Power Min Proposal For Phasedown of Thermal To Allow for 30 GW of Renewables Could face States Roadblock

In its latest initiative to support renewables growth and allow for an orderly exit from thermal power, India’s power ministry has proposed a phasedown of 58,000 million units of thermal generation across 81 thermal power stations spread across the central, state and private sectors. The idea is to allow such a phased reduction to allow for addition of 30,000 MW (30 GW) of renewable energy, all solar in this case, to fill in the gap.

With a target of achieving the final figure by 2025, the ministry hopes that this, coupled with the RPO requirements that will be in force shortly, will allow renewables growth to be achieved more smoothly. It bases its optimism on two key aspects. That this whole exercise has been done keeping the primary objective of lowering energy costs for consumers, by targeting high priced power generating stations. Secondly of course, there is the need to meet emission norms and commitments made by the country, besides increasing coal availability for the kind of crisis being experienced presently.

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The renewable power needed to substitute the thermal power will be calculated at a capacity utilization factor of 22%.

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The 81 thermal stations identified are divided between 30 in the central pool, 32 in the state sector, and 19 in the private sector.

The notification sets the year wise target or trajectory as, 20% in the FY 2023-24, 35% in FY 2024-25, and 45% in FY 2025-26. The 45% figure has been arrived at after considering the minimum plant load factor for a thermal power plant to operate efficiently.

The program’s implementation is estimated to conserve 34.7 million MT of coal and reduce carbon emissions by 60.2 million MT.

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Hydropower generating stations have also been permitted to bundle renewable power. Generating stations that have installed or procured a higher capacity of power for the purpose of replacement but not scheduled are free to sell such power in the exchanges.

While the ministry’s targets and intentions seem practical, even desirable, there is no doubt that it faces formidable hurdles ahead. For one, states have been unusually uncooperative in recent years vis a vis central diktats, and we have no reason this decision will also be politicised.

Some of the biggest laggards on renewable energy like Uttar Pradesh, West Bengal, Bihar, Chhattisgarh, and Jharkhand, happen to be the states that depend the most on thermal power and even the coal mining industry to a large extent. Thermal plants close to mining pitheads for instance are unlikely to be touched accordingly, as they are quite competitive in power costs.

Even if thermal plants in these states were to seek renewable power from other states, we can never be quite sure of the other states will be as accomodative. It will be no surprise if land rich and solar rich states like Rajasthan even seek to add cesses to renewable energy exports to other states, seeing it as a legitimate natural advantage for themselves.

Even the private sector TPP’s may not submit meekly, as they are likely to dispute the CERC figures of 55% minimum, and a technical minimum of 45%. Consider that collectively, TPP’s have effectively managed to delay the  installation  of pollution control equipment on older plants by over 5 years, despite repeated rulings and ‘final’ deadline extensions to expedite the process. Expect arguments calling for funds support to ensure energy storage to provide more dependable power, for starters.

With the electricity amendment bill still stuck in limbo, a key enabling tool to make states fall in line is missing from the mix

The biggest positive we see here is the intent, to create space for renewables growth, and a clear 30 GW at that in terms of thermal bundling by 2025-26. Seen in the context of the other renewable projects already in the pipeline or underway, besides the growth finally expected in the corporate and solar rooftop market, it does seem the government is awake to the need to plan more carefully to get anywhere close to the 25 GW of annual solar capacity additions we need.