Distributed Renewable Energy Generation Opportunities not to be missed. A future for the electricity grid?

Martin Scherfler

Distributed Renewable Energy Generation (DREG), which is small and medium scale units of local generation, that 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), taking more control of their immediate electricity requirements, are emerging. DREG requires grid operators and policy makers to rethink gird 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 become more and more of a real 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 is to ensure a reliable network and clear and transparent rules of the game. At which side this coin will toss, 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.

DREG has the potential to deliver Tamil Nadu’s rising energy demand and to tackle environmental issues such as CO2 and air-pollution. Distributed generation means also distribution of risk and increases the resilience of the electricity grid, a benefit that may be essential in a future of global warming characterized by an increase in extreme weather events such a storms and floods.

Producing electricity at, or close to, the point of consumption has major technical advantages. Some of which are s reduction in transmission and distribution losses, avoiding or deferring investment in electrical infrastructure upgradation and voltage improvements. The physically closer consumption and production are to each other the higher are these benefits. Behind the meter generators are DREG who’s primarily purpose it to deliver electricity for self-consumption of a building. 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 interested 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 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). Operators struggle to guarantee supply and to meet increasing and fluctuating demand, particularly so during peak periods.  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 market design and planning instruments.

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, distributed renewable energy generation (DREG) 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 2018 stood merely at 312 MW. Utility solar accounted for 2,119 MW installed capacity. Given the States strong focus on utility scale renewable energy plants, DREG has received, so far, less attention both in terms of policy and regulations.

In order to integrate DREG in a sustainable energy transformation for 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

Auroville Consulting
a unit of the Auroville Foundation

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