The major challenge facing the power generation sector is that of expanding capacity to meet increasing electrical demand. Since the commissioning of power plants takes many years, planning for any capacity required in the next ten years should begin now, and the appropriate mix of energy sources must be identified. It is well known that electrical energy cannot be stored—instead it must be consumed as it is generated, or converted to potential energy, kinetic energy, chemical energy or some other form in order to be stored. However, the energy density of these known forms of storage is very low; hence, generation should ideally be scheduled to match the varying load by the second, minute, or hour in an economical and reliable manner. This problem is well understood; however, with the increasing penetration of renewable sources, the aim of matching generation to load will become even more challenging.

Currently more than 50 percent of power is generated from fossil fuel based plants. These plants are not efficient. Owing to the variability of renewable sources, conventional fossil fuel plants are required for dispatch and regulation. As renewable sources are still costly, even for providing base load, conventional plants will continue to be used.