Aditya Birla Group’s flagship metal company Hindalco Industries wants to meet 30% of its energy requirements via renewable sources by 2030. As the deadline inches closer, the company is experimenting with several technologies. One of the alternatives available from which the company has high hopes is the hybrid combination of solar, wind and pumped hydro. “This is a unique arrangement. If this works, it can revolutionise smelting in India,” says Satish Pai, managing director, Hindalco.
The optimism about hybrid technology from a player engaged in an energy-intensive industry has not gone unnoticed. A look at the power sector in the past one year shows a growing affinity for the development and procurement of hybrid energy, which combines different energy sources such as solar and wind.
Power generators such as NTPC, Tata Power, SJVN, Sembcorp and Torrent Power are active in the hybrid energy space. Large industrial states in the country are also ramping up the presence of hybrid power in their energy mix. In the past couple of months, Maharashtra and Gujarat have invited bids for the procurement of 500 megawatts (MW) of wind-solar hybrid power each.
When seen in the larger scheme of things, the importance of the pick-up in hybrid power becomes evident. India has set an ambitious target of installing 500 gigawatts (GW) of renewable energy capacity by 2030. As of April 9, Union power ministry data showed that renewable capacity stood at 190 GW. If the country must meet its target in the next six years, it must add at least 50 GW of renewable energy annually.
Flagging Momentum
An analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) showed that India added a mere 13 GW of renewable energy in 2023, a 20% decline as compared to the addition in 2022. Moreover, power ministry data shows that only 17% of India’s electricity demand is met through renewable sources.
A breakdown of the renewable energy mix of India holds some answers to the slow adoption of renewable energy. Around 120 GW of the total 190 GW renewable capacity composes of solar and wind energy, which are intermittent in nature. Pure solar and wind plants in India struggle to deliver power round the clock as not all parts of the day see sunlight or strong wind speed.
As a result, the capacity utilisation factor (CUF)—the ratio of actual output and maximum possible output from an energy source—is low in renewable energy sources. Industry estimates put the CUF of both wind and solar energy in the range of 20%–30%. The low efficiency and the higher requirement of investment in battery storage are deterrents.
While battery storage price in India was at Rs 10.18 kilowatt per hour (kWh) in December 2023, the average cost of thermal power between 2019–20 and 2021–22 ranged from Rs 3.96/kWh to Rs 4.13/kWh.
Both technical and economic factors resulted in a moderation in momentum of renewable capacity addition. Centre for Monitoring Indian Economy’s (CMIE) data showed that year-on-year growth in installations of wind and solar capacity has seen a rapid slowdown.
For wind, the growth had come down from 29% in March 2017 quarter to 6.7% in December 2023. A similar trend was visible for solar where the growth fell from the high of 152% to 16% in the same period. The lost momentum does not bode well for the renewable transition. It is in this context the pickup in hybrid energy space is happening.
Promit Mookherjee, associate research fellow at Observer Research Foundation (ORF), a Delhi-based think tank, says that the question everyone is trying to answer is can the renewable energy at industry’s disposal be able to meet its electricity demand throughout the day.
“There has been a realisation in the past one year that there is a need for diversification in the renewable's basket. Industry and policymakers have realised that just pure solar or wind will not be enough for a smooth transition to green energy,” he says.
Due to this there is momentum in hybrid energy space, he adds. “While the idea has existed for a long time, the capability and the required technology to do wind and solar together has improved over the
past few years.”
The Right Mix
Comparison of the data on renewable energy capacity under construction for the months December 2022 and 2023 highlights the momentum in the hybrid space. In December 2022, hybrid projects made up for 5% of the total renewable energy capacity under construction. This number jumped up to 15% within a year.
Moreover, the share of hybrid projects is higher if the data on projects under the planning stage is considered. According to Central Electricity Authority update for December 2023, hybrid projects made up for 35% of renewable energy capacity under development.
Manikkan S., executive director and chief executive officer at Radiance Renewables, a solar power producer, says that the hybridisation has become a theme as corporates have now become comfortable with the idea of more green power in their energy mix.
“In utility, commercial and industrial markets, hybrid power has become attractive. As economics for the storage model with one source is not working out, stakeholders are seeking hybridisation at the source of generation itself to offset the gaps of intermittent sources like solar and wind,” he says.
Radiance Renewables, backed by India’s largest climate fund Eversource Capital, plans an investment of Rs 1,245 crore over the next three years in the hybrid energy space. Another industry player that has identified the potential of the technology is Adani Green.
Through a series of investments, the company installed 2.14 GW of hybrid energy capacity spread across four plants. Notably, hybrid energy makes up for a larger share of its 10 GW renewable energy mix than wind capacity which stood at 1.4 GW.
But what makes the technology a reliable bet in the energy space? While the gaps in the pure play solar and wind are obvious, the complexity in combining the two technologies is also high which requires significant investment and land acquisition.
The answer could be in how the synergy between the two unlocks generation potential. A team of researchers at Pandit Deendayal Energy University, Gandhinagar, explored the results of combining solar and wind along with hybridising existing pure solar or wind plants.
The 2022 study concluded that hybridisation could boost power generation capacity in the range of 62%–399%. Moreover, it noted that most parts of the country are suitable for peak load wind-solar hybrid systems while southwestern parts of the country are best for meeting base load requirements. Base load refers to the amount of energy required throughout any day while peak load is the extra energy needed depending on the requirement.
The study said, “Peak wind power output in the western half of the nation is approximately 14 GWh, whereas the same is around 7 GWh in the northern regions. Hybridisation, on the other hand, would boost power output to above 10 GWh across the nation, with a high of 18 GWh in the western areas.”
Recognising this potential, the government had introduced the National Wind Solar Hybrid Policy in 2018 which covered the setting up of new hybrid plants and the hybridisation of existing power plants. According to the policy, industry players setting up such capacity were eligible to receive financial incentives available for standalone solar and wind projects from the government.
In the last Budget session, R.K. Singh, the Union power minister, told Lok Sabha that 1.44 GW of wind-solar hybrid capacity was commissioned under the scheme.
ORF’s Mookherjee says that the policy catered to a niche segment in the energy space so far. “As the industrial demand picks up for hybrid sources, we will get a better sense of how equipped the policy is to aid the momentum in the hybrid space. But as a policy signal to the industry, it has worked in promoting the pickup of hybrid energy,” he says.
While the under development and construction data points to a robust pipeline of hybrid plants, the industrial adoption wave could get even bigger in the coming years.
Hybrid Rush
Amit Kumar, partner and leader, energy and climate at Grant Thornton Bharat, a consultancy, says that the share of hybrid projects in the total renewable capacity being added could rise even further. “Two to three years from now, I think 70%–75% of the total capacity additions will be hybrid. The reason why we are seeing such momentum in the past few months is Europe’s Carbon Border Adjustment Mechanism [CBAM]. As it is an important destination for metals exports, the players in the industry are rushing to add green power to their energy mix,” he says.
Kumar adds that as the demand coming from the industry is for supply of power for duration between 12 hours and 18 hours a day, which can be met using the combination of solar and wind. “This wave of hybrid adoption started from metals, but it will spread to other industries such as textile and pharmaceuticals. The industry finds the cost of power generation from hybrid plants very attractive which is driving this wave,” he says.
The European Union (EU) introduced CBAM in 2023 to push for less carbon emissions during carbon-intensive goods production. Being an important destination for metal exports, the decision is important for big industrial players in India. Of the total exports of iron, steel and aluminium products, EU accounted for 27%.
The metals industry is known to be energy intensive in nature. To meet its electricity demand, it needs reliable green energy systems which is why observers believe wind-solar hybrids have become all the rage.
Industry estimates suggest that the CUF of hybrid plants can be higher than 50%. Adani Green’s hybrid plant in Jaisalmer has been designed to deliver a minimum CUF of 50%. Radiance Renewable’s Manikkan says that the CUF can go up to 70% in the case of hybrid plants. To put this in context, rating agency ICRA’s estimates suggest that the average capacity utilisation of thermal plants stood at 68% in 2023–24.
With the industry warming up to the technical advantages of the hybrid, the economics also made sense. Analysis of bid documents by Mercom India, a clean energy consultancy, showed that the tariff for such projects ranged from Rs 3–4/kWh in 2023. In one of the projects, Central Electricity Regulatory Commission (CERC) set a tariff of Rs 2.53/kWh.
Neeraj Kuldeep, senior programme lead at Council on Energy, Environment and Water, a think tank, says that optimisation of the two technologies helps deliver technical and economic advantages. “As both energy sources complement each other and the plant is optimised looking at the weather conditions, industrial players can find better returns on investment. Optimised usage of grid infrastructure also means reduced integration cost for renewable energy,” he says.
Moreover, the investment required in battery storage is minimal as most parts of the day record sunlight and wind. This allows the tariff to be cheaper. To increase efficiency, some players also opt for adding pumped hydro facility at their hybrid plants which acts as a battery storage unit.
Only Time Will Tell
These factors emerge as reasons why big industrial players like Hindalco and Tata Steel are looking at hybrid power. Tata Steel signed an agreement with Tata Power for the development of hybrid projects in October 2023.
Big names like Tata, Adani and Birla are betting on the future of hybrid energy. The renewable transition in India Inc. appears to be tilting towards the combination of two abundant natural resources. But with the number of commissioned projects limited right now, how hybrid energy will fare in the long run remains to be seen. The average time to commission a hybrid project is two years, which means the momentum in planning and construction currently will be visible on the ground from 2025–26.
Will the technical benefits hold over the long run? Can the tariffs remain low without threatening the viability of such plants? And is hybrid technology the winning bet for India’s renewable transition? The answers are blowin’ in the wind.
