Managing India’s Renewable Energy Integration through Flexibility

This report by the Climate Policy Initiative and Indian School of Business examines the challenges of integrating high levels of renewable energy into India's power grid, specifically focusing on the need for system flexibility and the risk of coal-based assets becoming stranded. The authors propose that converting existing baseload coal plants into flexible plants is a cost-effective short-term solution to provide necessary operational reserves and mitigate financial risks for investors.

• India's renewable energy targets include installing 175 GW by 2022 and 275 GW by 2027, which would result in renewable energy contributing 20.3% and 24.2% of total electricity requirements in 2021-22 and 2026-27, respectively.
• Integrating variable renewable energy creates five types of flexibility needs: ramping, load following, spinning and short-term reserves, daily balancing, and seasonal balancing. It is estimated that approximately 5% of installed generation capacity must be flexible resources.
• Ramping up requirements in the Indian grid are expected to increase significantly from 13.27 GW in 2017 to 75.05 GW in 2027, with the highest demand occurring between 5 pm and 7 pm due to the reduction in solar generation.
• Coal-based power plants in India face a high risk of becoming 'stranded' assets. A plant is considered economically unviable when its project internal rate of return (PIRR) falls below the weighted average cost of capital (WACC), which occurs at a plant load factor (PLF) below 52%. Approximately 95 GW of coal capacity is expected to be stranded by 2022.
• Converting baseload coal plants to flexible plants is technically feasible, as demonstrated by pilot cases in the USA and Germany. Technical retrofits are required to allow plants to operate at lower PLFs (40-55%), reduce start-up times, and increase ramp rates.
• The total incremental cost to convert a baseload coal plant into a flexible one is estimated at 5%-10% of the total project cost in net present value (NPV) terms, or 8%-22% in levelized terms.
• Flexible coal is significantly more cost-effective in the short term than cleaner alternatives; the upfront investment costs for lithium-ion batteries and pumped hydro are 500-2000% and 400-1800% higher, respectively, than the incremental cost of coal flexibility.
• Operating coal plants flexibly can reduce absolute CO2 emissions by approximately 0.11 million tons/MW due to lower average load factors (reducing from 85% to 40%) and a shorter project lifespan (reducing from 40 to 35 years).
• Lowering the minimum PLF of coal plants to 40% could significantly reduce renewable energy curtailment, potentially dropping it from 3.5% down to 0.76%.
• To implement flexible coal cost-effectively, the report recommends moving away from cost-plus power purchase agreements toward market-based mechanisms, such as capacity auctions and the development of an ancillary services market.

APA

Sen, V., Trivedi, S., & Shrimali, G. (2018). Managing India’s Renewable Energy Integration through Flexibility. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/05/Managing-Indias-Renewable-Energy-Integration-through-Flexibility-.pdf

Chicago

Sen, Vivek, Saurabh Trivedi, and Gireesh Shrimali. Managing India’s Renewable Energy Integration through Flexibility. Climate Policy Initiative, 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/05/Managing-Indias-Renewable-Energy-Integration-through-Flexibility-.pdf.

Wikipedia

{{cite report |last1=Sen |first1=Vivek |last2=Trivedi |first2=Saurabh |last3=Shrimali |first3=Gireesh |title=Managing India’s Renewable Energy Integration through Flexibility |publisher=Climate Policy Initiative |date=May 2018 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/05/Managing-Indias-Renewable-Energy-Integration-through-Flexibility-.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sen2018managing, author = {Sen, Vivek and Trivedi, Saurabh and Shrimali, Gireesh}, title = {{Managing India’s Renewable Energy Integration through Flexibility}}, institution = {Climate Policy Initiative}, year = {2018}, month = may, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/05/Managing-Indias-Renewable-Energy-Integration-through-Flexibility-.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }