R.K. Singh's Red Flag On Bihar Thermal Power Deal Opens Need To Consider Thermal Plans Carefully

R.K. Singh, a long standing member of the ruling BJP and a minister of Power for over 7 years, who was elevated to cabinet rank in 2021, missed out on continuing as power minister only because he lost in the lok sabha elections of 2024 from Bihar. However, that doesn't take away from the undoubted experience he has in the sector, having been exposed to it as both a bureaucrat first and later a politician. Singh is also more than familiar with India's renewable gains, having overseen a significant shift in the government's approach to the sector during his term as minister between 2017 and 2021.

Thus, while his sounding the alarm over Bihar's deal with Adani Power and alleging a scam worth thousands of crores has the usual political hyperbole, one cannot ignore the broad premise of the allegation as well. That the state is overpaying for a 25 year commitment when other cheaper options are available. The deal at the centre of the controversy is the PSA signed between Bihar State Power Generation Company Ltd (BSPGL)'s and  Adani Power Limited, for a 2400 MW Ultra Supercritical thermal project at Pirpainti in Bhagalpur district at a price of Rs 6.075/unit.  With coal to be supplied under the government of India's Shakti Policy assuring linkages, the project is slated to come up within 60 months at an investment of $3 billion and create 10,000 jobs.

The deal comes at a time when the central government has announced plans to add nearly 90 gigawatts of additional coal based thermal capacity through 2032. While some of this new capacity will undoubtedly replace the almost 25% of the 290 thermal plants that run on coal and are more than 25 years old, most will add to the existing coal based fleet. 

The key issue? 

Quite simply, Singh claims that the price is too high, claiming that it is as much as Rs 1.41/unit higher than it should be. However,  compared to the more recent 3200 MW bid from Assam, again won by Adani Power at a price of Rs 6.30/unit for a 3200 MW plant. Or a 1600 MW plant in MP at Rs 5.83/kWh, his basis of calculating the extra costs are not clear yet.

The Bihar government has issued a formal rejoinder to deny the accusations of handing over land, saying ownership will remain with the state, and pointed to the competitive bidding process followed to arrive at the price and winner. For good measure, it has also pointed to a similar project in Madhya Pradesh signed up for comparable rates. 

Ignoring the Solar+Storage Option

What most detractors have ignored is the fact that today, a combination of solar and storage power, plus merchant power to fill any gaps would suffice to fulfil the state's needs at the same or lower cost. While solar plus storage is already capable of delivering power at well under the Rs 6/unit cost as seen in recent tenders, even merchant power from exchanges, should it come at a higher cost will have enough time periods when it is lower priced to justify the effort. Add to that the fact of clean energy, meeting RPO targets,  quicker deployment, and freeing up land for other purposes in an otherwise well connected zone, and the picture is complete. Of a state stuck in thinking in the past, with little vision for  a future powered by clean energy and better energy planning. 
Ironically, Adani Power's own Godda plant in Jharkhand, that supplies power exclusively to Bangladesh will itself have connectivity to the domestic grid by December this year, and looking at the way disputes wih Bangladesh are escalating, there is very possibility it will be seeking domestic buyers for its power soon, including perhaps Bihar. Credible studies have claimed that energy storage could cut costs, not just deliver power efficiently now to India as well.

Thermal Renewal, Even As Green Projects Await Buyers

The threat of cancelling transmission allotments to green projects over 40 GW has already been in the news. These projects have struggled to find buyers, and over 85%, including BESS linked projects, are at a net price of under Rs 6/unit. It would appear that instead of focusing on adding more thermal capacity that will take between 60-72 months to come online, the government would be better served solving the buyer resistance to these projects, while doubling down on its energy storage plans. We have seen how countries across the world have brought forward long term storage targets when prices came down, be it China, Australia, the Middle east or Europe. We can learn a lot from their experience. Add to that a much larger domestic solar sector, besides an expanding battery supply chain, and India might be in a position to add renewables plus energy storage at a far higher scale before the first of the new coal based plants come online.