Crashing solar tariffs crush storage plans

NEW DELHI: The steep fall in solar tariffs may have delighted discoms and other power consumers, but it is also having unintended consequences. Last week, it forced the Solar Energy Corporation of India (SECI) to cancel two tenders it had announced last year which were to include storage capacity for the first time in India.

One disadvantage of both solar and wind power is their ‘erratic’ or ‘infirm’ nature — they are available only when the sun shines bright or the wind blows above a certain speed. To provide uninterrupted power, storage batteries are required alongside the solar or wind farm, but such batteries do not come cheap.

Experts estimate their cost at around $450 per kwH — thus including storage adds considerably to the cost of a project and pushes the tariff up. None of the solar plants operating in the country so far include storage, but transfer all the power they produce immediately to the grid. Thus they are able to supply power for a maximum of only around 12 hours a day.

In August last year, SECI announced for the first time two solar auctions which would include storage — 200 MW at the Pavagada Solar Park in Karnataka and 100 MW at the Kadapa Solar Park in Andhra Pradesh, both under Phase II of the Jawaharlal Nehru National Solar Mission.

The storage capacity sought was around 2.5 MWh for every 50 MW installed. Since the Ministry of New and Renewable Energy provides viability gap funding (VGF) — if required — for solar projects up to a maximum of Rs 1 crore per MW installed, SECI officials believed the VGF would offset the increased cost of storage and the power from these projects would be able to match the tariffs of those which neither had storage nor had asked for VGF.
Bids were sought in October-November last year but were never opened. Instead both tenders have been cancelled. “The lowest solar tariff has fallen to Rs 2.44 per kwH (at an auction in May at the Bhadla Solar Park in Rajasthan),” said Ashwini Kumar, managing director, SECI. “Even with VGF, a project that includes storage can never hope to match it. Everybody in the industry is disappointed as it was the first time we were trying this.” There’s no doubt that if renewable energy is to ever become a viable substitute for conventional sources of power, it will have to be steady, uninterrupted and available 24×7, analysts said.
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