In India’s energy transition, solar will emerge as a dominant source of energy, but coal is still going to be the mainstay of the country’s energy sector.
In the coming decade, at least 40% more coal consumption is estimated in India. These trends are reflected in the draft version of the National Electricity Plan (NEP) released by the Central Electricity Authority (CEA), which gives a glimpse of the energy transition happening in India.
The CEA report estimates a 40% increase in domestic coal requirement in 2031-32. In 2021-22, India’s domestic coal requirement was 678 million tonnes (MT). It will increase to 831.5 MT by 2026-27 and 1018.2 MT by 2031-32.
At present, 51.1% of the total installed capacity in the energy sector in India comes from coal. Out of the total 399.49 gigawatts (GW) installed capacity of the country, 236.10 GW comes from thermal, 6.78 GW comes from nuclear and 156.60 GW comes from renewables. The draft NEP says that there is an additional coal-based capacity required till 2031-32, which may vary from 17 GW to around 28 GW. This is over and above the under-construction coal-based capacity of 25 GW.
Talking about the role of thermal power plants (TPP) in the future, Ashok Sreenivas, coordinator at Prayas, a Pune-based think tank on energy, says that a small increase in thermal power capacity may be required despite low plant load factor (PLFs). Energy capacity may be maxed out at certain peak demand hours when renewable energy is not available. To meet this demand, some additional capacity may be required. It should also be clear that reasonable coal capacity would get retired in the coming future.
Interestingly, there was a total of 22.7 GW of coal plants, scheduled for retirement between 2017-22. Out of this, only 7.35 GW got retired from the scheduled ones which include 4.5 GW retiring due to old age criteria. Now, there is an estimate that 4.6 GW of TPPs will retire between 2022-27. There is no such estimate for 2027-32.
An expert working with one of the four international accounting organisations, says that out of 22 GW that were scheduled for retirement, 16 GW of TPPs were those that did not have space to install flue gas desulphurisation (FGD). It is necessary to control sulphur dioxide (SOx) emissions.
The majority of these TPPs did not retire. The central government is also extending the deadlines for installing FGD. So, no one should get confused with the government’s intention related to coal. Even today, the government is talking about installing 17 GW of thermal power plants in the most conservative scenario and 28 GW in the most optimistic scenario, the expert, who wishes to remain anonymous, added.
As per the Electricity Act, 2003, the CEA is supposed to prepare a National Electricity Plan once in five years. So far, the CEA has prepared three NEPs in 2007, 2013, and 2018-2019. The CEA prepares the report in two volumes one addressing energy generation and the other on energy transmission. The present draft report talks about estimates of energy generation in the next five-year and 10-year scenarios. It draws an ambitious picture of the power sector and the effort needed to achieve the goals.
Energy transition is on the way
Since its Independence, India has been focusing on capacity addition to meet the energy demand.
In 1947, the country had just 1.36 GW of installed capacity. As compared to this, the country’s installed capacity for energy generation was 399.49 GW in March 2022. Now, India is not only looking for capacity addition but also focusing on clean fuel to meet its energy demand. In the next 10 years, the country plans to add more than double its existing capacity.
As per the draft NEP, the country will aim for 865.94 GW of installed capacity at the end of the year 2031-32, and half of this will be from non-fossil fuel sources. This is India’s commitment to the global community in the fight against global warming.
To achieve this, India plans to add 35 GW of coal to its existing capacity by 2031-32. Against this, the country plans to add 279.48 GW of solar and 93.6 GW of wind to its existing fleet during the same time frame.
The draft report says, “Contribution of Renewable Energy Sources (RES) will be around 35.6% of the total energy of the country in the year 2026-27 and 45.09% by 2031-32.”
This capacity addition will change the sector, said the expert quoted above. As per him, coal and gas as a mix have been the predominant player so far. Renewable energy contributes only 10% of the total power generation.
“Right now, it is not a problem. When you talk of a grid in which renewables will be 45%, then it will become a problem. You are reducing a reliable source that is coal and replacing it with a variable source that is renewable. In this case, grid management becomes a concern. Therefore, the country needs reliable resources for energy generation. It can be a hydro or storage battery. For the next five years, we have enough hydropower which can take care of these challenges. But beyond 2026, only hydro will not be able to offer that reliability. We need a battery energy storage system (BESS). The draft report is clear about it and underlines the fact that the country will need 51 gigawatts of storage capacity by 2031-32.”
However, he underlines another issue with this ambitious target. India is hardly adding 10 to 12 GW of renewable capacity every year. It is not sufficient. “If the country is serious with its ambition, it needs to add 40 to 50 GW of capacity every year. It needs huge investment as well,” he added.
The NEP draft report also gives a glimpse of it by saying that a total investment of Rs 3.4 trillion is required for BESS and Rs 12.52 trillion for renewables by 2031-32.
Under-utilisation remains a concern
Though capacity addition remains on top of the energy ambition of the country, proper utilisation of existing capacity (including TPP, gas and renewables) remains a challenge.
The performance of a power plant is measured by using the plant load factor (PLF). This is a measure of the output of a power plant compared to the maximum output it could produce. It means if a power plant has a higher PLF, it is producing more energy also at a lower cost (per unit of electricity).
The CEA’s draft NEP underlines this bitter fact. About TPPs, it says that once the power station is commissioned, the biggest challenge is to operate the station at a high PLF. “The PLF of the coal-based power stations in the country has been decreasing steadily over the years. The PLF has varied from 60.5 % in 2017-18, 60.9 % in 2018-19, 55.9% in 2019-20, 54.6% in 2020-21 and 58.8 % during 2021-22,” it adds.
Similarly, the draft NEP talks about gas infrastructure. Gas power plants have been running at a low PLF of around 23%, says the report. The low PLF is not due to a lack of gas pipeline infrastructure, but due to the unavailability of cheap sources of natural gas.
Regarding peak demand and meeting the challenge, it says that RE generation could not be fully absorbed due to the shape of the load curve. This is the case when the wind Capacity Utilization Factor (CUF) on the day is 24.08% and solar CUF is 17.73%.
An expert, requesting anonymity, explains this by saying that there is a demand-supply mismatch. Solar and wind are producing maximum energy when the demand is minimum. If you see the pattern of energy demand, it is high in the evening and morning. But energy generation peaks in the afternoon. In such a scenario, it is tough to accommodate the generated energy in the grid. In the future when the capacity of solar and wind increases, it will be an even bigger challenge to accommodate the total power generation.
Coming to the TPP and low PLF, the utilisation of these plants is falling continuously for at least a decade. In 2009-10, the national PLF was 77.5%. Now in 2021-22, the average PLF has declined to 58.87%. The draft NEP document foresees further decline and estimates it to reach 55% in 2026-27. Though, it claims that there will be improvement after that and the PLF of thermal power plants will be about 62% in 2031-32. But, it does not give any explanation of how it is going to improve.
Sreenivas from Prayas says that TPPs have low PLF because the country added significant coal capacity during the last decade. This is coupled with lower-than-expected demand growth and the increasing role of RE in the generation. It has led to reduced usage of TPPs and hence lower PLF, he added.
A paper published in the International Journal of Energy Production and Management in 2021 raises these concerns too. The author of the paper is Alok Kumar Tripathi, General Manager & Head – L&D- NTPC Regional Learning Institute. He writes that coal capacity appears to have been caught up between inaccuracies of forecasting, obsession with legacy systems, and the fast advent of renewables.
In his paper, he gives five scenarios where three projects further decline in PLF of the thermal power sector. But, when Mongabay-India approached him, Alok Kumar Tripathi had a different view to share.
He says that now the situation is changing. Due to several reasons, the whole world is again considering thermal power addition. In recent months, the way demand has picked up, renewable is not able to match it and that is the reason, thermal power is getting attention again. Now policymakers across the world are considering establishing new thermal power plants. Regarding low PLF, he says that TPPs have to adjust with renewables as and when the latter’s production goes up or down. Due to this imposed flexibility, thermal power plants are suffering and they need to be compensated, he adds.
His view is also reflected in other reports, appearing from different parts of the globe about renewed attention towards coal, which is increasingly looking like a global trend.
This post was originally published in Mongabay India.