No new coal fired power plants for India

India’s new draft National Electricity Plan for the two five year periods to 2027 unambiguously concludes that beyond the half-built plants already under construction, India does not require any new coal-fired power stations.

India is accelerating an already rapid diversification away from coal-fired power generation. Energy Minister Piyush Goyal’s strategy is to cut pollution and drive down costs for the consumer, while fully accommodating sustained, strong Indian economic growth.

India’s Intended Nationally Determined Contribution (INDC) released in September 2015 and submitted for the Paris COP21 Climate Agreement aimed to achieve about 40% cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030.

The new draft National Electricity Plan calls for 57% of India’s total electricity capacity to come from non-fossil fuels (372GW of the 650GW total) by 2027, indicating a 42% uplift three years ahead of a schedule set only 12 months ago.

The 50GW of coal power currently under construction is already largely stranded, with the Central Electricity Authority (CEA) modeling showing none of these plants are required before 2022 and only possibly before 2027. 11GW of end-of-life thermal power plants will also close.

The 50GW of coal power under construction will barely operate at 50% capacity, according to the new plan. These stranded assets are only moving forward as the government has opted to retain them as reserve capacity rather than write them off now.

Shortly after the release of the plan, speaking to the Indian oil and gas sector, Energy Minister Goyal stated “we have to look at a world beyond fossil fuels” and reiterated that India must cut its dependence on fossil fuel imports.

The shift from fossil fuels is largely driven by the transition to renewable energy, in particular solar, the cost of which has dropped 80% since 2011. With installed solar already cheaper than imported coal, last week McKinsey & Co published a paper highlighting that utility solar could reach grid parity against domestic Indian coal-fired power generation by 2019.

India’s new plan models the additional installation of 215GW of renewables (biomass, small hydro, wind plus distributed and utility scale solar) by 2027, balanced by 27GW of hydro, 5GW of new hydro imports from Bhutan, 4GW of gas and 8GW of nuclear capacity. 

As such, by 2027 India aims to have 275GW of total renewables, plus 72GW of hydro and 15GW of nuclear (97GW of “other zero emissions” installs) – translating to 372GW of non-fossil fuels, or 57% of the 650GW planned total. 

Energy efficiency is modeled to reduce the need for capacity additions by 20GW in each five-year period, with the reduction of transmission and distribution loss from the grid also targeted.

India is moving beyond fossil fuels at a pace scarcely imagined only two years ago. The stark reality is the economics of renewable energy make it irresistible to a growing country aiming to put an end to expensive energy imports.