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BW Businessworld

Green Energy: Eyeing India’s Energy Pie

As India strives to achieve 450 GW of installed renewables capacity by 2030, global power major AES looks to up its play here with newer solutions and an eye on sector dominance

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Burning forests. Gushing floods. Warmer temperatures and the steady echo of nature’s fury. The call for environmental consciousness resounds clearer than ever as we slowly reel from the ravages of a man-made pandemic. While the drain of fossil fuels scorches the ground below, the future of energy and how we procure it is an important question to ponder. It is in this context that the Prime Minister’s ambitious goal of 175 gigawatts (GW) of installed renewable energy capacity by 2022 and 450 GW by 2030 becomes critical.

Already, in an attempt to make good on its COP21 commitment, India has adopted a slew of green measures such as ethanol blended fossil fuels, green mobility, battery storage, and green hydrogen and extended its renewable energy commitment. Meanwhile, on the home front, the price of fuel and the demand for electricity has continued to soar with peak demand touching 200 GW ahead of monsoon showers.

It is evident that the potential as well as the market for green energy has never been bigger. With large Indian corporations rushing in to contribute to India’s energy goals, international players such as AES Corporation are also going big in eyeing the energy pie.

A key player in the sector for nearly four decades and having established its presence in 12 countries, AES has rich experience in running diverse businesses such as solar, wind, energy storage, liquefied natural gas (LNG) and regulated utilities. The company has bagged seven Edison Awards in the last 13 years, which is a testimony to its DNA of innovation. These awards are given out each year for the most innovative projects in the power industry in the US and internationally.

Reporting a reaffirmation of its growth expectations in the first quarter financial review in early May 2021, AES said it is looking to achieve a 7-9 per cent average annual growth through 2025 and expects to sign long-term Power Purchase Agreements (PPAs) for 4GW of renewables in 2021.

No Stranger to India
Tracing its first steps in India, AES was invited to Odisha in 1992 to develop the Ib Valley thermal power plant. Soon, in 1998, the company acquired a 49 per cent stake in the 420 MW thermal power project of Odisha Power Generating Corporation (OPGC), owned by the Government of Odisha. This cemented its presence in the Indian energy sector. Over the years, the Virginia-based energy giant undertook a clean energy shift to achieve portfolio-wide net-zero carbon emissions from electricity sales by 2040 and the ripples of these changes have traversed to its offshore locations.

The company has inaugurated a 10 MW battery-based energy storage project in Rohini in New Delhi (jointly owned by Mitsubishi) developed with Tata Power DDL to support India’s Energy Storage Mission. The energy storage project is the first of its kind in the country and can serve more than 2 million customers in the Delhi region.
Andrés Gluski, President and CEO of AES Corporation says, “India cannot get to 450 gigawatts of renewables on the grid without energy storage. It simply can’t be done without large-scale battery energy storage because, simply put, renewables are intermittent. If you don’t have a buffer between the renewables and the grid, the quality and reliability of energy are going to be a concern.”

The case for energy storage is underpinned by the sporadic availability of natural resources that power popular renewables like wind and solar plants. The unpredictability of sunshine or clouds passing over solar farms, the damage to wind turbines due to sudden gusts of wind are all possible scenarios that cast a pall on the reliability of these options, strengthening the need for energy storage.

“The transition away from fossil fuels and towards cleaner energy would require large amounts of variable/ intermittent renewable energy on the electrical grid in India. To support this transition the Indian power infrastructure will have to address a variety of integration challenges on the supply and demand sides, and grid stability,” says Rajendra Shrivastav, President & Market Business Leader for AES India.

“Numerous studies completed around the globe point to a similar conclusion that energy storage is critical to achieving a decarbonised power grid and other changes involving electrification of transportation and building sectors,” adds Shrivastav.

Big Moves
AES’ global experience makes it more relevant for India’s needs at the moment. And India’s ambitious 2022 energy goals of 175 GW of installed renewable capacity, of which 100 GW has been allocated for solar power, signals ripe investment opportunities for the energy distributor. One such investment project is the 5B product ‘Maverick’. AES’ Australian partner 5B provides pre-fabricated redeployable solar solutions which are said to take less land area, lesser manpower and can be implemented faster without any civil construction at the sites.

AES sees an interesting business proposition in localising the product’s production based on India’s crowded urban spaces ahead of what it believes will be a global shortage of basic materials and parts needed by developers, chiefly land. “5B allows us to double the energy density. If you need to locate 100 MW of energy, we can do it in the space that other people do 50 MW and we can build it in a third of the time,” explained Gluski at the first quarter financial results in May 2021. He also highlighted the tenacity of the product which can withstand real-life category-4 hurricane winds, unlike conventional solar solutions.

RAJENDRA SHRIVASTAV, President & Market Business Leader, AES IndiaAES INDIA MILESTONES A selected timeline of projects and latest developments

1998: AES acquires 49% stake in the 420 MW thermal power project by Odisha Power Generating Corporation

1992: AES enters India to develop the Ib Valley thermal power plan

2012: AES starts commercial operations of 5MW solar project in Rajasthan and another 15 MW solar project in Gujara

2012: AES commences commercial operations of a 39.2 MW Windfarm in Gujarat

2014: Groundbreaking of expansion plansOPGC Project 660x2 MW

2019: OPGC Project Units 3 and 4- 660x2 MW inaugurated

2019: AES along with our partner Mitsubishi, inaugurates the 10 MW battery energy storage project at a Tata PowerDDL sub-station in Delhi

2020: AES shares acquired in 1998 from the Government of Odisha transferred back to the state

Sector In Transition
The future of energy business, as AES posits, is transition to a low-carbon future. While helping companies and industries rapidly decarbonise, AES has also shifted its portfolio to green and sustainable energy by exiting coal-fired plants. The company is inching towards achieving a portfolio-wide net-zero carbon emissions from electricity sales by 2040 and retiring its coal interests progressively.

According to Gluski, AES has its sights set on bringing its generation from coal to less than 10 per cent of total generation by 2025.

“It is a transition. You cannot go out and suddenly say you want to be a hundred per cent renewable tomorrow. Civil societies, governments, NGOs and the private sector need to work together realistically to address certain questions about how to transition, how to maintain reliability during that transition, and given the evidence of climate change impacts, how we make the transition quickly. There is also the issue of financing the transition. Who is going to make those investments, and is there community support?” says Gluski.

Leading With Example
Recently in Virginia in the US, AES signed a contract with Google to supply renewable energy on hourly basis for their data storage centre in the state. AES undertook to supply the data centres’ carbon-free energy needs on an annual basis by sourcing energy from a portfolio of wind, solar, hydro and battery storage resources to be developed or contracted by AES. This deal alone would propel the construction of close to 500 MW of renewable energy and storage projects to ensure the data centre’s needs. The company believes that large data centres and other industrial customers in India could also benefit from the localised application of the same.

“Round-the-clock clean energy products are the likely next step in the evolution of corporate thinking about clean energy,” said Kyle Harrison, a Bloomberg analyst, heading the Sustainability Research at BloombergNEF in a recent media report. His comment indicated that while companies outside top tech firms like Amazon and Microsoft may not be able to follow in Google’s footsteps for maybe three to five years, or perhaps until energy storage achieves price parity, the demand for mixed resource renewable energy development would grow, thus establishing a new aspirational trend.

Another AES solution that is set to enter India soon is Fluence. To maintain its stronghold on the energy storage market, AES entered into a joint venture with Siemens in 2018 to form Fluence. Expecting a growth of 40 per cent annually in the energy storage sector, Fluence is positioned to capitalise on the green energy opportunity through its AI-enabled bidding engine, which is targeted on its current Indian customers and partners.

Enabled by its innovations, AES premiered online the Alamitos battery energy storage facility in Southern California in late 2020, which won it international acclaim as well as the 2021 Edison award. When fully charged, the product exhibits a potential to light tens of thousands of homes almost instantaneously.

The Road Ahead
Looking at the road ahead in India, AES’ Shrivastav explains that the company will aim to localise the production of 5B prefab solar and capitalise the solar momentum and work with governments, industrial consumers, communities and grid applications. Simultaneously, Fluence’s India plans can localise the production of systems and scale up its supplies and services in the country. The goal, according to Shrivastav, is to have an Indian solution made in India for the Indian market and to work with Indian partners and Indian prices. “AES has been a committed investor in India for 30 years and we see tremendous potential to work with Indian partners to support the country’s sustainable economic growth,” he says.

In a publication titled ‘Global Renewables Outlook: Energy transformation 2050,’ the International Renewable Energy Agency (IRENA) points out that ultimately any success in mitigating the climate threat will depend on the policies adopted, the speed of their implementation and the level of resources committed. The IRENA is an intergovernmental body with over 164 member countries that supports nations in their transition to a sustainable energy future and serves as the principal platform for international cooperation and knowledge on renewable energy.

Shrivastav echoes the sentiment: “We believe that time is of essence for policymakers in India to develop a clear and aggressive strategy for encouraging the utilisation of energy storage in the power infrastructure. Without this, the planned rapid growth of renewables being installed in India in the next few years could lead to grid stability issues, including potential blackouts, as is currently happening in Australia and the UK.”