Report
Are Urban Microgrids Economically Feasible?
A study of Delhi’s Discom and Consumer Perspectives for BYPL
Akanksha Tyagi, Neeraj Kuldeep, Aarushi Dave
October 2020 | Energy Transitions, Power Markets
Suggested citation: Tyagi, Akanksha, Neeraj Kuldeep, and Aarushi Dave. 2020. Are Urban Microgrids Economically Feasible? A Study of Delhi’s Discom and Consumer Perspectives for BYPL. New Delhi: Council on Energy, Environment and Water.
Overview
Urban microgrids with rooftop solar (RTS) PV and battery energy storage systems (BESS) can help power distribution companies (discoms) meet the accelerating electricity demand in cities. These may be a more convenient alternative to usual methods of procuring additional generation capacity and building new grid infrastructure. Last year, BSES Yamuna Power Limited (BYPL), in association with Panasonic India, piloted four urban microgrids in their service area.
This study employs the VGRS framework to assess the impact of these systems on BYPL revenue. It also uses a discounted cash flow method to estimate the impact on consumer finances. The analysed microgrid consists of 7 kWp RTS PV system coupled with a 10 kWh/ 5 kW lithium-ion battery. For this purpose, four scenarios were developed for the discom and consumer.
Discom scenarios:
- Sd1 assesses the impact of the grid-connected PV system on discom operations.
- Sd2 examines the impact of the coherence of PV and BESS on discoms, where the battery is restricted from charging using the grid supply.
- Sd3 represents the actual configuration of the pilot; the battery is allowed to charge on the grid when the PV system is unavailable.
- Sd4 is a modelled version of Sd3, where the battery dispatch across seasons is optimised to maximise the availability of the microgrid during the discom’s peak hours.
Consumer scenarios:
- Sc1 assesses the grid dependence of the consumer.
- Sc2 examines the impact of the PV on the consumer’s grid dependence.
- Sc3 represents the actual configuration of the pilot; the battery is allowed to charge on the grid when the PV system is unavailable.
- Sc4 is a modelled version of Sc3, where the battery dispatch across seasons is optimised to maximise the availability of the microgrid during the discom’s peak hours. This scenario estimates the impact of prioritising the operations of a microgrid for discoms over consumer finances.
Key findings
- BYPL gains the most in Sd4 where microgrid is scheduled to reduce the overall peak demand.
- Greater export of solar electricity to the grid during the discom’s peak hours – 70 per cent in Sd1 and 65 per cent in Sd4 – results in a net benefit to the discom.
- On the contrary, increased self-consumption of solar electricity by consumers – 87 per cent in Sd2 and 87 per cent in Sd3 – results in a net loss to the discom, as local peaks are different to and smaller than system peaks. Hence, using microgrids to reduce these local peaks does not significantly impact discom operations but does affect their revenues substantially.
Sd4
- Microgrids improve the utilisation of solar electricity by the consumer – almost 80 per cent of solar generation is self-consumed.
- However, preferential scheduling of microgrids to improve availability for discom (Sc4) adds a financial burden on the consumer. The payback period in Sc4 increases to 10 years.
Key recommendations
- Introduce regulatory provisions to support dispatch by the consumers from behind-the-meter storage to the grid. Such provisions would allow discoms to utilise the exported electricity to reduce power procurement, manage peak demand, and minimise transmission and distribution losses.
- Optimise the permissible export of electricity to the grid. Besides prioritising consumers for greater favourable gain, excess export to the grid might be challenging for discoms to manage. Therefore, to sustain equitable benefits for consumers and discoms alike, regulations should focus on restricting the permissible export of electricity to the grid to promote self-consumption by consumers, while ensuring access to electricity for discoms within the manageable technical limits.
- Introduce differential time-of-day tariffs for battery export for all consumer categories. Such tariffs can be designed to incentivise consumers to export electricity to the grid during peak hours or to charge battery from the grid during off-peak hours.
- Discoms should implement new business models based on cost-sharing and leasing to ease the financial burden on consumers.
BYPL gains the most by optimising electricity dispatch from microgrids to support its peak load.
