As the country is taking measures to change its energy mix to increase renewable energy contribution, power minister Piyush Goyal acknowledged the contradiction faced by policymakers in the evolving scenario. While releasing a report on renewable energy integration into the power grid, Goyal raised concern on the future of coal-based power plants — which have traditionally been the baseload electricity source. “There is a contradiction in terms of coal-based plant growth, renewable energy integration and grid balance,” Goyal said. While confirming the technical and economic viability of integrating 175 GW of renewable energy into India’s power grid by 2022, the report said in such a situation, the plant load factor (PLF) of coal-based power plants would drop by 13 percentage points to 50%, with 65,000 MW plants running at PLFs below 30%.
To normalise PLFs of coal-based plants, plants which run below 15% PLF would have to be retired, the report added. That translates into 205 generation units, with a capacity of 46,000 MW and investments of more than Rs 2,30,000 crore. Goyal added that the findings of the study, developed under the US-India bilateral programme ‘Greening the Grid’, calls for reorienting the policies and regulations to be in line with a scenario where coal and power availability is surplus and renewable energy is cheaper than thermal power.
The minister said the country’s plan for sustainable renewable energy is reflected by Coal India and NTPC’s aim of installing 10 GW of solar plants. On the sidelines of the event, a senior government official told FE that the coal-based power stations would face tougher challenge from renewable energy when power storage becomes cheaper — something which is no longer a distant possibility.
Currently, the combined cost of solar power tariff (with storage) comes around Rs 6-8 per unit, whereas coal-based electricity comes at around Rs 4/unit. The report further said 175 GW of renewable energy capacity would generate 370 billion units (BU) of electricity, a 22% share of total electricity consumption in India. Thermal power, with a capacity of 218 GW generated 90 BU in April. 6.9 BU was generated by 57 GW of renewable energy sources in the same period. To boost renewable energy, the government has come up with certain policies such as deemed generation status and exemption on transmission charges.
Additionally, renewable purchase obligations also eat into some of the demand for conventional power. However, some subsidies and incentives are being gradually phased out for players in the sector. Accelerated depreciation being halved to 40% and the withdrawal of generation based incentives and 10-year tax holidays.