult to achieve. Global Solar capacity is also expected to increase at a similar rate as per the projection made by IEA and hence supply-side constraints are expected for domestic solar capacity addition. RPO fulfilment will therefore depend a lot on the success of the solar PLI scheme introduced by the Government of India.
- The Nuclear capacity presently under construction is 4.6 GW, which is most likely to be commissioned by FY 26-27, further nuclear capacity is expected to come from plants accorded Administrative Approval and Financial Sanction but for which construction is yet to be started. Considering the gestation period of the nuclear power plant, not all this capacity may get commissioned and hence this capacity must be created by other non-fossil sources, which will require further higher capacity addition in Solar and Wind.
- Transmission constraints are also becoming a major hurdle for the power evacuation from the RE projects, hence parallel augmentation of evacuation as well as inter-regional transmission capacity must also be ensured.
Sachin Dubey is a Deputy General Manager at NTPC. He is a Mechanical Engineer from Jabalpur Engineering College. He has more than fifteen years of experience in the power sector covering Project Management, Strategic Planning and Risk Management.
Sitesh Barche is a Senior Manager at NTPC. He is a Mechanical Engineer from National institute of technology, Calicut. He has more than twelve years of experience in the power sector covering Project Management and Strategy & Analytics.