Co-authored by Pratim Raha
Despite the Ministry of New and Renewable Energy's ambitious targets to deploy at least 10,000 renewable energy-based micro- and mini-grid projects with a minimum installed capacity of 500 MW in the next five years, there is little reliable information available on what the current status is on the ground. Additionally, there are private initiatives such as the Rockefeller Foundation's US$75 million Smart Power India initiative, which aims to provide electricity in 1000 villages in India. While these are commendable initiatives, much needs to be done to synchronize efforts and build the ecosystem for mini-grids. These ecosystem factors could range from the right technological solution, appropriate financial models, a skilled workforce for servicing and a conducive policy environment.
When electricity goes out, could a solar mini-grid provide a backup to the DISCOM's grid in thousands of villages? Or, could we allow mini-grids to support the central grid?
For mini-grids to be sustainable, we must deepen our understanding of socio-economic factors such as community cohesiveness and understand the end-users better to customise the right collection, financial and operational solutions. We must plan for long-term exit strategies in terms of ownership models—and think about how mini-grids can be integrated with the grid provided by electricity distribution companies. This post explores technical, financial and policy factors associated with Grid-Integrated Mini-grid with Storage (GIMS).
India's DISCOMs (electricity distribution companies) are around $70 billion in debt. There are transmission losses of more than 30-40% in some states, cases of theft as well as insufficient supply are all too common. Thus, decentralised renewable energy solutions in the form of GIMS is important to explore, study, pilot and implement—making way for a new policy framework. Gabriel Barta, head of technical coordination for the International Electrotechnical Commission (IEC), noted that international standards for mini-grid integration "are crucial but practically non-existent" and that "the IEC will need the regulators' cooperation to know how to frame them."
What is Grid-Integrated Mini-grid with Storage (GIMS)?
For most urban, office-going, apartment-living Indians, when electricity goes out the inverter or generator kicks in just minutes later. What if we extended this idea to villages plagued with unreliable electricity supply? When electricity goes out, could a solar mini-grid provide a backup to the DISCOM's grid in thousands of villages in India? Or even better, could we allow mini-grids to support the central grid? This will require some amount of ecosystem building, for instance financing technological innovation in the advanced smart control systems arena.
GIMS are capable of feeding excess energy to the DISCOM's grid. Unlike a traditional grid-tied system, it remains active and provides back up in the absence of DISCOM power. It allows for the use of the existing distribution network of the DISCOM or RESCO (renewable energy service company) mini-grid with bare minimal upgrade. The main aim of GIMS is to encourage local DISCOMS to collaboratively work with RESCOs to supplement their energy supply. In other words RESCOs could be viewed as a franchisee of the local distribution company for last mile voltage drops, especially where grid cannot be extended or is not viable. By generating electricity at the point of consumption, transmission losses can be avoided to a large extent.
Diagrammatic Explanation of GIMS
GIMS in action
By creating a framework for the determination of tariffs, the GIMS model seeks to push current policy and regulatory framework to pave the way for innovative grid-interactive projects in the future. GIMS aims to overcome traditional revenue and operational challenges associated with mini-grids by engaging the community, leveraging DISCOM's existing metering infrastructure and collection mechanism, and sizing the plant optimally considering revenue generation for a long period of time.
Grid integration can enable end-users to rise in the energy access ladder—going beyond lighting and basic needs, to cooking, water heating and rural industrial loads.
Decentralised renewable energy solutions such as mini-grids, have long been used as an alternative to the expansion of electric grids to bring electrification to remote rural areas. Traditionally, these mini-grids have operated in isolation from the main grid, but this is changing as main grids extend their reach into rural areas, offering the opportunity to integrate existing mini-grids with DISCOM infrastructure. Grid integration can enable end-users to rise in the energy access ladder—going beyond lighting and basic needs, to cooking, water heating and rural industrial loads. For the RESCOs, grid integration may provide an opportunity to increase revenue by selling surplus electricity from the mini-grid to the DISCOM.
Operational and financial model
GIMS can be owned by the gram panchayat, RESCO or DISCOM itself. If it is the former, a Power Purchase Agreement (PPA) can be signed between the RESCO or Gram Panchayat and the DISCOM to sell the power generated by the plant. Should DISCOM choose to integrate and acquire an existing mini-grid, the regulatory framework should provide guidelines for assessing the cost of mini-grids.
All the power supplied to the end users (from the DISCOM grid or backup system) can be metered in their regular energy meter (paying the normal tariff as charged by DISCOM or creating a common tariff regime for neighbouring regions). Thus, this model overcomes traditional collection challenges associated with mini-grids, by capitalizing on the existing DISCOM collection mechanism. The financial model largely depends on the ownership model. Corporate social responsibility (CSR) funds can be leveraged to bridge the capital expenditure or to reduce the cost of innovation in the piloting phase. Financial solutions can be overcome if RESCOs can sell power to the DISCOM.
To begin with, policy frameworks exist for small-scale rooftop systems (less than 1MW) and for medium- to large-scale utility systems (more than 1MW). For a small village of 500-1000 households, a Grid Integrated Mini-grid System with Back-up can be less than 1MW, but it does not fit into either of the available policy categories. The guidelines therefore need to be updated to incorporate GIMS category of projects, and appropriate tariff determination mechanisms need to be put in place. Any central financial assistance being offered for mini-grids also needs to be extended to GIMS.
GIMS can help local DISCOMS achieve their goals of providing uninterrupted electricity to end-users. It can support the global transition to low carbon development.
Second, DISCOMS' safety concerns need to be addressed by bringing evidence-based research of similar technical solutions that are have previously been implemented. Additionally, working closely with the DISCOMS as collaborators would be instrumental in making these types of projects successful. Finally, the government should improve transparency in electrification plans—with no actionable frameworks in place, the grid reaching a mini-grid site is seen as a threat. However, the community would benefit from cheaper power and the microgrid could act as back up and or sell power back to the grid. Should mini-grids be installed in areas that then receive grid access, the local DISCOMS can complement RESCO's efforts to provide electricity to end-users.
GIMS can help local DISCOMS achieve their goals of providing uninterrupted electricity to end-users. It can support the global transition to low carbon development. While the energy market is growing with efforts such as Panasonic and AES's announcement of installing India's first large scale 10MW battery based energy storage project, there are little efforts to direct these types of innovation to benefit the underserved. GIMS is currently in the ideation phase that is slowly transitioning into the piloting stage; these pilots could provide crucial lessons that could help the model evolve over the next few years. Refining the right technological, financial and operational models has the potential to increase energy access and improve quality of life for underserved populations.
What does the Indian government's goal of installing 100GW of solar capacity by 2022 mean in the aftermath of COP? These goals will remain dreams, if the right ecosystem is not fostered for decentralized renewable energy (DRE) to thrive. Electricity Regulatory Commissions and Energy Departments must make provisions for DRE to complement the grid—this will help India achieve its dreams of becoming the "superpower" it aspires to be.