1) The cost of electricity can be divided into plant-level costs, grid-level costs, and other external costs. Plant-level costs include capital, operating, maintenance and fuel costs. Grid-level costs include transmission and distribution infrastructure costs as well as balancing costs associated with intermittent renewable energy sources like solar and wind.
2) The integration of large amounts of variable renewable energy (VRE) like solar and wind has increased grid-level costs due to needs for more backup generation capacity, grid reinforcement, and balancing of the electricity network.
3) For true parity between VRE sources and dispatchable sources like coal and nuclear, the total generation plus grid-level and external costs must be equal. Con
1) The cost of electricity can be divided into plant-level costs, grid-level costs, and other external costs. Plant-level costs include capital, operating, maintenance and fuel costs. Grid-level costs include transmission and distribution infrastructure costs as well as balancing costs associated with intermittent renewable energy sources like solar and wind.
2) The integration of large amounts of variable renewable energy (VRE) like solar and wind has increased grid-level costs due to needs for more backup generation capacity, grid reinforcement, and balancing of the electricity network.
3) For true parity between VRE sources and dispatchable sources like coal and nuclear, the total generation plus grid-level and external costs must be equal. Con
1) The cost of electricity can be divided into plant-level costs, grid-level costs, and other external costs. Plant-level costs include capital, operating, maintenance and fuel costs. Grid-level costs include transmission and distribution infrastructure costs as well as balancing costs associated with intermittent renewable energy sources like solar and wind.
2) The integration of large amounts of variable renewable energy (VRE) like solar and wind has increased grid-level costs due to needs for more backup generation capacity, grid reinforcement, and balancing of the electricity network.
3) For true parity between VRE sources and dispatchable sources like coal and nuclear, the total generation plus grid-level and external costs must be equal. Con
and affordability of electric supply day when solar is available and a rapid ramp up in the evening. This lowers the capacity factor of dispatchable generators. The DNEP acknowledges technological and operational challenges posed by the integration of VRE into the grid. It highlights the loss of genera- tion efficiency, high maintenance cost, and R.B. Grover higher emissions of combined cycle plants due to cycling and ramping. It details grid in- The cost of electricity can be divided into tegration cost of VRE in qualitative terms. plant-level costs, grid-level costs, and other A recent report by the Department of En- costs. Plant-level costs consist of capital, op- ergy, U.S., highlights another element that is eration and maintenance, and fuelling cost. smoothening of transients in the grid by the Capital cost is reflected in the cost of genera- inertia of the rotating mass present in tion by way of interest on debt and return on thermal power plants, while solar plants equity. For nuclear power plants, capital cost have no such feature. is high, but fuelling cost is low. System costs have been For coal-fired power plants, quantified by the Nuclear En- capital cost is low, but fuelling ergy Agency of the OECD and cost is high. The capital cost of differ across countries de- solar and wind is continuously pending on the extent of pres- decreasing; fuelling cost is nil. ence of sources like natural GETTY IMAGES
Electricity reaches a con- gas. According to this quanti-
sumer through the grid. Laying fication, system cost of VRE a grid needs significant invest- sources is much higher than ment. A distributor buys elec- nuclear and coal. True parity tricity from a generator, adds of VRE sources will be transmission and distribution charges, a achieved only when the sum of generation charge to recover technical losses, operating cost and system cost matches with that from expenses, and his profit to determine the tar- dispatchable sources. iff to be charged from a consumer. Since sev- eral generators are connected to the grid, in- Other costs teraction with the grid and grid-management Other costs include those arising from the in- policies influence the working of a generator. fluence of electricity generation on health, At present, electricity markets do not assign influence on existing generation capacity any price to system effects, that is, to the due to adding new capacity, cost of acci- complex interactions among various gener- dents, security of supplies and net energy ators connected to the grid. gain for society. In recent years, a large capacity based on In the Economic Survey 2016-17 (Volume variable renewable energy (VRE) sources has 2), an attempt has been made to estimate been connected to the grid. These sources grid-level costs and some other costs. The are intermittent, but get priority feed-in due survey uses the term social cost of carbon to nil fuelling cost. A grid manager must en- to represent economic cost of greenhouse sure that enough dispatchable generation ca- gas emissions. It also adds health costs, costs pacity is connected to the grid to meet the of intermittency, opportunity cost of land, peak load in the evening when solar power is cost of government incentives and cost not available. Dispatchable generation is arising from stranded assets. It, thus, in- provided by baseload technologies like coal cludes not only system cost, but a significant and nuclear, and by large hydropower. part of other costs as well. It estimates that Grid-level costs have several components: the total social cost of renewables was 11 per grid connection, grid extension and rein- kWh, around three times that of coal. forcement, short-term balancing costs, and Conventional metrics like levellised cost long-term costs for maintaining adequate of electricity generation cannot be relied on back-up supply. VRE sources demand much to compare intermittent and dispatchable higher back-up, grid connection and rein- electric supply options. Indias electricity re- forcement costs. This aspect needs attention quirements are enormous. It doesnt need a during policy formulation. technology versus technology debate, but a In December 2016, the Central Electricity policy framework that integrates all low-car- Authority issued a draft national electricity bon energy technologies with coal in a man- plan (DNEP), which refers to system effect ner that ensures reliability and security of and resulting system cost at several places. electric supply along with affordability and The emphasis on VRE sources without climate-resilient development. any investment in energy storage has conver- ted daily load profile for dispatchable gener- R.B. Grover is Homi Bhabha Chair, Department of ating stations into a duck curve, that is, Atomic Energy, and member, Atomic Energy with a reduced electricity load during the Commission