India Inc’s Growth Story Will Be Powered By Coal Energy

India Inc’s Growth Story Will Be Powered By Coal Energy

Globally, coal is heading towards a bleak future. This is primarily due to its negative impact on the environment and health. Many analysts believe that the future of coal is no different in India. However, my take on India’s coal dependence is arguably different. Despite the negative aspects, coal still dominates power production in India, which may continue in the future. At end of June, in India, of the total 329.2 GW of installed capacity, 194.5 GW of coal-based power plants contributed 59 per cent, which means that it still is the undisputed leader of lighting millions of households and running numerous industries.

The Central Electricity Authority (CEA) estimates a generation of 9,58,442 million units (MU) of coal-based electricity in 2017-18, compared to 9,21,129 MU in 2016-17, a targeted growth of 3.9 per cent. On the other hand, the gas-based power plants are struggling due to a short supply of gas. CEA’s annual fuel supply report (2016-17) suggests that gas-based power plants could receive just about 30 per cent of their allotted gas. Despite schemes like e-bids for re-gasified liquefied natural gas (R-LNG), optimal capacity utilisation of gas-based power plants remains far from reality. In the near future, the gas supply situation for gas-based power plants may not improve.

Therefore, it is fair to argue that coal may continue its dominance in the absence of any serious challenge.

A CEA report confirms that India is a power-surplus country, that despite the underutilisation of about 25 GW of gas-based power plants, electricity supply exceeds demand. Today, ironically, millions of residents don’t have access to 24×7 power supply, with thousands contending with intermittent supply. This apart, industries endure agony due to lack of timely power supply. Arguments and support are flooding in favour of renewables to address ground level acute power supply problems in the country. Prime Minister Narendra Modi, an ardent supporter of green energy, has been pushing his administration and government agencies to catapult renewable growth. As a result, renewable targets have been reset, policies reframed, promotional schemes launched or revamped, implementation, and monitoring mechanisms tightened. Subsequently, faster expansion of renewable power, especially solar and the wind, has helped cumulative renewable installations reach 59 GW with 17.3 per cent of total installations.

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The solarisation movement initiated by the previous UPA government, and intensified by the Modi government, brought about a solar price revolution. Once commercially infeasible, the price of solar has now become competitive. Recent rounds of solar auctions have reduced solar tariffs below Rs 2.5/kWh, precisely Rs 2.44/ kWh, which is lower than the National Thermal Power Corporation’s average coal-based power tariff of Rs 3.20/kWh.

The government’s strategic decision to move away from subsidy-based levelised tariff to market determined auction-based tariff delivered unexpected but desirable results. For the first time ever, solar threatens to disrupt the low tariff monopoly of conventional and polluting fuels like coal.

As per the BP Statistical Review of World Energy 2017, with 94,769 million tonne of coal reserves, India contributes 8.3 per cent to the global reserves. In 2016, with 692.4 million tonne, India’s coal production share was 9.3 per cent of the global production, which is higher than its share of global reserves. By 2016-end, India’s coal consumption reached 411.9 million tonne of oil equivalent (Mtoe) from 164.4 Mtoe in 2000, a 2.5 times growth. India’s economy is projected to surpass the US by 2040, which means energy will remain the key driver of economic growth. Coal will continue to play a critical role in meeting energy demands of the country, as a shortage of domestic supply of other forms of fossil fuels is expected to persist. On the price front, coal will face tough competition from renewable power. However, on the efficiency front, coal has a long way to go. Until the efficiency of renewable power, especially solar and wind, takes a quantum leap, coal will continue to power the Indian economy.

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Source Link – Dna India

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