ReNew Power: Crossing the final frontier in renewable energy

The two main points raised against the push for renewable energy, whether it is wind or solar has been its intermittent nature—electricity is only generated only when the sun shines or the wind blows at a certain speed, and the low 25%-35% plant load factor (PLF) or capacity utilization. At thermal plants, which give steady supply due to the shovel-in-the-coal-and-generate-electricity process, the PLF is usually more than double.

These limitations resulted in two things. One, it forced power generation companies or gencos to keep an equivalent amount of thermal power in standby to prevent outages because of sudden changes in the weather. The sky could suddenly turn cloudy or there could be a sudden burst of rain, or the wind would not gather momentum, not to forget the monsoon months. It also meant ensuring that thermal plants were equipped to change gears—ramping up and down—at a short notice without damaging the equipment and having an electricity grid capable of managing such sudden changes.

However, by winning the entire round-the-clock 400 MW renewable energy auction at ₹2.90 per unit in the first year, ReNew Power has completely changed the rules of the game. Now gencos, will no longer worry about a cloudy or low-wind speed day or require a thermal power plant as a standby.

Says Sumant Sinha, chairman and managing director, ReNew Power: “This tender in a landmark for several reasons because it mandates an annual capacity utilisation factor (CUF) of 80% and a monthly CUF of 70%.” This CUF is much higher than the average 35% CUF in most wind-powered plants. It is also a first step towards “ensuring near-firm, assured power supply using 100% green energy.” Obviously, such an arrangement will call for provision of storage by the developer. For R.K. Singh, minister of state for power and renewable energy, it was the “new beginning towards firm, schedulable, affordable round-the-clock supply through 100% renewable energy power.”

The auction, conducted by the government-owned Solar Energy Corporation of India, was a closely fought one, which saw the lowest tariff drop by 69 paisa over the course of almost three hours. What made it historic was the fact that this tender provides 24-hour energy supply from 100% renewable power based energy generation combined with storage at just ₹2.90 per unit. Under the terms of the contract, the tariff will be escalated at 3% on an annual basis up to the 15th year of the 25-year term of the PPA. As a result, the effective tariff will be ₹3.59 per unit over the 25-year period.

“Additionally,” argues Sinha, “the tariff discovered in the auction makes renewables much cheaper than thermal energy making it the most commercially viable option for future power projects.” The profile of the power supply, he adds, will be much more suitable for distribution companies or discoms.

Experts agree that round-the-clock power at ₹2.90 per unit is something that even pit-head (located on top of the mine) coal-fired plants may find hard to match. Those located either on the coasts or some distance away from their coal mines which needs transportation of raw materials will be at a further disadvantage.

Even earlier, ReNew Power had won a 300 MW of a total of 1200 MW auction with storage capacity—it will be using lithium-ion batteries as a storage mechanism—showing its innovativeness and its efforts to be at the forefront of driving this change towards firmer clean energy at competitive prices.

Meanwhile, to strengthen its digital capabilities, ReNew Power has acquired a digital-analytics software development, machine learning and artificial intelligence company, Climate Connect, for an undisclosed amount.

Climate Connect, however, will continue to operate as an independent subsidiary that focuses on building a global team, data integrity and software development processes as well as development activities.

Talking of the importance of the acquisition for ReNew, Sinha says that “as distribution companies look to tighten operations, find efficiencies, and reduce aggregate transmission and commercial losses, digitalisation will play a key role and Climate Connect is well positioned to service this important market.”