India’s power sector is at the cusp of a historic transformation. By 2031-32, analysts anticipate a decreased need for coal plants throughout the day. One major factor for this change is the increased penetration of solar energy. Ember, a leading energy and climate think tank, found some very encouraging trends. India is at a critical juncture where it can now attain reliability and flexibility in its power sector without needing to build any more new coal plants.
These renewable energy sources have never been more popular. Indeed, the next era of power sector planning in India needs to focus on improving system flexibility. It is possible through large-scale adoption of storage, operational reforms, and targeted retrofitting of existing coal plants. The modeling further underscores the coal fleet’s patchwork operation, from 70GW to 80GW in the early morning to midday hours. By fiscal year 2031-32 (FY31-32) though, it will be mandated to operate much nearer its minimum technical underpinnings.
Rising Costs and Falling Load Factors
The economic future of coal-based electricity in India is looking quite grim. In fact, by FY31-32 coal-based power will likely cost at least 25% more than it will in FY24-25. We expect average plant load factors to plunge to only about 55%. This is problematic because this drop in capacity means that the fixed costs of coal power will be spread over fewer units of generation. The new cost structure will make it even more difficult for coal to ever be a dependable source of energy.
India today sits on a margin of about 7GW over its technical minimum in coal-based electricity generation. Yet, as our nation transitions to a cleaner, more sustainable energy mix, this excess capacity will prove far less advantageous. The projected decline in coal’s operational load raises concerns about the future role of these plants in meeting India’s energy demands.
Embracing Renewables and Storage Solutions
India’s power sector is in the midst of a thrilling, historic transformation. It’s ever so slightly better, now powered by renewable energy and the latest storage innovations. We anticipate that the integration of these technologies will help us make the system more flexible and reliable. With the increasing share of renewables, the demand for coal-based electricity will decrease in the mid-afternoon, when renewables are peaking.
Ember’s analysis highlights that India requires greater flexibility in its coal-based electricity generation to adapt to changing energy dynamics. Renewable energy sources are growing in prominence. Now’s the time to be maximizing our existing resources, rather than pouring money into new coal infrastructure.