New coal plants could hit India's renewable energy goal

Even with aggressive projections of 5% annual growth in power demand, analysis shows that coal-fired generation in FY 2030 will be lower than in FY 2020

The proposed new coal-based power plants with a total output of 27 GW could jeopardise India's target of 450 GW renewable energy (RE) by 2030, according to a new report.

These surplus “zombie” plants - assets that would be neither dead nor alive -- would require Rs 2,47,421 crore ($33 billion) of investment, but are projected to lie idle or operate at uneconomic capacity factors due to surplus generation capacity in the system, according to the report by Ember and Climate Risk Horizons.

Aditya Lolla, Ember’s senior analyst, said: “As India recovers from the disruption caused by the Covid-19 pandemic, how the country uses scarce public resources will be absolutely crucial. By avoiding these unnecessary “zombie” coal plants, India can not only save lakhs of crores of rupees but also lower power costs and reiterate its commitment to the success of its clean energy transition goals".

According to Abhishek Raj of Climate Risk Horizons, “Once incurred, these wasted investments will lock DISCOMs and consumers into expensive contracts and jeopardise India’s renewable energy goals by adding to the system’s overcapacity. The smart option is to divert these resources to renewables and storage to build a cheaper, more resilient grid for the future.”

Read | How can India achieve its renewable energy ambitions?

The analysis by energy experts at Ember and Climate Risk Horizons demonstrates that India doesn’t require new coal capacity beyond the 33 GW of new coal plants already being built, to meet demand growth by FY 2030.

Even with aggressive projections of 5% annual growth in power demand, the analysis shows that coal-fired generation in FY 2030 will be lower than in FY 2020, as long as India achieves its 450 GW renewable energy and other non-coal targets. The report finds that over 300 GW of renewable energy commitments have already been made by India’s public and private power generators.

Furthermore, India can meet peak demand in FY 2030 even if it retires its old coal plants and stops building new coal beyond those under construction, according to a press statement released here.

By FY 2030, India will have a total “firm” capacity of about 346 GW in addition to 420 GW of variable renewable capacity to meet an estimated peak demand of 301 GW. Daytime peak demand would be easily met with India’s huge planned solar capacity while the report shows that evening peaks will be most effectively met by additional battery storage, at a lower cost than building new coal.

The analysis reveals that switching investment from coal projects to renewables and battery storage would save the Indian power system an additional Rs 43,219 cr ($4 billion) a year from 2027 onwards in terms of reduced power purchase cost -- in addition to capex savings -- without sacrificing the power system’s ability to meet future demand.

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