Framework to assess the economic impact of grid integration of rooftop solar on Indian discoms

© Council on Energy, Environment and Water, 2019

Akanksha Tyagi Selna Saji Neeraj Kuldeep 05 September 2019

CEEW – Among South Asia’s leading policy research institutions

Energy Access Renewables

Low-Carbon Pathways

Technology, Finance, & Trade

Industrial Sustainability & Competitiveness

Risks & Adaptation

Power Sector

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Centre for Energy Finance

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Agenda

• Introduction

• Methodology

• Case study

• Conclusion

Introduction

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Introduction

India’s rooftop solar sector

• 40 GW national target for rooftop solar by 2022 • 3.8 GW installed capacity of rooftop solar as of FY191

1. CEEW compilation from multiple sources: MNRE, Bridge to India, Mercom

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Maharashtra

Rajasthan

Tamil Nadu

Gujarat

Karnataka

0

1.000

2.000

3.000

4.000

0

500

1.000

1.500

2.000

FY13 FY14 FY15 FY16 FY17 FY18 FY19

Cum

ulat

ive

capa

city

/ MW

Annu

al c

apac

ity a

dditi

ons/

MW

Financial Year (FY)

Annual capacity additions Cumulative capacity

Annual trends in rooftop solar capacity additions in India

Introduction

Challenges Opportunities

Discom: Distribution companies; T&D losses : transmission and distribution losses; RPO: renewable purchase obligation

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Inequitable billing methods

Revenue loss

Infrastructure upgradation

Inadequate technical staff

Need for improved solar valuation methods

Rooftop solar and discoms

Reduction in T&D losses

Demand management

Network decongestion

RPO targets

Introduction

Value of grid-connected rooftop solar (VGRS)

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Cost-benefit analysis method

Location and time specific

Flexibility to choose different perspectives: discom, consumer, society

Equitable compensation of solar electricity

Introduction

Relevance of VGRS to discom

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Efficient demand and supply management

Wiser investments for grid upgradation

Strategic deployment of rooftop solar projects

Support for equitable solar tariffs and operational incentives

Methodology

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Costs and benefits of rooftop solar to discoms

Costs

• Revenue loss • Program administration cost • Added transmission and

distribution services cost

Benefits

• Generation – Avoided generation capacity cost – Avoided power purchase cost

• Transmission – Avoided transmission charges

• Distribution – Avoided distribution capacity

infrastructure and related O&M cost • Externalities

– Avoided renewable energy certificate cost

– Reduced working capital

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Costs of rooftop solar to discom

• Migration of consumers from grid to rooftop solar • Reduction in DISCOM’s receivables

Revenue loss

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 = � 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝑤𝑤𝐵𝐵𝐶𝐶𝑤𝐶𝐶𝑤𝑤𝐶𝐶 𝐶𝐶𝐶𝐶𝐵𝐵𝑠𝑠𝑠𝑠 − 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝑤𝑤𝐵𝐵𝐶𝐶𝑤 𝐶𝐶𝐶𝐶𝐵𝐵𝑠𝑠𝑠𝑠

• Technical staff recruitment, site visits, panel cleaning • Additional expenses to discom

Program administration cost

Costs of rooftop solar to discom

• Additional network components required to evacuate and manage rooftop solar

• Expenses to install and maintain new network components

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Added transmission and distribution services cost

𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶 = �𝑅𝑅𝑅𝑅𝑅𝑅𝐶𝐶𝑤𝑤𝐶𝐶𝑅𝑅𝑤𝑤𝐶𝐶 ∗ 𝐷𝐷𝐵𝐵𝐶𝐶𝐶𝐶𝑠𝑠𝐵𝐵𝐷𝐷𝑤𝑤𝐶𝐶𝐵𝐵𝐶𝐶𝐷𝐷𝐶𝐶𝑠𝑠𝑅𝑅𝑠𝑠𝐷𝐷𝐵𝐵𝐶𝐶𝐷𝐷𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶

Benefits of rooftop solar to discom

General formula of evaluating a benefit

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Benefit

= �𝑅𝑅𝐶𝐶𝐵𝐵𝑠𝑠𝑠𝑠 𝐶𝐶𝑤𝑤𝐶𝐶𝑅𝑅𝑤𝑤𝐶𝐶

1 − loss%∗ (1 − 𝐷𝐷𝑒𝑒𝑒𝑒𝑠𝑠𝑠𝑠𝑒𝑒𝑠𝑠𝐶𝐶𝐵𝐵𝐶𝐶𝐷𝐷𝐹𝐹𝑠𝑠𝐷𝐷𝐶𝐶𝐶𝐶𝑠𝑠) ∗ 𝑅𝑅𝐷𝐷𝐶𝐶𝐶𝐶𝑒𝑒𝑆𝑆𝐶𝐶𝐶𝐶𝐵𝐵𝐷𝐷𝐷𝐷𝐵𝐵𝑒𝑒𝑒𝑒𝐷𝐷𝐷𝐷𝑒𝑒𝐹𝐹𝑠𝑠𝐷𝐷𝐶𝐶𝐶𝐶𝑠𝑠 ∗ 𝐶𝐶𝐶𝐶𝐶𝐶𝐶𝐶

Rooftop solar System (generation/ transmission/ distribution)

Benefits of rooftop solar to discom

• Reduced generation capacity requirement • Savings on the fixed cost

Genco: generation company

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Avoided generation capacity cost (AGCC)

• Reduced power requirement • Savings on the variable cost

Avoided power purchase cost (APPC)

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Benefits of rooftop solar to discom

• Reduced transmission capacity requirement • Savings on the transmission charges

Avoided transmission charges (ATRC)

• Delayed distribution transformer (DT) upgradation • Savings on upgradation and maintenance

Avoided distribution capacity infrastructure and related O&M cost (ADCC)

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Benefits of rooftop solar to discom

• Available solar generation enough to meet renewable purchase obligation (RPO) targets

• Savings on renewable energy certificates (RECs)

Avoided renewable energy certificate cost

Case study

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Selection of distribution transformers

Rated Capacity

100 kVA

630 kVA

990 kVA

Peak Loading

Low

High

RTS penetration

Low (<10 per cent)

High (>10 per cent)

Consumer category

Residential

Industrial

Commercial

Government

Institutional

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Selection of distribution transformers

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Generation-normalized benefits and costs

₹ 0,00

₹ 0,20

₹ 0,40

₹ 0,60

₹ 0,80

₹ 1,00

₹ 1,20

₹ 1,40

₹ 1,60

₹ 1,80

₹ 2,00

DT 1 DT 2 DT 3 DT 4 DT 5 DT 6 DT 7 DT 8 DT 9 DT 10

INR/

kWh

ADCC AWCC ATRC AGCC ARECC APPC RevenueLoss

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Capacity normalized benefits and costs

0,00%

3,00%

6,00%

9,00%

12,00%

15,00%

18,00%

₹ 0,00

₹ 10.000,00

₹ 20.000,00

₹ 30.000,00

₹ 40.000,00

₹ 50.000,00

₹ 60.000,00

₹ 70.000,00

. DT 1 . DT 2 . DT 3 . DT 4 . DT 5 . DT 6 . DT 7 . DT 8 . DT 9 . DT 10

Perf

orm

ance

fact

ors (

CUF

and

SCF)

Capa

city

nor

mal

ized

valu

e (IN

R/kW

)

AGCC APPC ATRC ADCC ARECC AWCC RevenueLoss CUF SCF

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Aggregate benefits and costs

ADCC has been ignored in the calculations

Challenges in VGRS

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Comprehension

Multiple components

Data availability

Granular data required

Data accuracy

Long term projections

Computation limitations

Scaling up the analysis from

DT level to the entire

service area

Conclusion

• VGRS is a comprehensive tool to assess the true value of solar electricity

• The total inherent benefits of a rooftop solar system outweigh the revenue loss to discom.

• Rooftop solar installations in the residential consumer category, in lower tariff slabs, tend to offer a greater benefit to discoms.

• DTs with frequent overloading and day time peaks serve as useful targets for rooftop solar deployment to further improve the net benefit.

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Acknowledgements

• BSES Rajdhani Power Limited (BRPL) team, especially Abhishek R Ranjan, Naveen Nagpal, Pankaj Kargeti, and Sugandhita Wadhera

• Shakti Sustainable Energy Foundation

• CEEW Team, especially Karthik Ganesan and Kanika Chawla

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Thank you ceew.in | @CEEWIndia

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