CRH Study Makes The Case For India To Drop 27 GW of Planned Coal Fired Generation

Yet another study, this time by Ember and Climate Research Horizons (CRH) has laid down a stark warning for India’s thermal power plans.

The report released by the organisation states that based on analysis by Climate Research Horizons (CRH), 27 GW of pre-permit and permitted new coal power plant proposals are now “superfluous to requirements and will likely end up as “zombie” plants— assets that will be neither dead nor alive. “That sounds quite close to the description used for an existing pack of close to 40 GW of gas fired and thermal plants which are already  struggling, and rather than being called ‘zombie’ plants, go by the much gentler moniker of stranded capacity. barely 24.4 GW capacity of these plants has finally been made operational, with over 8 GW still without any long term PPA’s. The higher gas prices currently takes out the gas fired ones from these from the equation in the near future too.

The CRH report, coming at a time when the country is scrambling to arrange enough power to meet demand , using higher coal contributions, might seem counter intuitive, but the case against thermal plants based on coal has been building up for a while. Be it larger private sector players that have sworn off coal plants for good like Tata Power, or the largest power generator, NTPC, that has chosen to double up on its renewable targets, most generators get it, but governments at state levels don’t seem to be able to get over coal.

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At stake is the millions of jobs the coal economy supports, and the seeming inability of  states with high coal deposits to make a decisive switch away.

The Climate Research Horizons (CRH) Report, authored by Aditya Lolla, Senior Electricity Policy Analyst, Ember, Ashish Fernandes, CEO, Climate Risk Horizons and Abhishek Raj, Analyst, Climate Risk Horizons makes a strong case however.

“India can meet its peak demand in FY 2030 without building the “zombie” coal plants. India’s peak demand would reach 301 GW by FY 2030, assuming it grows at an annual growth rate 5% in line with the Central Electricity Authority (CEA) projections. This is about 40 GW less than the OGCM forecast. If this peak occurs during sunlight hours as recent studies predict, India’s planned solar capacity can cover much of it. Even if it occurs in the evening, substituting the “zombie” coal plants with additional battery storage capacity represents a more flexible, cheaper option” they state.

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Financially, “India can make annual savings of Rs. 43,219 cr by investing in renewables and storage, instead of “zombie” coal projects.

Substituting 27 GW of coal with battery storage will save the Indian power system Rs. 43,219 cr (US $6 billion) a year in terms of reduced power purchase cost. In addition, building 30 GW of additional battery storage rather than the “zombie” coal plants will require an estimated Rs. 109,800 cr (US $15 billion) capex, implying a savings by way of avoided investment of nearly Rs 137,621 crore (US $18 billion).”

While the case for considering the premises, and recommendations made in the report is very strong, we believe, it will be at least 2-3 years, or until after the next general elections in 2024, that India finally bites the bullet on no more fresh thermal capacity creation. The best hope to minimise the cost of slow decision making until then might be to look at the delays the same process causes for fresh capacity creation, and the pushback against fresh coal mining being seen. In time, it should be politically and economically prudent to make the right call.