The power sector in India is undergoing transformation. States like Andhra Pradesh have recently implemented power swapping to reduce electricity costs. This method allows States to exchange power to balance demand and supply. However, experts argue that power swapping alone is not a sustainable solution. The future lies in energy banking and enhanced storage capacity, especially with the rise of renewable energy sources.
Power Swapping Explained
Power swapping is an agreement between two States or utilities to exchange electricity. When one State has low demand, its share of power from an inter-State generating station is used by another State with higher demand. This reduces the need to buy expensive power from the open market. Both States save on capacity and energy charges. However, swapping can lead to additional transmission charges and energy losses, making it less economical in some cases.
Limitations of Power Swapping
While power swapping reduces costs temporarily, it does not address the root challenges of the power sector. Inter-State transmission charges add to the cost. Energy losses during transmission reduce efficiency. Swapping also depends on fluctuating demand patterns and may not always be balanced. Experts suggest that relying solely on swapping ignores the need for better planning of power purchase agreements and a balanced energy mix including thermal, hydro, and renewables.
Energy Banking – The Next Step
Energy banking allows excess renewable energy to be stored or banked with the grid for later use. This mechanism supports grid stability and financial benefits for producers and consumers. Unlike swapping, banking does not require immediate exchange but focuses on storing surplus power. It enables better integration of intermittent renewable sources like solar and wind. Banking policies vary across States, with some allowing only limited daily or monthly banking, which restricts the full potential of renewable energy projects.
Need for Enhanced Storage Capacity
India aims to increase renewable energy’s share in power generation to over 35% by 2030. The intermittent nature of renewables demands efficient storage solutions. Experts estimate a need for about 50 GW of energy storage capacity with 5-6 hours of backup by 2030. This will be met through battery energy storage systems and pumped hydro projects. Storage allows Discoms to save surplus solar power during the day and use it during evening peak demand when solar generation drops.
Policy and Market Considerations
Capacity trading and prudent power purchase agreements are crucial for a balanced power sector. States must focus on integrating renewables with storage and banking mechanisms. Developing sustainable battery storage systems can reduce dependence on costly market power and unscheduled power draws. A coordinated approach between States and regulators is needed to promote energy banking and storage adoption for a resilient power grid.
Questions for UPSC:
- Critically analyse the role of power swapping and energy banking in managing India’s electricity demand and supply. With suitable examples, discuss their economic and technical implications.
- Explain the challenges of integrating renewable energy into India’s power grid. How can energy storage solutions address these challenges?
- What are the key policy measures required to enhance energy storage capacity in India? Comment on the importance of such measures in achieving India’s renewable energy targets.
- With reference to India’s power sector, critically analyse the significance of interstate cooperation in electricity trading. What are the potential benefits and limitations of such cooperation?
