India’s net coal-powered capacity additions to fall short of target: Study
A study by US-based think tank Institute for Energy Economics & Financial Analysis (IEEFA) has projected that the country’s net coal-powered capacity by 2030 would be lower than the government estimates.
According to IEEFA’s prediction, India’s net coal-fired capacity by FY2030 is pegged at 230 Gw, implying an incremental addition of 26 Gw over the present nameplate capacity. The Central Electricity Authority’s (CEA) optimal energy mix by 2029-30 projects India’s coal-based capacity to be 266.8 Gw – a net addition of 64 Gw on the current installed capacity. CEA’s projection exceeds National Electricity Plan 2018 by 17 Gw. NEP had identified 49 GW of end-of-life capacity retirements, and capacity that should be retired due to age plus space constraints preventing the implementation of emission control systems on plant facilities.
IEEFA, however, is not upbeat on net capacity additions in coal-fired power.
“Given the dire financial situation of the thermal power sector, construction of new coal-fired power plants without subsidy support from the government will be highly risky and unviable. India’s largest thermal power developer NTPC recently announced that it will not undertake any new thermal power plant development beyond its current portfolio. India’s largest private power company, Tata Power, reached the same conclusion in 2018”, the report by IEEFA noted.
The Indian thermal generation sector has faced multitudes of problems this past decade. A far too ambitious expansion programme was undertaken, almost entirely funded by financial leverage. Financial problems were compounded by cost overruns, project delays, floods, earthquakes, fuel supply interruptions, PPA contract cancellations, and a lack of accountability by promoter groups.
Projects tend to rely on Coal India Ltd (CIL), a state-owned coal mining giant supplying more than 80 per cent of India’s thermal coal demand to generators. The company, however, has struggled to expand its mining operations, mainly due to being unable to get environment and forestry clearances for proposed mines, land conflict issues, coal evacuation complications and other law and order problems arising from protests against mining.
At the same time, renewable energy wholesale tariffs have become increasingly cheaper due to the introduction of reverse bidding auctions, and supported by falling costs in solar modules and wind turbines. As a result, state discoms (distribution companies) have increasingly preferred to procure power through cheaper renewable energy contracts to meet incremental demand.
IEEFA expects this trend to continue as renewable energy tariffs continue to decline over the coming decade, and while India strives to build massive renewable energy capacity, targeting up to 450 GW by 2030 (over 50 per cent of its total installed capacity).
Source: Business Standard