Does India need more coal power?

Business Standard     30th June 2021     Save    
QEP Pocket Notes

Context: Analysing the need for coal power for the development of India.

Estimates by Central Electricity Authority: 19th Electric Power Survey (EPS)

  • It estimates a demand of 2,400 BUs with a peak demand of 340 GW in 2030.
  • To meet our demand in 2030 in the least cost fashion, we need a total installed capacity of 817 GW, out of which 266 GW will be coal-based.
  • We have about 200 GW of coal-based capacity today (March 2021), which means that another 66 GW needs to be added (about 32 GW of coal- based plants (private sector share being only about 1.5 per cent) are under construction, leaving a gap of about 34 GW).
  • If the cost of battery rises further to $125/kwh, the requirement will go up further to 280 GW.

Arguments in support of ceasing the addition of coal-based power plants in India

  • Achievement of Paris Climate Agreement: The target of limiting temperature rise to only 1.5 degrees centigrade by 2100 when compared to pre-industrial levels
  • Low Plant Load Factor (PLF): our coal-fired plants are operating at a very low plant load factor (PLF), and we can generate additional power at a relatively low marginal cost.
  • Presence of massive renewable programme: Of having 450 GW of renewable capacity by 2030 and over the past few years, we have grown at the rate of about 25% annually.
  • Battery storage as a viable option: With the cost of batteries declining progressively, storage is already a viable option, which will help in attaining grid stability.
  • Thrust on green hydrogen: This may become a viable option by 2030 and will be able to provide long-term storage solutions.
  • Declining investments in coal: Coal-based developers will find it increasingly difficult to find lenders for their projects due to increasing abhorrence for coal.

Arguments in favour of the addition of coal-based power plants

  • To meet the rising demand: Various estimates ranges from 2,200 billion units (BUs) to 2,800 Bus.
  • The undefined shape of future load curve: Will it be the same as it is today where the peak demand will be at around 8 pm, or will it shift to sometime during the daylight hours - as suggested by  The Energy and Resources Institute.
  • Slump in renewable capacity enhancement: There has been a slump during the last two years or so for various reasons.
  • Marginal effect of low-cost renewable: Though battery costs may have come down by 80 per cent approximately in the last decade, further decrease in costs may no longer be so dramatic.
  • Peaking PLF: PLF is only the average use of the capacity of the generating station over the year. There could be certain hours where the plant may have to operate at more than 80% of the load.

Conclusion: Given the significance of coal-based plants in meeting our future demands, it might be somewhat premature to relegate additional coal-based plants to the background.

QEP Pocket Notes