India Sinking Over ₹ 3 lakh crores/$49 Billion To Build 62 GW of idle coal plants

India is making laudable progress towards its clean energy commitments, installing 175 GW of solar and wind power, and looking to attract multi-billion dollar investments in the renewable sector. At the same time, Greenpeace’s analysis shows that over Rs 3,00,000 crores (close to $50 billion) is being wasted on building an additional 62* GW of coal power plants, which will remain idle due to huge overcapacity in the power sector. (1)

The threat of excess coal power comes even as the sector has already seen plant load factors (PLF) drop to 62% in 2015-16, and as low as 54% in July 2016, leading to under-recoveries and financial distress. At least 31 GW of coal power plants are currently idle and stranded, due to a lack of coal supply or purchasing agreements with state discoms. (2)

“It is clear that there is no need for any additional coal power till 2022 at least, and probably beyond that too, even if we work with the government’s own estimates of 6.7% p.a. growth in electricity demand (based on a projected GDP growth of 8.3%). And yet, to continue building, at enormous expense, an additional 65 GW of coal plants that will not be utilised, is shocking evidence of poor planning in the infrastructure sector. In effect, 94% of the coal power capacity that is currently being built will be lying idle,” said Jai Krishna,  research consultant for Greenpeace India.

In addition to 65 GW of coal power under construction, there are an estimated additional 178 GW of coal power plants at various stages in the permitting process. If even a fraction of this gets built, the overcapacity problem in the power sector will be magnified. This has follow-on implications for the banking sector, with the risk of further growth in Non-Performing Assets.

Energy surplus or energy poverty?

Providing affordable electricity to all must be a priority, but even though a large segment of the country’s population remains without power, the Central Electricity Authority projects India to be electricity surplus this year. This makes it amply clear that large, centralised additions to the grid have failed to address energy poverty, as distributing companies lack the finances to purchase additional power, and the actual needs of the population remain unmet. Numerous demonstration models have shown that the provision of decentralised renewable energy via micro grids offers a more cost-effective option. Energy Minister Piyush Goyal has himself said that solar is now cheaper than thermal power in India.(3)

“This alarming situation - of creating excess capacity in coal - needs to be addressed immediately,” said Jai Krishna. Greenpeace is asking the Government of India to take a unified position on its energy commitments, and urging government bodies to discourage and disallow further investment in coal, starting with state owned companies, such as the unnecessary expansion planned by NTPC to add an extra 31 GW by 2032 (4). They must also accelerate the process of shutting down older, polluting and less efficient coal power plants, and explore mechanisms to divert capital from coal plant construction towards meeting India’s renewable energy targets.

Notes:

* 62 GW is the  projected figure according to the analysis, while 65 GW is the actual figure

1. Link to brief: http://bit.ly/GpinCoal

2. http://energy.economictimes.indiatimes.com/news/power/35-of-indias-total-thermal-power-capacity-lying-unused/53733220

3. https://twitter.com/piyushgoyal/status/731438910954295297

4. http://www.irade.org/national-Presentations/Session%201/Presentation%20by%20Shri%20AK%20Gupta,%20NTPC.pdf

Brief explanation of calculations.

(For a more detailed explanation please refer to the brief at the link above.)

A summary of power generation and demand is tabulated below. The projection for power demand in 2016 and 2022 and is based on 6.7% annual growth rate using 2012 as the base year. Energy Efficiency savings (estimate put forward by Bureau of Energy Efficiency) of 191 TWh is deducted from the 2022 total demand of 1486 TWh, while 15% Aggregate Technical & Commercial (AT&C) losses is credited, yielding a total demand of 1489.25 TWh. Power generation potential from all forms of energy, including the coal power plants under construction, is estimated at 1835.72 TWh, assuming a 64% PLF for coal. Since excess power cannot be generated it would mean that 346 TWh of power generation will need to be backed down in 2022. In terms of coal power alone, this would mean that 61.7 GW of coal capacity would be lying idle if the average PLF of the coal power sector remains at 64%.

This analysis assumes that none of the 178 GW of coal in the permitting pipeline actually gets built by 2022.

For further information:

Jai Krishna .R, Senior Research Consultant, Greenpeace ; :
+91 9845591992

Anindita Datta Choudhury: Senior Media Officer, Greenpeace; ;
+91 9871515804