Distributed Renewable Energy Generation and the future of Tamil Nadu’s electricity grid

Martin Scherfler

Tamil Nadu is a renewable energy leader among the States in India. As of 2018 14.3% of all electricity consumed in Tamil Nadu is from renewable sources, primarily wind and solar.  Most of the installed renewable energy capacity is at the utility (mega and ultra-megawatt) scale. Small and medium scale RE, is in a nascent state. Though the domestic rooftop solar sector in Tamil Nadu had and continues to receive subsidy support, the total installed rooftop solar capacity in September 2018 stood merely at 312 MW. On the other hand, utility-scale solar accounted for 2,221 MW of installed capacity. Overall, Distributed renewable energy generation (DREG) makes up only about 11% of installed RE capacity and about 4% of total installed power capacity. Given the State’s skewed focus on utility-scale RE plants, DREG has received, so far, less attention and support both in terms of policy and regulations.

Distributed Renewable Energy Generation (DREG), which includes small and medium scale units of local generation, shifts the paradigm from a one-way flow of power to a two-way flow of power. An increasing number of households, communities or organizations generate their own electricity with DREG such as solar, wind or bio-energy. Today producing consumers (prosumers), who take more control of their immediate electricity requirements, are emerging. DREG requires grid operators and policy makers to rethink grid operations and the future of the electricity grid itself, especially so if they want to stay relevant. Some envision a future without grid and distribution companies. Locally installed solar at building or community level coupled with battery storage would supply a consumer’s entire electricity demand, without any transmission or distribution. With solar energy and storage prices dropping on an annual basis these options are becoming more and more of a realistic alternative. Others envision a highly interactive and interconnected electricity grid as a market place, where prosumers trade and exchange surplus energy. The role of the grid operator would be to ensure a reliable network and clear and transparent rules of the game. On which side this toss will land, largely depends on whether and how policy makers, regulators and grid operators will prepare for this transition. If an enabling environment is actively created the electricity grid may see a renaissance, if not, a more radically decentralized electricity supply may be the future in which the grid may have a minor role or no role at all.

Producing electricity at, or close to, the point of consumption has major technical advantages. Some of which are reduction in transmission and distribution losses, avoiding or deferring investment in electrical infrastructure expansion, and voltage stability. The physically closer consumption and production are to each other, higher are these benefits. The best example of this is rooftop solar.  Surplus production, if any, can be injected to the grid and will supply the nearest load (consumer) with electricity; most of this electricity will never go into transmission at all. It will be in the interest of TANGEDCO and the consumers if DREG capacity addition is planned with the overall objective to add maximum value to the system. This requires a pro-active planning by TANGEDCO and a location specific incentive for the generators to attract DREG capacity addition where it has most value to the system. The transition towards a distributed grid presents challenges and opportunities. Reliability and flexibility of the system has emerged as a major concern to the grid operators as most of the renewable distributed generation (DREG) is highly intermittent (e.g. solar and wind).

With higher DREG, the electricity demand that the operator needs to meet on a daily and seasonal basis fluctuates more. As a result, it becomes harder for the operators to meet the increasing and fluctuating demand.  Addressing this challenge will require a complete overhaul of our grid management system and regulations. Creating an enabling environment for DREG, that offers a win-win situation for all stakeholders, DISCOMS, consumers and generators, will need a new set of instruments. It requires adapting policies, regulations and standards. It also requires new electricity market design and planning instruments.

In the electricity grid of the future, DREG is poised to meet the increasing electricity demands of Tamil Nadu’s consumers in a reliable and cost effective way, while tackling environmental issues of CO2 emission and air pollution. Distributed generation is an important solution to create a resilient electricity distribution system, as climate change causes extreme weather events such as cyclones, floods and wildfires occur with more frequency around the world. Recent examples include extreme wildfires risk in California and cyclone in Odisha leading to power outages for millions of people over days.

In order to integrate DREG for sustainable energy transformation in Tamil Nadu, a phased approach may be required. This requires new policy and regulatory instruments, appropriate tariff setting and market mechanisms, and an integration of DREG into the utilities grid operation and expansion planning. A good starting point would be to recognize the value of DREG, to permit grid interconnection of DREG at any voltage level, set DREG-specific capacity targets and compensate DREG for the location specific value they add to the distribution network (e.g. reduction of transmission and distribution losses, deterring or avoiding investment into grid infrastructure upgradation).

1* Centre for Science and Environment. 2019. State of Renewable Energy in India 2019

2* Bridge to India. 2018. India Solar Rooftop Map September 2018. Accessed on 7th May 2019 under: https://bridgetoindia.com/backend/wp-content/uploads/2018/12/BRIDGE-TO-INDIA-India-Solar-Rooftop-Map-December-2018-1-1.pdf

3* Ministry of Statistics and Programme Implementation. (2019). Energy Statistics 2019. Available at: http://www.mospi.gov.in/sites/default/files/publication_reports/Energy%20Statistics%202019-finall.pdf (Accessed on 19th September, 2019).

Auroville Consulting
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