The challenges ahead for India

Coal production must match planned thermal power capacity in light of green goals; the target of 1 billion tonnes (earlier 1.5) by 2025 may now be excessive

This requires large-scale funds and technology transfer, for which prerequisite is an investor-friendly, risks-mitigated ecosystem.
This requires large-scale funds and technology transfer, for which prerequisite is an investor-friendly, risks-mitigated ecosystem.

By Deepak Gupta & Kolluru Krishan

Benjamin Franklin’s 1752 kite experiment, which ushered an understanding of the potential of electricity, had a revolutionary impact on the development of modern society. Extensive electrification of applications has been the new strategy, and decarbonising it, is the new mantra. The fundamental challenge for India then—unlike developed economies, and critical for its climate action—is how to significantly increase its electricity production, widening usage across the board, while simultaneously decarbonising it.

Clearly, we are talking eventually of several thousands GW of solar and wind power. This is, arguably, also the easiest pathway to Net Zero, with an array of commercialised RE technologies and dramatic reduction in costs. However, there are several constraints in the short term. There are also significant long-term challenges in terms of deployment of this huge quantum of variable RE power, besides the requirement of enhanced flexibility of grids to absorb it as also ensuring schedule-able and dispatch-able power for long periods through multiple energy storage solutions.

A holistic and objective analysis is required of supply and demand forecasts, indigenous manufacturing capacity vis a vis imports, phasing out of coal and its consequences, deployment of huge RE power and impact on grid stability and infrastructure, economic viability of discoms vs electoral populism. Public comments, with near universal optimism, take as a given that our Glasgow NDCs with enhanced ambition will be achieved. Andy Grove famously said “Only the paranoid will survive”. In the same spirit, we express worries and briefly suggest realistic pathways.

First, demand has tended to be overestimated, with correspondingly excessive capacity creation plans. Today, the PLF of thermal plants is at an inefficient low of ~52%, with RE power also being curtailed; 500GW of non-fossil power by 2030, along with increase in thermal capacity, will lead to considerable over-supply leading to stranded assets and NPAs becoming the norm. More analytical rigour in demand-side management and realistic 2030 forecasts of scale-up in energy storage and hydro/nuclear power may suggest revisiting the 450GW target.

Second, post 2030, new coal-based thermal plants construction will face headwinds, necessitating additional capacity creation within this decade itself. The CEA’s optimum mix study suggested about 80GW net increases, after retiring 30-40GW of inefficient plants. This is sensible. Plants must be retired immediately and older ones obligated to expeditiously comply with emissions standards. Both are getting repeatedly postponed. New plants must be highly efficient. Coal production must match planned thermal power capacity; the target of 1 billion tonnes (earlier 1.5) by 2025 may be excessive. Detailed mapping and planning is essential, involving closure of some old mines, shelving some new mine proposals, overall efficiency improvement in coal mining, accompanied with enhanced afforestation and biodiversity.

Third, there has been inadequate debate on how the 300GW solar targets will be achieved. The enhanced target of 100GW by 2022 meant annual capacity addition of 12-13GW, but we have achieved only 7-8GW with nearly 90% import dependency. We will now require annual capacity creation at the rate of 30GW. Currently, we have nil manufacturing capacity for silicon ingots/wafers, about 2GW for cells and about 12GW for modules, with considerable shortfall for other components such as glass/inverters, etc. Will we continue imports, and from China? We must first build domestic capacity aiming for, by 2030, ~25GW for all items in the value-chain. The current PLI scheme will at best create 10GW. Furthermore, aspirations must translate to projects on the ground. This requires large-scale funds and technology transfer, for which prerequisite is an investor-friendly, risks-mitigated ecosystem.

Fourth, the presumption of land availability for 1,000GW of solar is seriously misplaced. Many land problems are already being encountered in states. The Supreme Court Order on the Great Indian Bustard alone will take away vast tracts of land in Rajasthan. There must be a rational, long-term solar deployment strategy based on immediate identification of large land-banks, planned transmission network and logistics requirements, etc. Thousands of decentralised solar plants, with energy storage and evacuation into distribution grids, including agri-solar and village-level solar mini-grids, should become the pan-India norm, along with cogent policy for pushing rooftop solar and building-integrated photovoltaics (BIPV) to saturation levels.

Solarisation of all rural railway stations, and, later, highways (for decentralised hydrogen production) must be pursued. The hurdles to the KUSUM scheme need to be resolved and all electric irrigation pump-sets should be solarised. These are illustrative, but critically-important pathways that the green-economy framework requires. They will have positive externalities and additional benefits—like lowering transmission load, improving quality of supply, increasing farmer’s incomes, reducing discom losses, providing rural employment to millions.

Fifth, the discoms’ financial solvency is critical,  and needs a permanent structural solution, enforceable by appropriate legislation. Political populism on low tariffs is playing havoc on discoms’ financials and efficiency. There should be no free electricity, though some subsidy may be desirable. Their dues to power suppliers are currently Rs 113,227 crores, including Rs 19,712 crores for RE, and these are growing by the month, in spite of schemes like UDAY. Constantly reiterating that the tariff of solar is Rs 2/ KWh creates the wrong perceptions and consumer expectations. In the medium term, indigenisation as well as imports, with enhanced customs duties, will increase costs.

Delivered costs of RE power, with storage for peak and balancing, will go down in the long term, perhaps only by the next decade. Meanwhile, we should avoid getting locked into high storage costs. Rational tariffs are necessary and PPAs must be deemed sacrosanct, with renegotiation and cancellation being made legally untenable.  

Sixth, there are calls for green hydrogen mandates and rapid electricity storage development. In either case, we are not factoring in the time required for further technological advancement and cost reduction through economies of scale, both necessary for large-scale deployment. It augurs well that indigenous manufacturing of electrolysers is being prioritised by industry, which, hopefully, will be replicated for energy storage batteries—including those of chemistries based on domestic research and locally available materials. Battery raw materials are likely to become a big constraint globally. Therefore, this decade’s focus should be on catalysing demand while facilitating scale-up in local manufacturing. Thereafter, both sectors will witness exponential growth, driven by market dynamics.

Finally, we need a comprehensive, multi-sectoral and continuous effort on energy conservation and efficiency and demand-side management, encompassing industry, buildings, and white goods consumption, with time of day tariffs to lower peak demand. This is simply not getting the attention it deserves.

Deep decarbonisation is a very complex and challenging process and will have costs. Each action of a dynamic, rational and measured response requires constant engagement with all stakeholders and intense public discussion.

Gupta is former secretary, MNRE, and former chairperson, UPSC,
and Krishan is chairman, CVC India Infrastructure

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