Power play. Charting a complex energy transition

As the energy demand is expected to spike over the next decade, the focus is now on ensuring higher output from fossil fuel-based power plants while simultaneously setting up new renewable energy projects. This means managing the energy transition by phasing down fossil fuel plants while ensuring adequate power supplies.

“India must now pick up the speed to meet its target of reaching 500 giga watt (GW) of non-fossil energy capacity by 2030, including 280 GW of solar power and 140 GW of wind power. India has the potential to add more than 140 GW of solar and wind power capacity by 2025, which would save $19 billion a year in coal fuel costs,” says Shradhey Prasad, Project Manager, Global Wind Power Tracker.

While environmental issues of coal plants are of concern, the declining cost of renewable energy should be seen as a positive to cut coal dependency. In 2015, the Environment Ministry introduced stringent pollution standards for coal plants but the deadline to comply has been repeatedly delayed. It is time for the country to implement a bold no-new-coal plan to ensure energy and economic development plans are in line with its net zero commitments.

Increasing savings

India plans to add 76 GW of utility-scale solar and wind power by 2025, leading to savings of up to $19.5 billion. This will translate into a reduction in the use of 78 million tonnes of coal annually or roughly 32 GW in coal power plant capacity.

Annual savings can further increase if green plans go as proposed. India plans to add an additional 420 GW of wind and solar power by 2030, which would increase the annual savings from avoiding coal power to more than $58 billion, with total savings reaching $368 billion by 2030.

If India were to implement its planned utility-scale solar and wind projects, it would cost roughly $51 billion. But with a $19.5-billion annual savings in direct fuel costs, India could pay for this in just two-and-a-half years.

But while the government realises it has to push for renewable energy, it has to also factor in the power demand. This is retarding the progress of its green energy programme. “India has committed to phase down the use of coal but the government has asked utilities to hold off on retiring coal plants until 2030 to meet electricity demand. The Coal Ministry continues to open new coal blocks for commercial auction. Today, India has more than 28 GW of coal power capacity planned, a third of it already permitted and 32 GW of coal power capacity under construction, not to mention 99 new coal mines,” says Flora Champenois, Project Manager, Global Coal Plant Tracker.

All-fuel approach

Bridging the gap in meeting India’s ambitious goals will require a revamp of Central and State policies as well as resolving financing issues.

“In order to meet its high electricity demand, the government is pursuing an all-fuel approach. While there is a big push for renewable energy, the government is also pushing more coal. Covid-19 and the Russia-Ukraine war have led several countries to look inward to meet energy security goals. In the short-term, India may have to rely on coal but it should be looking at slowly phasing it down and building renewables at an accelerated phase as these plants can be built in 12-18 months. While renewable energy is competitive, what the government should do is to provide more support to nascent technologies like storage, green hydrogen, etc., to make them commercially viable,” says Vibhuti Garg, Director, South Asia, Institute for Energy Economics and Financial Analysis.

According to an International Energy Agency report, “With the energy markets remaining extremely vulnerable, today’s energy shock is a reminder of the fragility and unsustainability of our current energy system. A key question for policy makers is whether the crisis will be a setback for clean energy transitions or will it catalyse faster action.”

The use of coal contributes to greenhouse gases and addition of new plants would add to rising temperatures. The government is trying to address the surge in power demand by ramping up coal output while directing utilities to blend it with imported coal. The focus has to now shift to accelerating the setting up of new renewable energy plants.

However, renewable energy throws up the challenge of the intermittent nature of supplies. This calls for change in the entire system calling for investment in flexible energy sources, including battery storage and pumped hydro. Since storage is relatively expensive, the transition is a tough one.

Very clearly, India’s thermal power dependence from coal fired plants and reluctance to an early phase out require a well laid out strategy, both in the near and the long term.

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