India’s power sector is experiencing a major transformation as renewable energy sources and storage technologies gain an increased share in the country’s energy mix, according to think tank Ember.
With the evolving generation mix, coal is expected to transition from being the cornerstone and baseload provider of the domestic power system to serving as a flexible balancing resource that complements the increasing presence of variable renewable energy.
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This change is making coal-based power increasingly uneconomical compared to renewable options.
According to the National Electricity Plan (NEP) 2032, India is largely progressing towards achieving its generation mix targets for solar, coal, and hydro power.
However, there is need for growth in other technologies such as pumped-storage hydropower and battery energy storage systems.
Nuclear energy is the only technology projected to fall short of its target, the report said.
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By GlobalDataThe changing role of coal in the country has profound cost implications. By fiscal year 2031-32 (FY31-32), the cost of coal-based electricity is expected to be approximately 25% higher than in FY24-25.
This projection is based on a chronological, least-cost operations model of the Indian power sector, which compares coal fleet operations between the two fiscal years within the NEP scenario.
The analysis reveals that by 2031-32, the demand for coal plants during daytime hours is expected to decrease due to higher solar penetration, thereby compelling coal plants to operate nearer to their minimum technical thresholds.
India’s coal fleet fluctuates between 70GW and 80GW from morning to midday, with a margin of about 7GW above its technical minimum, leading to increased flexibility requirements of coal-based electricity.
Consequently, plant load factors are anticipated to fall up to 55%, causing fixed costs to be spread over fewer units of generation, thereby increasing the actual cost of coal power.
On the other hand, firm and dispatchable renewable energy solutions such as renewable energy paired with battery storage are becoming more competitive.
They offer tariffs ranging from Rs4.3 to Rs5.8 ($0.04 to $0.06) per kilowatt-hour and have showcased their ability to fulfil availability and performance obligations.
India is now in a position to attain reliability and flexibility in its power sector without the need for constructing new coal plants.
The report says that India’s upcoming phase of power sector planning should prioritise enhancing system flexibility through the incorporation of storage solutions, implementing operational reforms, and undertaking selective retrofits, rather than increasing coal capacity.
This approach reportedly aligns with the goals of NEP 2032 and assures a more economically efficient, resilient, and sustainable power system.
