India’s renewable energy commitments and coal plant retirements
In press, we hear a lot about coal plant retirement in India.[1] The central electricity authority (CEA) has identified approximately 50GW for environmental reasons,[2] and academic research has identified approximately 100GW based on economic reasons.[3] There is similar work from the council of energy environment and water (CEEW).[4] But we see little action on ground.
The reality is that it is not going to be easy, given the key role of coal power in India. Coal power still produces more than 70% of India’s power, and this has risen to close to 80% in recent times.[5] Furthermore, quitting coal power requires addressing issues around lowest costs reliable power supply, energy security, and just transition.[6]
So, what is a reasonable strategy going forward given various guardrails? First, we need to keep in mind what India has proposed at COP 26, because a global commitment may be easier to track. Second, we also need to keep in mind what the ground realities are. Finally, we need to think about a reasonable transition strategy.
At COP 26, India has committed 500GW of renewable energy (RE) capacity by 2030, plus a commitment of 50% generation from RE. Let us look at what it means for India’s implicit assumptions around coal power. 500GW RE at 25% PLF — a ballpark number for RE — is equivalent to 125GW RE generating at full capacity (i.e., at 100% PLF). Assuming the rest mostly comes from coal — a reasonable assumption for India given limited generation from gas, hydro and nuclear — this means approximately 200GW coal power capacity at 60% PLF, which is equivalent to approximately 120GW coal power capacity generating at 100% PLF. That is, given 200GW coal power capacity, 500GW RE is equivalent to 50% generation by RE. This is, in fact, supported by system simulation studies.[7]
This implies that, given current coal power capacity at approximately 200GW, coal power capacity is assumed to be invariant until 2030. This further means that the 50GW capacity to be retired, as proposed by CEA, is replaced by 50GW new capacity that, incidentally, is already in the pipeline.[8] After 2030, we don’t know what happens, but that’s where battery storage (BESS) and hydrogen can become a bigger part, the remaining 200GW coal power capacity is phased out, without any additional new coal power capacity ever.
In the meantime (i.e., in 2020s), we can show that just transition is possible on the 50GW slated for retirement by CEA. Given that an official agency (i.e., CEA) is engaged, this process is likely to encounter the least friction. This can then create a blueprint for larger scale phase down, as India calls it, in the 2030.[9] In this context, multilaterals, such as the World Bank (WB) and the Asian Development Bank (ADB), in coordination with the Climate Investment Funds (CIF) can play a significant role by providing technical assistance and concessional finance. This is already under works in the Accelerating Coal Transition (ACT) program of CIF.[10]
[1] See How Long Will Coal Remain King in India? | Greentech Media
[2] See https://cea.nic.in/wp-content/uploads/2020/04/nep_jan_2018.pdf
[3] See [PDF] Making India’s power system clean: Retirement of expensive coal plants | Semantic Scholar
[4] See https://www.ceew.in/sites/default/files/CEEW-study-on-thermal-decommissioning-coal-electricity-power-plants.pdf
[5] See electricity generation: Coal’s share in India’s power mix hits highest in over two years, Energy News, ET EnergyWorld (indiatimes.com)
[6] See India making strides toward clean energy, but quitting coal isn’t easy — CBS News
[7] See Least-Cost Pathway for India’s Power System Investments through 2030 | Electricity Markets and Policy Group (lbl.gov)
[8] See New-Coalfired-Power-Plants-in-India_Reality-or-Just-Numbers_June-2021.pdf (ieefa.org)
[9] See EXPLAINED: Why India Pushed For Coal ‘Phase Down’ Instead Of ‘Phase Out’ At COP26 (news18.com)
[10] See CIF Begins Historic $2.5B Coal Transition Pilot in Four Developing Countries | Climate Investment Funds
