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Boost to renewable energy: MNRE proposes ‘bundling’ scheme

FE Bureau
renewable energy, MNRE proposes, electricity supply, thermal power, discoms, MNRE, YS Jaganmohan Reddy

In order to provide a leg-up to the renewable energy sector, the ministry of new and renewable energy (MNRE) has come out with a draft framework for a scheme to supply round-the-clock (RTC) power from wind and solar plants. The scheme proposes to sell renewable energy and thermal power together in a 'bundle' so that buyers can get the assurance of receiving firm uninterrupted electricity supply.

The aim of the scheme is to address the issues of intermittency, limited hours of supply and low capacity utilisations of renewable power plants and make them more attractive for state-owned power distribution companies (discoms). MNRE has proposed that under this scheme, a government authorised intermediary agency would carry out auctions where power sellers can quote single composite tariffs for renewable energy-based power combined with one single thermal fuel source (coal or gas). The intermediary agency would then sell the power to discoms. Stakeholders have been asked to provide their feedback on the draft scheme to MNRE by January 16.

The generator is required to supply at least 51% of electricity sold under this scheme from renewable sources. The proportion of thermal tariff shall be adjusted to cover the possible changes in coal or gas prices. The composite tariff would consist of 51% renewable energy tariff, 30% thermal fuel cost and the remaining would account for fixed thermal tariff. Renewable power may include a combination of solar, wind, small hydro with or without any energy storage system. The renewable energy component bought under this scheme shall be eligible for complying with renewable purchase obligation (RPO) norms.

In order to manage the infirm nature of renewable power, discoms have to procure balancing electricity for stabilising the grid and to meet their requirements when the sun doesn't shine or the wind doesn't blow, raising the power procurement cost for these cash-strapped entities. The country expects to have an installed renewable capacity of 175 GW by FY22, when daily net load swings are expected to be as high as 80,000 MW.

The scheme has been proposed at a time when renewable energy is being seen as an additional burden for discoms. As pointed out by Andhra Pradesh chief minister YS Jaganmohan Reddy in his letter to Prime Minister Narendra Modi, the effective cost of wind power (contracted at Rs 4.84/unit) was coming to Rs 5.94/unit as the state, under contractual obligation, had to continue paying Rs 1.1/unit fixed cost to thermal power plants even when they were not using this electricity to accommodate renewables.