Low Carbon Transition of

the Indian Power Sector

S E PTEMBER 1 9 , 2 0 2 2
A L E X ANDER HOG E V EEN R U T T ER
P R I VATE S EC TOR S P ECI AL IST, I N T ERNATIONAL S OL A R A L L I A NCE
New solar and wind are substantially
cheaper than new coal
However, without storage, adding solar and
wind will substantially impact coal plants
Sample NTPC profile with 60 GW of
coal, 40 GW of solar and 20 GW of
wind
CUF will continue to fall from ~80% to
60% or lower
Extreme morning and evening ramps
(as well as during high wind variability
periods)
Minimum load below 33%. Plants
must turn off/down, substantially
increasing O&M costs
NTPC has ~ 60 GW of firm PPAs, same
as today
Load curve (even Pre-VRE) shows the
need for coal ramping
10% of Generation (aka 20 GW) needed
<10% of the time (aka. 800 hours)
Load factor has actually been decreasing
since 2016 (perhaps as unmet demand is
now being met)
In Ontario, 20% of the generation is used
<10%. Will India evolve in this direction
as more ACs are built?
In general, building combined RE +
storage is cheaper than new coal plants
• Many recently built plants
(Wanakbori, Solapur, Kudgi,
Harduaganj, etc.) have variable
costs that are above the cost of
new RE + storage
• RE requires 2-6 hours of storage
back-up to meet peak demand,
which is why it costs Rs.
3.5/kWh, rather than the 2.0-2.5
kWh seen in “vanilla” solar
projects
By Embracing Energy Storage, NTPC can integrate
renewables, grow market share and maintain CUF
Retiring High VC coal lowers costs to
DISCOMs/consumers and maintains
Excess solar stored CUF of remaining thermal
Use of storage to capture excess
solar and meet evening/morning
Battery discharge to meet peaks peaks mean remaining thermal CUF
is maintained at 80%+
Increase in market share. In this
example, 95 GW firm PPAs from:
◦ 45 GW coal
◦ 120 GW solar, 60 GW wind
◦ 50 GW/300 GWh storage
◦ 5 GW biomass (or biogas)
◦ More thorough analysis required for
precise optimization
For Existing Plants, must evaluate if flexibilization
makes sense
Type of Plant Target Price Path Forward
“Baseload” VC < Rs. 2.5/kWh Maximize PLF. Invest in efficiency, not flexibility
“Peaking” FC < Rs. 8/kWh at PLF of 50% or Invest in flexibilization (including on/off, not just reduced
less minimums)
Uneconomic VC > Rs. 2.5/kWh and Convert to synchronous condenser (if required for system
FC > 8/kWh at PLF of 50% or less stability) OR replace with RE + storage

If plants are following merit order dispatch, low VC plants will maintain
higher PLFs naturally while high VC plants will be subject to lower PLFs.
Do not try to distort this by forcing all plants to run equally!
Prices are already deviating, and day vs.
peak gap will continue to increase Are we prepared for
coal plants to run 6-
12 hours/day?

Low VC plants should continue

to strive to operate at peak
efficiency point
 For Low VC plants, there is little value in
increasing flexibility
Sample Market Prices vs. Coal Plant Utilization Sample Plant with VC of Rs.
14,000 100%
2.5/kWh
90%
12,000 As increased solar drives low
80%
10,000 70%
daytime prices, it will lose money
60% during the day
8,000
50%
6,000 40%
However, high prices during evening
4,000 30% peak and moderate prices during
20% night mean the plant is still
2,000
10% profitable
0 0%
Goal: Minimize VC, not flexibility
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In this example, unit is making Rs.
Price Low VC, Inflexible
43,000/MW/day
 For Low High VC plants, flexibility,
including two-shift operation, is a must
Sample Plant with VC of Rs. 5/kWh
Sample Market Prices vs. Coal Plant Utilization
14,000 100% Ability to turn off during the day
12,000
90% means it is avoiding low prices
80%
10,000 70% Moderate losses during night are
8,000 60% offset by huge value during the
50% evening peak
6,000 40%
4,000 30% Goal: Maximize flexibility, minimize
20%
2,000
10%
shut-down/start-up costs
0 0%
In this example, unit is making Rs.
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20,000/MW/day (excl. shut-
down/start-up cost). It is competing
Price High VC, Flexible
with storage to meet evening peak
economically
 High VC plants that cannot increase
flexibility should be converted to storage
Sample Market Prices vs. Coal Plant Utilization Sample Plant with VC of Rs. 5/kWh
14,000 100% If it can only turn down to 60%, it is
12,000
90% providing negative value during the
80% day and night
10,000 70%
8,000 60% Value during the evening peak is
50% insufficient to compensate
6,000 40%
4,000 30% Goal: Replace with storage. Convert
20% to synchronous condenser if
2,000
10%
0 0%
required
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In this example, unit is losing Rs.
1000/day. In real life, not all plants
Price High VC, Inflexible are exposed to market-but we
should act economically regardless!
 There has been a lot of attention on Minimum
Plant loading but relatively little on start-
up/shut-down costs
Option 1-Part-Load Option 2-Two-Shit Operations
Sample Plant Daytime Operation Sample Plant Daytime Operation
Unit 1 (500 MW) 250 MW Unit 1 (500 MW) 333 MW
Unit 2 (500 MW) 250 MW Unit 2 (500 MW) 333 MW
Unit 3 (500 MW) 250 MW Unit 3 (500 MW) 333 MW
Unit 4 (500 MW) 250 MW Unit 4 (500 MW) 0 MW

Sample Plant Daytime Operation

Unit 1 (500 MW) 400 MW
Option 3 Storage (with efficient All 3 options can meet 2000
Unit 2 (500 MW) 400 MW
operating point for remaining MW evening peak, but which
units/solar to charge) Unit 3 (500 MW) 400 MW is most economic?
Storage (500 MW) -500 MW
 It is time to adjust to new reality
IEX prices for FY 2021/2022 Effective FC for a Coal Plant*
Cost Hours CUF
threshold Hours/Day FC-equivalent
Standalone storage
> Rs 2/kWh 7970 91% 18 Rs 3/kWh costs Rs. 8-12/kWh
> Rs 3/kWh 5414 62% 12 Rs 4.5/kWh (though PSP is lower)
> Rs 4/kWh 3357 38% 6 Rs 9/kWh Most DISCOMs have a
4 Rs 13.5/kWh 2-4 hour peak
> Rs 5/kWh 2488 28%
When India was perpetually short power, the primary goal was maximizing CUF
Now that India has surplus power during off-peak periods, value (price + flexibility) is more important
than production alone
Additional RE will further exacerbate these trends, creating a larger spread between peak and off-
peak value
Is your coal plant a “baseload” plant, a
“peaker” or neither?
Baseload
• Target CUF 80%+
• Primary value is energy (GWh)
• Variable cost competes with wind and
solar (Rs. 2.5/kWh or less)
• Priority is to keep VC low
• Should not invest heavily in flexibility
Peaker
• Target CUF 50% or less
• Primary value is capacity (MW)
• FC of operating for 6-12 hours/day
competes with storage (Rs 8-12/kWh)
• Priority is to keep start-up/shut-down
costs low
• Should invest heavily in flexibility,
including lowering minimum operating
point and minimizing ramping costs