Gas can accelerate the transition to renewable energies
The global energy system is transforming on an unprecedented scale and rate. The recent announcements of Prime Minister Narendra Modi at the COP26 summit will usher in a new investment climate in the country. Targeting net zero emissions by 2070, achieving 500 GW of non-fossil fuel capacity, and meeting 50% of energy needs from renewables by 2030 would require the development of robust infrastructure.
The idea is to move towards an energy future that is more resilient, self-sufficient and capable of dynamically changing to close the gap between supply and demand.
Technically, the increasing penetration of wind and solar will make the Indian grid sensitive to the complexities of frequency and voltage fluctuations. This will happen due to an unexpected sudden loss of power generation, resulting in a reduction in system inertia. These natural and man-made events can also lead to grid instability and power outages.
Considering the nature of each technology (i.e. solar, wind, gas, coal) and the dynamic situation of electricity supply and demand, it is prudent for grid operators to identify the appropriate technology. that will help manage the network and meet their long-term needs. . According to the IEA, India has a greater requirement for flexibility in its electricity system than almost any other country in the world.
At the global level, the decarbonization of the electricity sector is one of the main priorities of nations moving towards net zero. India must undertake this transition in a smooth, reliable and affordable manner.
Rules of coal
In India, in 2020, around 60% of electricity production came from coal-fired power plants. From an environmental, technological and economic point of view, the new additions of coal seem unsustainable. Governments around the world have understood this and are speaking out against any major investment in the construction of new coal-fired power plants, while striving to meet their respective emission reduction commitments.
However, closer to home, some of the policy actions continue to promote high carbon types of fuels for power generation and turn a blind eye to the benefits of gas power. For example, according to the draft National Electricity Policy (NEP) 2021, new coal-fired power plants will continue to be added and the deadlines for coal-fired plants to meet emissions standards will be pushed back.
Even in a prospective tender such as 24-hour electricity, coal remains the first choice and the assessment is one-dimensional taking only the weighted average tariff as a criterion. Environmental and systemic attributes of the technology such as ramp rates, emission reduction, etc., are not taken into account. To ensure a successful transition to renewable energies, wind and solar need a good partner, who can compensate for their disadvantages and contribute to the proper functioning of the grid. Gas-based electricity production is perfectly suited to this situation.
It has been a lost decade for gas-fired electricity, mainly due to questions about the availability and affordability of gas. However, the value proposition that gas-fired electricity is able to deliver due to its flexibility, quick start-up, larger dip levels and faster ramp-up rates is a key factor in integrating more renewables in the national grid and meet seasonal and peak demand for electricity.
Electricity generation based on gas turbine technology can balance the grid and provide competitively priced electricity both in stand-alone generation as well as when combined with renewable energy.
Green hydrogen has been gaining a lot of interest lately and there is a lot of pressure to lower its cost of production and make it affordable. It is encouraging to see that the government aims to increase the share of natural gas in the country’s primary mix from 6% to 15% by 2030. Investments in the construction of a network of gas pipelines and new installations of Importing gas to connect all states to the six gas terminals will address availability issues.
In the short term, there are a few key issues that need to be addressed:
Shorter Alignment of the terms of PPA (Power Purchase Agreement) gas contracts is necessary to enable developers of gas-fired power plants to obtain gas at reasonable prices. Gas contracts today are not available for a 25-year horizon, and opting for long-term contracts risks increasing pricing uncertainty, which has an impact on the final cost of electricity. .
it would be Be reasonable to link the CERC Escalation Index, to reflect the market and the benchmark, with the less volatile sources like Henry Hub.
Gas infrastructure is available and underutilized. It would be encouraging if regulatory and policy interventions could help encourage the use of this infrastructure.
Hybrid gas-fired power plants may well be an appropriate technological solution to help and accelerate India’s transition to renewable energy. These two seemingly dissimilar technologies have perhaps the most complementary characteristics within them that can continue to support the grid in its operations while continuing to significantly decarbonize the sector and provide affordable electricity.
The author is CEO of GE Gas Power South Asia