RTC Power To make Up 5% of Renewable Power by 2025

Even as India awaits its first large RTC (round the clock) renewable projects to come online, research agency CRISIL predicts that the share of RTC plants in the overall renewable (RE) capacity mix will increase from nearly nil today to over 5% by calendar 2025. The agency expects this to be achieved on the back of tariff reduction of nearly 12% over the next two fiscals and an ability to provide power at a pre-determined schedule — currently a challenge for RE projects. These will make RTC power much more acceptable to state discoms.

For the record, RTC power projects till now have been bagged at prices going upto Rs 6.85 for peak hours power supply.

Thermal plus renewable bids on the other hand, have already started beating thermal power costs comfortably.

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Government initiatives and strong investor interest have led to multi-fold growth in RE capacity (solar and wind) in the past five years from 45 GW as of December 2016 to around 100 GW as of December 2021. The heady growth, however, has brought to the fore the issue of grid stability for discoms, given the difficulty in scheduling of RE power generation vis-à-vis other sources.

Says Manish Gupta, Senior Director, CRISIL Ratings, “We expect a reduction in RTC tariffs over the next two fiscals, from a levelised tariff of Rs 3.7 per unit to Rs 3.2 per unit. This will be due to lower cost of storage equipment, which currently contributes nearly 25% of the tariff. Prices of lithium-ion based battery storage solutions, the dominant form of storage, have fallen from $250 per kilowatt hour (kWh) in 2018 to $180-200 per kWh today, and are likely to drop to ~$150 per kWh over the next two fiscals.”

This reduction of storage system cost will ride on economies of scale, improvement in efficiency, falling prices of electrolytes (which form around one-fourth of overall cost), and recycling of component metals such as nickel, cobalt, and lithium. Additionally, alternative compositions and chemistries in battery pack are now becoming available, which allows substitution of certain metals and is thus likely to shield against the rise in prices of select metals.

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While lower cost is one aspect, Ankit Hakhu, Director, CRISIL Ratings says, “As India marches towards its goal of 500 GW of RE power by 2030, and the share of RE generation in the overall mix continues to grow, the issue of grid stability will only intensify from here. Over next four years, RE capacity will be around 25% of the generation mix – sizeable enough to materially destabilise the grid or get curtailed, if not scheduled properly. Thus, we expect RTC plants, which have the ability to schedule power at pre-determined timelines, to gain traction. We expect RTC to be forming atleast 5% of the overall RE mix by 2025 from almost nil today.”