The analysis, released by Delhi-based climate communications outfit Climate Trends, measures the cumulative impact of few states and companies that have pivoted towards renewable energy to cater to new demand growth.
NTPC, India’s largest government owned power company that owns more than 25 per cent (54,224 MW) of total installed coal capacity, is committed to not building any new greenfield coal power plants.
Similarly, Tata Power, India’s largest (12,792 MW) private power company, has also committed to not building new coal projects. So is, JSW Energy, another private power producer with a total capacity of 4600MW.
In addition to companies, four states — Gujarat, Chhattisgarh, Maharashtra, and Karnataka — have also committed to no new coal policy. Collectively, the states and the companies make up 50 per cent of India’s total installed power generating capacity.
Renewable energy is deflationary, with costs for setting up solar PV projects dropping by more than 80 per cent in India between 2010 and 2020. The price of renewable energy is 30-40 per cent lower than the domestic coal based capacity and 50 per cent lower than the imported coal based capacity.
Smart project developers as well as distribution companies have announced ‘no new coal’ or ‘exit coal’ policies, primarily based on economic considerations.
Developers don’t want their investment turned into NPAs and DISCOMS want to improve their financial health by reducing the cost of power purchase. This trend is likely to be followed by other developers and DISCOMS in India, with low or no appetite for any new coal, said Vibhuti Garg, Energy Economist, IEEFA.
On Thursday, US President Biden will convene 40 world leaders, representing countries that contribute the vast majority of carbon emissions, as well as some most vulnerable to climate impacts, for a two-day Leaders Summit on Climate.
A new US climate target is expected so are announcements from some countries on long-term net zero emission pathways.
“India has taken significant steps in decarbonising its power sector. With an ambitious target of 450GW of renewables by 2030, the country is committed to transform its energy mix. The share of coal in India’s electricity production has already stopped growing since 2016 with the falling cost of solar energy making it uneconomical to invest further in coal,” said R.R. Rashmi, Distinguished Fellow with TERI.
“It will naturally decline further if good energy storage systems develop and market reforms are speeded up.”
“Several Indian states and power producers have moved away from coal as it’s no longer profitable. Cost of solar energy in India is now cheaper than coal. In a few years, renewables along with battery storage will be more viable than thermal generation. The coal mines and solar auctions held last year are a clear indication on where international investors are heading. Not a single foreign investor participated in the coal mine auctions. However, for the solar auctions, the lowest price bids came from foreign investors,” Climate Trends Director Aarti Khosla told IANS.
Building new solar and wind energy is already cheaper than 51 per cent of operating coal power in India, and new solar will cost less than all operating coal in 2020.
India’s renewable energy cost is the lowest in the Asia Pacific region. With the recent solar auction, per unit cost of solar energy stands at Rs 2 per KWh.
“Power utilities of states like Rajasthan and Tamil Nadu that are plagued with financial liabilities are uniquely placed to commit to no new coal. They have abundant renewable energy and could benefit with reduced cost of electricity production,” added Aarti.
However, the inputs from industry suggest that the timeframe for transition away from coal will not only depend on just the variable cost of solar power production but several other factors as well.
These include the technologies for energy storage, grid flexibility, availability of investments at the scale required, and not the least, the energy market reforms both at the federal and state level.