Country report: India

Materials World magazine
1 Sep 2017

With a third of the population living without reliable electricity access and the country’s significance in meeting global Paris Agreement targets, India’s energy landscape in recent years has been chameleonic. Khai Trung Le looks at how India’s reliance on coal straddles its renewable ambition.

In 2010, India underwent a substantial boost in coal power. India currently accounts for 4.5% of global greenhouse gas emissions, and the threat of heightened commitment to coal could jeopardise the worldwide Paris Agreement target. But the country’s energy landscape is deeply malleable – how does a country reconcile its ambition of 275GW renewable production by 2027 when 300 million people are still in need of reliable power?

Old school thinking

Information from the Central Electricity Authority (CEA) notes that coal accounts for around 78% of power generation in the country. In 2015, the International Energy Agency positioned India as the global foundation of coal, stating that ‘nearly half of the net increase in coal-fired generation capacity worldwide occurs in India, where coal is set to remain key in the electricity system’. Later, in mid-2016, as much as 243GW of additional coal-fired generation was under development, increasing the country’s coal capacity by 123% and threatening climate goals set out in the Paris Agreement.

However, in December 2016, the CEA presented a new plan that specified no new coal plants, besides the 65GW already under construction, would be needed. In July 2017, India also identified 5.5GW of inefficient coal power plants for retirement, on top of the 4GW of coal plants retired over the last two years. The highlighted plants are more than 25 years old, although power and mines minister Piyush Goyal declined to provide a timeframe to their phase-out.

Christine Shearer, Senior Researcher at CoalSwarm, said, ‘It was hard to keep up. The country is supposed to be at the heart of coal plant growth, but it’s interesting to see the tide go against what we often hear about China and India – that they’re going to keep building coal plants, when actually they’re both stalling production.’

However, Steven Davis, associate professor at the University of California, Irvine, USA, was reticent to rule out the progression of new coal in the country. ‘I’m sceptical that they will be able to completely halt coal power plant construction for the next decade. That’s mostly not because of needing electricity, but because of some sort of industrial inertia in the system. The folks negotiating these climate agreements are not necessarily the ones deciding whether a power plant will be built.’

Davis speculates this will lead to one of two scenarios – many plants operating at a fraction of full capacity and becoming a financial drain, or the economy continuing to rely on coal. Similarly, state-run power utility NTPC plans to invest US$10bln in new coal power stations over the next five years. Five senior officials within NTPC, India’s largest power producer, confirmed the company’s plans to Reuters but noted no public statement has been made as the investment has yet to receive government approval. 

Coal is not the only source of power unpopular to some. As a slew of countries move away from nuclear, Goyal announced the country will double nuclear power generation after the Union Cabinet approved ten new pressurised heavy water reactors in May 2017. ‘We have recently embarked on a plant to expand [generation] by about 7,000MW more through indigenously manufactured equipment,’ Goyal said. However, despite celebrating its environmental credentials, Goyal sees nuclear as a supplement to the Indian energy landscape, stating, ‘Nuclear power will never ever become the main source of energy for India because it is very expensive.’

Minimal curtailment

Others argue that the future of India’s energy landscape lies in renewables. A study from the US Department of Energy’s National Renewable Energy Laboratory (NREL), Greening the Grid: Pathways to Integrate 175 Gigawatts of Renewable Energy into India’s Electric Grid, found that applying 100GW and 60GW of solar and wind generation, respectively, will be able to serve 22% of India’s power demand with minimal curtailment – the amount of renewable energy generated that cannot be used due to grid limitations.

India is currently operating with 9GW of solar and 29GW of wind installed. But Jacquelin Cochran, NREL manager and the principal investigator of the study, believes India will be able to reach the ambitious 175GW installed renewable energy target by 2022. ‘With renewable energy auction prices at record lows, an immense amount of renewable energy growth is anticipated to be added to India’s power system. We wanted to provide a systematic way to plan for that,’ she said.

The study argues that the significant increase in renewables is possible with the help of an older compatriot – coal. All coal plants are able to operate at 55% rated capacity, due to compliance with the Central Electricity Regulatory Commission, and co-author Sushil Kumar Soonee argues that ‘the existing physical flexibility of the power system’ will help bring about ‘appropriate market designs, operational rules, incentive mechanisms, and other regulatory and policy changes’ needed for greater commitment to renewable sources. 

Looking for light

India’s energy landscape has more complications beyond balancing its sources. There are 240 million people living in India without regular access to electricity. In 2014, the World Bank named the country as having the world’s largest un-electrified population, the same year Prime Minister Narendra Modi came into power pledging to bring reliable power to everyone. Many afflicted live in the country’s expanding urban slums and while organisations like Australian NGO Pollinate Energy distribute private solar systems to slum dwellers, with as many as 104 million people living in urban slums, the problem is far from being resolved.

Domestic utility energy costs can range between Rs120 to Rs500 (US$1.86–7.75) per month, far from affordable to many living in the urban slums. Modi repeated his calls to reduce the energy access gap in December 2016, saying, ‘In India, while the rich are buying hybrid cars, the poor buy firewood, bringing health hazards to the rural women. Our focus is to reduce that disparity.’ Modi stated his belief that this can be resolved with increased domestic oil production, urging the youth of the country to enter the industry. ‘We need to find an affordable and reliable source of energy… [the] youth should venture into this sector and find innovative ways for India’s oil security.’

Navroz Dubash, senior fellow at the Centre for Policy Reserarch, India, believes coal capacity and demand are often inflated, with commentators holding coal up as the solution to the country’s low electricity consumption. ‘But since last year, operational capacity factors have begun to fall – meaning each power plant is being used for less and less time,’ Dubash said. ‘There’s been a steep drop in the price of renewables, bringing solar and wind close to competitive and making people more jittery about funding coal.’

Additionally, energy distribution companies have been reducing the amount of power they purchase because they have been unable to raise their own tariffs. ‘So you have this curious situation where, in the last two years, India has gone from being under- to oversupplied, even though 300 million Indians are still without power. This is an artefact of distribution, it’s because of being institutionally in bad shape, but it’s going to affect all forms of power, whether coal or renewables.’