Wind-solar hybrid policy has little substance
MNRE released the final version of National Wind-Solar Hybrid Policy last week. The policy aims to “provide a framework for promotion of large grid connected wind-solar PV hybrid systems for optimal and efficient utilization of transmission infrastructure and land, reducing the variability in renewable power generation and achieving better grid stability.” A major change from the draft policy is removal of the 10 GW capacity addition target by 2022. The final policy has no specific target. Indeed, it is remarkable for having no numbers at all.
- The two touted advantages of hybrid plants – reduction in power cost and improvement in grid stability – are debatable in our opinion;
- The policy offers no incentive or other tangible mechanism to promote hybrid technology;
- Prospects of hybrid plants are limited in our view to select opportunistic cases depending on project location, transmission availability and open access policy;
There are supposedly two main advantages of hybrid plants and both of these are debatable in our opinion. One, by exploiting common transmission and evacuation infrastructure, such plants can use capital more efficiently and bring down tariffs even further. But transmission and evacuation infrastructure costs usually account for only about 3-5% of total capital cost of solar and wind power plants. Savings of this scale are likely to be easily eroded by sub-optimal wind or solar resource available at the location and/or higher curtailment risk. The other claimed advantage is that hybrid plants can reduce variability in power output and improve grid stability as wind and solar resources are somewhat complementary to each other. This is statistically correct although the benefit is hard to quantify. There are other easier and cheaper ways to achieve the same result including better forecasting techniques, ancillary services market, demand side management etc.
The policy is silent on how it will promote hybrid technology. There is no financial incentive on offer. If developers proactively add hybrid capacity, they would have to find private open-access customers as DISCOMs are unlikely to sign bilateral long-term PPAs in the current environment. Conversion of existing wind and solar plants into hybrid plants is allowed but that is technically untenable. It is almost impossible to overlay wind turbines on an operational solar site or vice-versa. These constraints are illustrated well by how Hero Future Energies recently added a 28 MW solar project, next-door to an existing 50 MW wind project in Karnataka. Power from the new solar plant would be sold entirely to private customers.
So far, no hybrid tenders have been issued by any procurement agencies in India. SECI has issued an expression of interest for a 160 MW wind-solar hybrid-cum-storage plant in Andhra Pradesh. Overall, we believe that the potential of hybrid plants is rather limited. The concept has found limited relevance elsewhere. It seems attractive in theory but technical and financial viability constraints mean that hybrid plants will remain a one-off opportunistic choice for developers rather than a mainstream option.
