Policy

NITI Aayog expert group suggests scrappage policy for thermal plants

| | Updated on: Dec 21, 2021
image caption

Eco concerns: Coal-fired plants still dominate the power scene | Photo Credit: DEEPAK KR

To achieve India’s commitment to turn carbon neutral by 2070, have 500 GW of RE capacity

An expert group set up by NITI Aayog has suggested the creation of a thermal power plant (TPP) scrappage policy in a bid to bring down the dependency of the power sector on coal and to maximise the use of clean and more efficient energy sources such as renewables. The group was formed to examine the expected coal demand in the next decade and offer recommendations that can guide policy.

The findings of the public policy think-tank come at a time when India has committed to becoming carbon neutral by 2070 and to have 500 Giga Watt (GW) of renewable energy capacity.

The expert group on coal examined possible scenarios for coal demand in 2030 and future decades based on eight major studies.

It mostly relied on secondary data and research available in the public domain. Given the enormous uncertainties, the group focussed less on predictions and more on broad trends. Coal-fired power plants are normally decommissioned in India after their useful life of 30-45 years .

“The volume of coal required depends primarily on demand. The objective must be to maximise the use of cleaner and more efficient power plants, so a mechanism must be developed to shut older plants.

Transition plan

A 2021 CEEW study and an NIAS research report (2021) on a transition plan for TPPs between 2022 and 2030 could be useful starting points for the government to consider developing a TPP scrappage policy to incentivise progressive retirement of inefficient TPPs with obsolete technology, the group has suggested.

Coal accounts for about 72 per cent of India’s power supply as of 2021, while RE has been growing rapidly to generate 10.7 per cent of electricity. CEO of Council on Energy, Environment and Water (CEEW), Arunabha Ghosh, in an article in the World Economic Forum (WEF) said that around 40 per cent of India’s greenhouse gas emissions can be attributed to 633 power units – 25 MW and above capacity – operating at 189 thermal plants.

NITI Aayog emphasised that “even a slower coal phase-out have significant implications for planning and policy formulation, not only in the energy sector but also in associated or even indirectly linked sectors, especially in States where coal mines and prominent coal-users (e.g., captive power plants, iron & steel plants) are located.”

In July, CEEW, in an independent study, said that Discoms could save up to ₹9,000 crore annually by prioritising coal power dispatch based on efficiency rather than the prevailing system based on variable costs.

The CEEW study suggested considering 30 GW of coal-based capacity for accelerated decommissioning. The proposed plants overlap with those identified for retirement in the National Electricity Plan (NEP), 2018. The study also recommends temporarily mothballing a further 20 GW of relatively new capacity that does not feature in the NEP list.

The think tank projected India’s requirement for coal to be in the range of 1,192–1,325 million tonnes by 2030. It also expects the country’s coal-based power generation to “peak” at around 250 GW by the end of this decade, after which it will slow down by 2040.

 

Published on December 22, 2021

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