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AsiaElec:India’s coal pipeline no longer necessary as demand growth slows

India’s current 27-GW pipeline of coal-fired power plants risks becoming a white elephant by 2030, as the country’s expanding renewable sector means that coal will not be needed to meet forecast demand growth.

Research from UK think-tanks Ember and Climate Risk Horizons (CRH) warned that new coal capacity risks becoming “zombie” plants and mopping up investment capital that could be more efficiently and economically used to boost India’s renewable energy (RE) ambitions.

Crucially, the think-tanks concluded that coal projects could be abandoned without needing to sacrifice the power system’s ability to meet future demand.

Ember said $33bn of potentially wasted capex could be saved by killing the “zombie” coal projects. India could make annual savings of $6bn by investing in renewables and storage rather than coal.

The forecast rests on data showing that India’s electricity demand growth rate has slowed in recent years, diverging significantly from previous Central Electricity Authority (CEA) projections.

Even if India’s power demand grows 5% annually, in line with the most optimistic International Energy Agency (IEA) projection, coal-fired generation in FY 2030 will be lower than in FY 2020 as long as India achieves its non-coal generation targets.

Using the IEA’s 5% projection, India’s peak demand would reach 301 GW by 2030. This is about 40 GW less than the Indian Central Electricity Authority (CEA’s) Optimal Generation Capacity Mix (OGCM) forecast.

In effect, more coal capacity beyond what’s already under construction is not needed to meet the aggregate demand growth by FY 2030.

Instead, substituting 27 GW of coal with battery storage would save the Indian power system $6bn per year in terms of reduced power purchase costs.

The report warned that the economics of India’s electricity generation sector have changed drastically in the last five years, and that demand had stalled because of the coronavirus (COVID-19) pandemic. Actual demand fell from 1,389 TWh in 2019-20 to 1,391 TWh in 2020-21.

India’s power sector still suffers from some inertia, the report said, as coal power players (both government and private) and regulators have allowed new coal power proposals to move through the system.

The risk for India is that 27 GW of “zombie” coal plants would waste public finances, lock consumers into expensive contracts and threaten India’s ambitious green targets.