India is rich in renewable energy sources and the ease of setting up a RE power plant, financial incentives & zero fuel risk has led to a rapid addition of RE power plants so much so that the inherent weaknesses of RE power mainly it’s intermittency, uncertainty and the higher cost vis-à-vis conventional power cost have started becoming a serious concern to the various Discoms.
It was seen in the earlier post (https://www.linkedin.com/pulse/indian-discoms-death-spiral-venkataraman-nagarajan?trk=pulse_spock-articles ) how the discoms are in an unsustainable situation having to cope with the free / subsidized agricultural consumers, power theft, increasing migration to open access, higher tariff liability of RE power sources and servicing of fixed cost liability of PPA generators and difficulty in increasing tariff to meet the revenue requirement.
The effect of all this stress imposed on the Discom is seen in varying forms: 900 MW of wind power projects commissioned with no PPA in Maharashtra, 2000 MW wind power projects curtailed in Tamil Nadu, about 500 MW ( guesstimate) of wind projects curtailed in Rajasthan, increasing cross subsidy surcharge, request for additional surcharge, unpaid bills etc.
The 175 GW, RE power dream of India, is likely to remain a dream, unless the RE power producers, find a workable solution which will not burden the discom.
The main problem with wind power plants are that the power is generated generally during the night and monsoon when the demand for power is low and there is surplus power. Rapid addition of Solar power plants is leading to a surplus power situation in daytime also. Under these conditions, the discoms have no option but to ask the base load plants to back down. This imposes a significant burden on the discom due to the price differential between the RE power and the incremental cost of the base load plant power. The intermittency of both solar PV & wind power further adds to Discom’s aggravation and it is not surprising that the Discoms are increasingly reluctant to contract for RE power.
What is the way out?
The RE power producers need to find a new customer who has the capability to absorb the surplus power and at the same time does not cause any financial burden to the Discoms.
The energy storages are excellent solutions to compensate for the intermittent generation of wind / solar power. The energy storages can store surplus power produced in the grid and can release the energy wherever there is a energy deficit. The power professionals tend to associate Energy Storage solutions to be used only for power application and that is where the problem lies. The current price of the stationary energy storage solution ( ESS )with battery used for power application, is very high and the cost of power supplied from the battery ESS during the electricity deficient period is very high and unaffordable for the discom.
However, nobody said that the energy stored in the battery should be used only for supplying power. One can always use it for driving the electric motor in a vehicle. This offers a great opportunity for the RE power producers to store the RE power in an EV battery and use it for transportation and substitute for the costly diesel /petrol. Today the main impediment for development of EV is the perception that the cost of battery is high. This is not true. As will be shown in the later part of this article, the cost of power + cost of battery on a per Km basis is only 75%- 80% of the cost/Km of diesel. Once the cost of battery is taken out from the cost of EV, the EV becomes competitive to the conventional IC engine.
For the RE power generator, the battery in the electric vehicle has to be viewed as a mobile energy storage system wherein the batteries can absorb the surplus power. Electric Vehicles act as a Distributed Energy Storage solution and is complementary to the Distributed Power Generation concept of RE power. There will be no need for any green corridor etc and the RE power need not be transmitted over long transmission lines wherein the transmission lines are utilized sub-optimally for only 30% of the time.
Electric Vehicle being a new customer will not be adding to the burden of the discom and by allowing the use of their wires, Discoms will add to their revenue.
EV battery as distributed ESS is cheaper than diesel
The current cost of Lithium Iron Phosphate cell is between US$ 0.8 – 1.0 / amp hr. If the cells are procured in MWhr quantities, the cost is US$ 0.8/amp hr which translates to US$ 250 / KWhr for the cell. If the cells are assembled in India, the assembly cost would be about US$ 50 / KWhr. The battery pack cost and the Battery Management System would add another US$ 100 / KWhr thus adding to a total battery pack cost of US$ 400 / KWhr. Considering 4000 cycles of operation of the battery pack, the cost of battery works out to US 10 cents / KWhr ( Rs 6.7/KWhr ). With cost of RE power at Rs 6 / KWhr, the RE power generator can lease out the battery to the EV vehicle at Rs 12.7/KWhr. Add another Rs 1.0 / Kwhr for the charging system, the delivered cost of power from battery will be Rs 13.7/KWhr. The power consumption of an AC bus is about 1.2 KWhr/ Km which works out to Rs 16.44 /Km for the Electric city bus compared to Rs 22 / Km for diesel city bus ( 2.5 Kmpl at a diesel price of Rs 55/L ). Similarly, the power consumption of car is typically about 0.2 KWhr/ Km which would translate to Rs 2.74/Km or 89% of the diesel car operating cost ( Rs 3.05/Km at 18Kmpl at Rs 55/L ).
The business model to be adopted in India could be that the RE power generator leases the battery to the EV supplier and the customer pays to the RE generator on a per Km of car or bus. RE generator can have different models of swapping or fast charging or slow charging depending on the requirement.
Once the cost of battery is not added to the EV, the EV becomes competitive to the conventional IC engine vehicle since the cost of AC Electric Motor and the inverter with increasing volume will come down rapidly.
RE power producer to bridge the gap between power sector & transport sector
The major reason for the Electric Vehicle not getting promoted is due to the mindset of the power sector and the transport sector professionals. The power sector people consider automotive sector to be none of their business and the auto industry does not have a clue on how to develop the electricity infrastructure to cater to the charging needs. Also the auto industry is not very keen to lose it’s market for IC engines which brings huge revenue not only from sale of new vehicles but also from after-sales market. They are not in any great hurry to develop the EV market and they don’t see any reason why they should shoot themselves in the foot.
It is for the potential 175 GW RE power producers to wake up to the reality and get into the act of developing the Electric Vehicle business if they want to survive. The coal-based power sector was faced in a similar situation when there was coal shortage in the late Nineties. At that time when GOI invited the power sector companies to get into coal mining by taking up captive coal blocks, none of the power companies were inclined to take the captive coal blocks since they held that coal mining was not their business. There were hardly one or two companies which came forward and only after they demonstrated the techno-economic feasibility of integrated mining and power generation, only then the interest in acquiring captive coal block started and later became a mad scramble.
Similarly, the RE power generators can well keep to their present position that transportation is not their business and keep struggling with the discoms or they can pro-actively start developing the EV business parallelly instead of sitting on the sidelines.
It is in the interest of the RE power producer to develop the EV business since the coal power producer is not affected because he gets paid even when his power is not consumed by the discom whereas the RE power producer has no such protection and if there is load curtailment he loses significantly.
Solar & wind are Distributed Energy sources & Electric Vehicle is a perfect complimentary Distributed Energy Storage System offering a one stop solution for reducing oil imports, pollution, congestion (when used in mass transportation ), climate change and last but not the least to make the dream of 175 GW RE power a reality by absorbing the surplus power without being a burden on the Discom.