The Cost Of Renewable Energy Promotion

The Cost Of Renewable Energy Promotion

It’s no secret that renewable energy promotion involves financial costs. But what is unknown is the quantum of the expense. A government committee study on grid integration of renewable energy pegs the cost at about Re1/unit. The study says it would still be cheaper to add renewable capacities in future even after including this financial cost but it calls for remedial measures such as sharing of balancing responsibility (by more states) of renewable energy, which is intermittent in nature.

An analysis of test cases in renewable-rich states Tamil Nadu and Gujarat by the committee puts the financial cost of managing renewable energy generation at Rs1.57/unit in Tamil Nadu and Rs1.45/unit in Gujarat.

That is due to the costs arising out of the standby balancing generating capacity charge, underutilization of conventional energy assets, opportunity cost of foregoing existing cheap spot rates (available at less than Rs3/unit, whereas renewable contracts averaged at Rs4/unit), impact of the deviation settlement mechanism charges for interstate flow of power and sub-optimal utilization of the transmission system used for evacuation of renewables due to their lower capacity utilization. Read More…

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