India is in the process of revising its National Electricity Policy (NEP) with a focus on clean energy, but the country stands by its plan to add another 41 gigawatts (GW) of coal-based power by 2030, senior power ministry and the Central Electricity Authority (CEA) officials told Moneycontrol.
India is revising the electricity policy of 2005 to align it with the country’s energy transition and emission goals. In the first draft of the revision in 2021, the NEP stated that the country “may add” new coal-fired capacity albeit with technology standards aimed at reducing pollution. In the latest draft of the policy, the government has decided to be silent on this matter and it no longer mentions anything about adding new coal-fired plants in the country. But that does not mean that the country will pull the plug on new coal-fired capacity, key government officials told Moneycontrol.
“NEP will focus on energy transition, but that does not mean India is putting a halt on adding coal-based power. We are moving ahead with our plan to add 41 GW of coal-based capacity. Since this was already planned, mentioning it in the policy is not necessary,” a senior power ministry official told Moneycontrol.
Coal Goals
Government officials privy to the latest draft of NEP told Moneycontrol that not mentioning plans for coal-based projects in the draft does not mean halting new projects over and above the 27 GW of coal-based projects currently being undertaken. Other projects at a planning stage (14 GW) to take this figure to 41 GW will not be scrapped, they stressed.
“India committed to certain energy transition timelines in COP26 (the international conference on climate change held in Glasgow, Scotland, in November 2021), which is why non-fossil fuel sources are being pushed. But the country has also maintained that its reliance on coal will continue through 2030 and a couple of years beyond that as well. India will add 41 GW of coal capacity by 2030 and this plan remains unchanged. The revised NEP will talk of India’s energy transition strategies, but will mostly be silent on coal-fired power capacity additions,” said a senior CEA functionary, requesting anonymity.
At COP26, India made two commitments: It promised to meet 50 percent of its energy needs from renewable fuels by 2030 and transition to a net zero carbon economy by 2070. Subsequently, at COP27, India pushed for countries to agree to phase down use of fossil fuels rather than phase out and received support from many, including the European Union. Rising energy prices and supply chain disruption after Russia attacked Ukraine renewed interest in coal globally.
As per CEA's projection, by 2029-30, India's peak electricity demand will touch 340 GW and the electrical energy requirement will be 2400 billion units (BU).
Data from the CEA, seen by Moneycontrol, showed that around 27 GW of coal-fired power projects are currently under construction. Another 14 GW of thermal (coal-fired) capacity addition is in the pipeline, meaning feasibility studies are either underway or completed. This totals to 41 GW of coal-fired power projects that will come up in India by 2030, irrespective of the NEP, officials confirmed.
Union power minister RK Singh, in an interview to Moneycontrol on April 13, also gave an overview about the government’s capacity addition plans. “Nearly 44,000 MW (44 GW) of thermal capacity is under different stages of construction. In the renewables segment, the government has already announced its plan to install 500 GW by 2030. Besides, 15-16 GW will be nuclear capacity. At present, India's nuclear power capacity is 6,800 MW. In hydropower, the country currently has 46,000 MW installed and another 14,000 MW is under construction. The government will be starting construction for another 16,000 MW of hydropower projects soon,” the minister said.
Reading The Fine Prints
The 41 GW of coal-fired capacity planned by 2030 will primarily be ‘brownfield projects’, which means it will only entail capacity expansion at existing thermal power plants and not all-new fresh plants.
“No fresh land will be acquired for any upcoming coal-fired projects. Work for 27 GW of thermal capacity is already going on, some of which started seven years back. So, barring a few from the 27 GW pool of under-construction projects, all will mostly be brownfield projects,” said a senior official in the power ministry, requesting anonymity.
India has identified existing thermal power plants under the central as well as state governments for the ramp up. This makes capacity addition easier for India because all these plants already have land and the requisite coal linkages. A few officials claimed this strategy will reduce the time taken for new capacity addition by nearly 50 percent as a bunch of processes from land acquisition to certain approvals can then be bypassed.
“States have already conducted feasibility studies on their thermal power plants and many of them have ample land within their existing capacities. So, the 41 GW of capacity addition is happening in two ways: one, old plants will be dismantled and new plants with the bigger capacities will be added on the same land, and two, some plants are in good condition, so more units will be added to increase their installed capacity. Only in very few select cases are we adding completely new thermal power plants and such units are already in the construction stage,” said the power ministry official quote above.
A second official from the ministry said since renewable energy with storage and the upcoming coal-fired plants will take some time to come up, the government, hence, introduced the policy to pool power tariffs from coal-fired and gas-based power plants older than 25 years. This will come into effect from July.
Since last year, the government has been invoking Section 11 of the Electricity Act to mandate power plants using imported coal to operate at full capacity during the identified "crunch period", which is mostly the summer and monsoon months. Besides, the government has also mandated all thermal power plants to blend 6 percent imported coal with their domestic stock for power generation. All these directions are being issued as India's power demand is growing at about 6 percent annually and renewable energy sources continue to be unreliable to meet the peak demand in the absence of storage.
Also read: Moneycontrol's PowerWatch section, where you can get a daily wrap of India's power demand
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