Transmitting efficiency – New RE projects could address a major weakness

Source: The post is based on the article “Transmitting efficiency – New RE projects could address a major weakness” published in Business Standard on 19^th June 2023.

Syllabus: GS 3 – Environment – Renewable Energy

Relevance: About NCT’s transmission project and challenges associated with it.

News: The National Committee on Transmission (NCT) has recently approved six transmission projects. It is an important step toward overcoming hurdles for renewable power projects in India.

About NCT’s transmission project

The project will connect green-energy installations and contribute to the goal of transmitting 500 GW of energy from non-fossil fuel sources by 2030.

The NCT’s approval is part of a plan to transmit 500 GW of energy based on non-fossil fuels by 2030, connecting solar parks and wind-power plants to the national grid.

Under the plan, the focus is on attracting private sector participation through “traffic-based competitive bidding” (TBCB) for these projects.

The transmission projects will connect renewable-energy zones (REZs) in Gujarat, Rajasthan, and Maharashtra, as well as hydroelectric power projects in Himachal Pradesh.

Note: Currently, renewable energy (RE) accounts for only 12% of the country’s power generation, with coal remaining the dominant source.

What are the challenges with Renewable Energy projects?

RE power generation, unlike fossil fuel-based generation, is based on various factors. For example, solar power depends on factors like sunrise, sunset, and cloud cover, while wind power relies on wind speed.

This variable nature of RE power makes it difficult to integrate it with the transmission of power produced by conventional sources.

Since the capacity utilization of the transmission system varies between 20 percent and 30 per cent, there are questions about its economic viability.

Another concern which arises is regarding the effectiveness of the traffic-based competitive bidding (TBCB) process.

While competitive bidding is generally considered a better approach, recent experiences have shown that the chasing of the lowest power tariffs by bidders does not always result in efficient or viable projects.

For instance, in the solar power sector, competition in project bidding drove prices down to a level where power purchasers backed out of purchasing contracts with RE power generators, hoping for even lower prices in subsequent bids.

It is therefore crucial that the National Committee on Transmissions’ (NCT) latest plan avoids this issue.