Increasing Share Of Variable Renewables In Total Energy Generation Mix Is Cost Effective For India Even In The Short-Term


The Energy and Resources Institute (TERI) released a report on ‘A Model-Based Assessment of Variable Renewable Grid Integration Costs in India’ today. The report provides a technological and economic analysis of the costs of integrating renewable energy (RE) into the Indian electricity grid.


RE is the cheapest source of electricity when available. However, it does introduce other costs into the system.


In the context of the already weak finances of power distribution companies, the report provides an analysis of the costs of integrating RE to the electricity grid.


According to Mr Thomas Spencer, lead author of the report, “This study shows that even in the short-term, it is optimal from a cost perspective for India to substantially increase the share of VRE in the total generation mix”.


A simple summarisation is:

  • Combining cheap energy when the sun shines and the wind blows with somewhat more expensive back-up capacities still allows total system costs to be lower than in a scenario with no RE growth
  • Given technology costs foreseeable for the coming decade, RE deployment can rise substantially above the existing levels without affecting the financial health of distribution companies
  • Growth in electricity demand and balancing fixed and variable costs can enable rise in RE share of the order of 40% generation
  • Post 2030, if demand continues to rise and storage costs can fall below ~80-100 USD/kWh, RE can be used to meet subsequent electricity requirement
  • Enhancing the grid integration of the Indian system and expanding pumped hydro capacity is the most cost effective way of integrating rising RE share. While some gas-powered electricity may be required, investments in new coal capacity would be economically unviable
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