India Clinging To Questionable Ultra Mega Coal Power Plants, According To IEEFA

Despite admirable moves intended to move the country towards a renewable energy transition, India is still clinging to unwise plans to develop two expensive coal-fired Ultra Mega Power Plants.

This is the primary conclusion from a new report published by the Institute for Energy Economics & Financial Analysis (IEEFA), released this week, detailing how India’s plans for two costly coal-fired Ultra Mega Power Plants (UMPP) “stand in jarring contrast to better-advised initiatives that include a huge renewable-generation expansion program that aims to increase renewable capacity to 175 GW by 2022.”

“Indian energy policy has undergone a radical transformation over the past few years, a shift that has gained momentum since the Modi government took power in 2014,” the authors of the report opened, pointing primarily to the impressive policy aims of increasing renewable energy capacity to 175 GW by 2022 — of which 100 GW is to be from solar. India is also aiming to minimize and eventually eliminate imports of thermal coal by increasing domestic coal production to 1,500 Mtpa by 2022.

“Nonetheless, and despite the recent major changes in India’s energy policy, the government has gone ahead with the bidding process for two UMPPs, at Bhedabahal, Odisha and Cheyyur, Tamil Nadu,” said Jai Sharda, an IEEFA energy-markets consultant, and lead author of the new report. A raft of hurdles face the implementation of these two projects, which only further serve to befuddle analysts watching India. As Sharda notes further, the contrast between moving forward with these UMPPs in favor of further supporting the country’s solar development is made even more explicit when taking into account the current climate of the country’s solar industry.

“Against the backdrop of research that shows the imprudence of expanding coal-fired electricity generation, India’s impressive solar expansion has been accompanied by impressive price declines. The required tariff for solar power has dropped recently to Rs 4.4/kWh (~US$ cents 6.5) from Rs 12.5/kWh (~US$ cents 19.0) –a 65% decline. The cost of solar power has plunged in other parts of the world as well, with records being set in countries that include Dubai, Mexico and Peru.”

The full report is available to read here (PDF).