By Admin 
Have you ever thought that the electricity that runs the fan and AC in your house throughout the day is sometimes sold for free and sometimes at a negative price in the wholesale market during the day? But the same electricity reaches Rs 10-12 per unit in the dark of night? Yes, this has now become a daily routine in the electricity exchanges of India. This story is not just about demand and supply of electricity, but completely about the battle going on between sunlight and darkness…
The game starts with the first rays of the sun
As soon as 6-7 in the morning, crores of solar panels installed on the roofs of houses, fields and deserts across the country start working. India is today the third largest solar energy producer in the world. The share of solar in our total electricity generation capacity has crossed 20 percent. As the sun shines brighter, millions of units of cheap solar electricity start flowing into the grid every hour. Solar plants are at their peak between 12 and 3 pm. Electricity is generated in such huge quantities that the supply in the exchange starts outweighing the demand.
The electricity market also has the same rule as the vegetable market, that is, when the goods become too much, the prices fall. This is the reason why in the hot afternoon the price of electricity on the spot exchange falls to Rs 1-2 per unit and sometimes even reaches zero. In some states, ‘negative pricing’ is also being seen, that is, the seller of electricity is paying money to the buyer so that his grid remains stable.
Why does the whole game change as soon as evening falls?
But as soon as it is 5 in the evening and the sun starts setting, the speed of the solar panel slows down. By 6 o’clock solar generation almost ends. At this very time, lights, fans, TVs, ACs and coolers switch on in every house in the country. People returning from offices increase their usage of electricity. On one hand, a huge source of supply suddenly stops and on the other hand, the demand rapidly reaches its peak.
Electricity distribution companies suddenly face a crisis as to how to meet this huge demand? They have to immediately start coal and gas thermal plants, the cost of generating electricity is 3-5 times more than solar. As a result, between 7 and 11 pm, the price on electricity exchanges jumps to Rs 8, 10 and sometimes Rs 12-14 per unit.
This is ‘Duck Curve’ – the shape of the duck which shook the whole system
The International Energy Agency and the Indian Research Institute call this strange pattern ‘duck curve’. If you draw a graph of electricity demand throughout the day, it looks like the shape of a duck. High peaks in the morning and evening and deep troughs in the afternoon. Indian Express reports that as more and more solar panels are being installed in the country, this duck curve is becoming steeper.
When electricity prices fall to zero in the afternoon, the rate of return for solar plants decreases. When thermal plants suddenly have to run at full capacity in the evening, their maintenance and fuel costs skyrocket. Both the situations are creating great difficulties for investors and power companies.
Lack of storage is the real problem
You will think that when such cheap electricity is being generated during the day, why not save it and use it at night? This is the biggest challenge. At present the capacity of battery storage in India is very modest. According to an analysis by a current affairs magazine, India’s grid-scale battery storage capacity is still in its nascent stage, while the need is many times greater. Installing big batteries requires huge investment, which is currently an expensive deal for power companies. Also, pumped hydro storage projects are also taking time. As a result, the electricity of the day cannot illuminate the darkness of the night.
Business Standard recently reported that this volatility in spot power prices is now seen 12 months of the year, whereas earlier it used to be only in summer. There are two big reasons for this:
- Very rapid increase in solar capacity.
- Inability to increase stable baseload electricity like nuclear and hydro.
When your most reliable power source, the sun, disappears in the evening, there will be turmoil in the market. To deal with this problem, the government is now working on schemes like time-of-day tariff (i.e. different electricity rates according to day and night) and subsidy on battery storage.
So what is the solution?
Experts believe that unless we make arrangements to store daytime solar electricity on a large scale, this turmoil will continue. Some startups are now designing plants with the help of Artificial Intelligence (AI) that will reduce their production during the day and increase it at night. According to Indoen.com, this wildness in electricity prices may increase further in the coming 4-5 years, because solar capacity is continuously increasing while the pace of storage is not matching it.