The announcement on June 23 of a partnership between SoftBank, Airtel and Foxconn for investing $20 billion in India for solar and renewable energy projects is welcome news. Tens of gigawatts of solar and wind generation will augment today’s electricity supply. The investment will also be used to manufacture solar panels.
As renewables percentage in the generation mix rises, thanks to large-scale solar projects and distributed generation, the grid experiences sudden drop in supply as the sun sets. As a result, the loads during evenings have to be met using quick-ramping power plants, typically gas-fired. This phenomenon, called the “duck curve”, was first noticed in California. It is so called because of the peculiar shape of the load profile resembling the neck of a duck, resulting from a sharp drop in supply at sunset.
While solar deployments increase the average electricity supply, shortages arise at certain hours that have to be met by conventional, fossil-fuel based power plants, for which new investments are necessary. Such generation is also expensive since the generation plant is used only for a short time. Moreover, such plants defeat the very value proposition of clean, solar projects.
One way to overcome this need to build conventional power plants is to deploy storage in the grid, typically batteries and occasionally fly-wheels. Storage systems enable quick ramp-up of supply at sunset, but are costly.
Microgrids complement the grid
Yet, a way, not typically discussed, would be to deploy solar panels as a part of microgrids. With microgrids, the resilience in supply can be achieved through a clustering of microgrids, each with complementary assets some with more wind, some in proximity to rivers, some with plenty of surface for solar panels and some with battery banks shared with other microgrids.
In other words, a federation of microgrids can achieve stable electricity supply at lower cost without the existing megagrid as back up or as an anchor of last resort. The topology of the future electricity grid might be as a honeycomb, as in cellular telephone systems, or as fractals. Today, little research addresses novel electricity topologies, and, thus, presents opportunities for cutting-edge innovation.
Relying on the research of countries such as the US will not do; their use scenarios, for example, jails, military bases, high-rise buildings, are distinct from India’s. India needs microgrids for electricity access at the lowest cost and not as a supplement during emergencies such as snowstorms and hurricanes. The UN’s SE4ALL programme and the World Bank’s work is helpful advocacy, but insufficient. India needs scalable, investment-grade project definitions and an execution oriented approach.
Microgrid economics
What about the economics of individual microgrids, as standalone systems first, before clustering them? IIM Kozhikode students, with engineering and finance training, developed a techno-financial model of our campus as a 2 Mw microgrid comprising solar panels, batteries and diesel generators. We used internet-derived pricing data for hardware and the campus’ historical load profile. Our conclusion: The price/unit is Rs 11 and lower, depending on financing assumptions.
Over 300 million Indians, and 1.3 billion people around the world, pay many times more when they burn kerosene or wood for light or cooking. And, this price is lower than today’s diesel-based generation at Rs 15+/unit. But isn’t this higher than today’s grid electricity price? It is, for now. Whereas the price/unit of coal-based electricity will rise over time, solar and battery systems prices will fall with scale economics and technical advance.
Further, today’s grid electricity is subsidised, delivered over a loss and theft prone system (over 30 per cent in some cases), and excludes the cost of emissions. Microgrids are greener and cleaner. Complementary microgrid clusters also lower costs through resource sharing and Demand Side Management (DSM), which controls peak hour loads.
What do we do?
India’s public policy must include microgrids as an intrinsically future-friendly solution that defers or avoids fossil fuel investments, in addition to offsetting the “duck curve” phenomenon. Today, no microgrids, unlike Solar Home Systems (SHS), are deployed in India.
India needs a few dozen microgrids, 0.5 to 5 Mw each, for different use situations – campuses, hospitals, residential neighbourhoods, shopping malls, office buildings, business parks, enterprise zones and high schools. Their economics and technical performance – with multiple generation sources, control and DSM – need to be publicly available to encourage business investments.
Microgrids extend the reach of electricity to millions without access to grid power; complement SHS; offset load in congested areas, on campuses, hospitals and; help with grid stability as renewables proportion increases in the generation mix.
The missing ingredient is positive public policy. What organisational arrangement will foster plentiful, clean and universally available electricity?