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    Why banning new coal-run power plants is a good idea

    May 26, 2023 - Somit Dasgupta


      Using generating units that are more than 25 years old can work since the station heat rate of well-maintained plants does not get adversely affected with age.

      It seems the government is contemplating a ban on setting up new coal-based power stations. The plants which are already under construction will be allowed to continue, of course.

      This move, prima facie, is surprising because the government has also said that in order to meet the power demand in 2029-30, an additional capacity of about 16,000 MW of coal-based capacity would be required, which would be over and above the capacity of about 27,000 MW already under construction. The need for additional capacity of 16,900 MW has been cited in the report of the Central Electricity Authority (CEA) called Optimal Generation Capacity Mix, which was released recently. In fact, there are two versions of this report. The first was published in January 2020 and the second in April 2023.

      So what’s the catch? How are we to meet our demand in 2029-30 if no new coal-based plants are allowed? This writer’s surmise is that the government probably feels that the additional capacity of about 16,000 MW of coal-based capacity may ultimately not be required, primarily for two reasons. The first reason is the demand for power in 2029-30 in the second report is based on the 20th Electric Power Survey (EPS) whereas the first report looked at the estimates of the 19th EPS. The demand for power in 2029-30 in the 20th EPS is somewhat more conservative. This is understandable since the estimates get closer to reality once we approach the terminal date.

      The 19th EPS had projected a peak demand of 340 GW in 2029-30 whereas the figure indicated in the 20th EPS is 334 GW. Similarly, the energy demand for the 19th and 20th EPS are 2,400 BUs and 2,313 BUs, respectively. Historically, CEA’s power demand projections are known to be exaggerated and, perhaps, the government feels the actual demand in 2029-30 could be even lower than the projections in the 20th EPS.

      The changing shape of the load curve is, perhaps, the second reason why the government feels this additional capacity of 16,000 MW may not be required. Traditionally, in India, there have been two peaks in a day and the evening peak is usually higher than the morning though there are seasonal variations. To meet the evening peak, which used to occur at around 7 pm, we had to rely on coal-based capacity as economically viable storage options were limited. However, the evening peak is actually occurring at about 4 pm in the last two to three years. This is good news since this peak can be met through solar power and hence, we can lower our need for coal-based capacity. There are some indications that the peak time may get further advanced to maybe 2 pm, which could enable us to further cut down the need for coal-based capacity.

      In the second version of the CEA report, the required capacity for coal-based stations in 2029-30 has come down from 267 GW to 251 GW. This decrease is on account of the reasons mentioned above and also because of a major change in policy relating to the retirement of units after they complete 25 years. This version mentions that about 2,121 MW of coal-based capacity would be retired by 2030 whereas the earlier version of this report stated that about 25,000 MW of coal-based capacity would be retired by 2030!

      The government probably feels it would be a good idea to carry on with old plants even after they have completed 25 years of operation. Carrying on with generating units that are more than 25 years old is not a bad idea since the station heat rate of well-maintained plants does not get adversely affected with age. The advantages of carrying on with old plants are that the transmission links are already there and that the coal linkages are maintained. However, such plants should sell their power in exchange instead of signing fresh PPAs.

      Renouncing the need for additional coal-based capacity is a good idea. However, we must ensure that we do not miss the targets set for the other sources, especially solar and wind-based capacities.

      The writer is Senior Visiting Fellow, ICRIER and former, Member (Economic & Commercial), Central Electricity Authority. View are personal


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