India’s renewable capacity estimated to increase, while reliance on coal to continue, indicates National Electricity Plan

India will achieve an installed renewable energy capacity of around 55% of the total energy capacity by 2026-27, according to the country’s National Electricity Plan (NEP) estimate. If this is met, India will achieve its Nationally Determined Contributions (NDCs), the voluntary targets for climate mitigation, before its 2030 deadline. The country has committed to achieving 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030 in its revised NDCs.

On May 31, the Central Electricity Authority (CEA) notified the NEP which reflects the evolution of the power sector in the coming decade. It estimates the total power required and the contribution of fossil and non-fossil fuels to achieve this requirement.

The CEA estimates renewable energy will be around 55% of the total installed capacity by 2026-27 and 66% by 2031-32, contributing about 35% and 44% in the total energy mix respectively. In addition to solar and wind, hydropower, pumped storage plants, small hydro and biomass are also part of the renewable energy sources considered in this estimate.

Even as renewable energy will have a signficant share in the energy mix, coal will still play a critical role with around 39% share in installed capacity and will contribute about 59% to the total energy mix by 2026-27.

The plan provides a short-term framework of five years while giving a 15-year perspective, including short-term and long-term demand forecasts, capacity additions in generation and transmission, technologies and fuel choices based on economy, energy security, and environmental considerations, and expected financial outlay. Under the National Electricity Policy, the CEA is empowered to prepare and notify an NEP every five years.

Bharath Jairaj, Director of Energy at the WRI India, finds the NEP bold, ambitious, and forward-looking document consistent with the overall objective to achieve 50% of cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030, as committed in the NDCs. The NEP also recognises the critical role of fossil fuels in meeting peak load and intermittency from renewable sources with the mandate to provide 24X7 electricity at a reasonable cost, he said.

“This is a transition phase; no transition is linear. It is difficult to bring these documents during rapid change regarding technology, finance, etc.,” he added.

Alexander Hogeveen Rutter, Private Sector Specialist at the International Solar Alliance (ISA), an alliance of countries working on solar energy, feels otherwise. He highlighted the problem with the NDC target and NEP, saying it creates a false sense of security. India is meeting NDC targets, but meeting NDCs is not enough to meet total electricity requirements. If India intends to be a $5 trillion economy by 2028-29, it needs to ramp up renewable energy (RE) capacity above and beyond the NDC targets.

India will require renewable capacity installation of 700-750 gigawatt (GW) by 2030 to meet the demand in the least cost way, in a scenario where no new coal power capacity is added and uneconomic coal power plants are retired, Hogeveen Rutter estimated. The NEP estimates, meanwhile, say that India will have a total of 596 GW of renewable capacity by 2032.

Commenting on the NEP, Aditya Lolla, Asia Programme Lead, Ember, an energy think tank, told Mongabay-India that 30 GW of solar and 7.5 GW of wind needs to be added annually to meet NEP’s 2022-27 plan targets.

India is building new coal plants to meet the instantaneous peak demand. But India’s peak demand profile is changing, with the highest peak demand of 223.23 GW during the daytime on June 9. With peak demand now occurring more frequently during solar hours, a big portion of it could be met cheaply through solar, said Lolla.

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The NEP report indicates that even as renewable energy increases in the mix, total carbon emissions will continue to increase in the future, as more energy will be generated to meet the demand. “The total CO2 emissions projected is likely to increase from 1002.02 million tonnes in 2021-22 to 1057 million tonnes in the year 2026-27 and 1100 million tonnes in 2031-32,” the report says.

However, as energy efficiency is improving, the average carbon emission per unit of electricity generated in the grid will improve. The emission factor was 0.710 kg in 2021-22 and will improve to 0.430 kg by the end of 2031-32.

The notified NEP also reduces the capacity at which old coal plants need to be retired, by more than 50% from what was proposed in the draft NEP in 2022. The retirement capacity of 4629 megawatt (MW) by 2027 in the NEP draft is modified to 2121.5 MW by 2031-32 in the 2023 notified NEP. Experts say this would increase emissions due to inefficient operations for a longer term than earlier proposed.

Jairaj from WRI India says that fossil fuels will continue to play an essential role in providing security in the system. But fossil fuel’s role could begin to change based on the development of new storage technology. The early retirement of old coal plants at the moment would create power outages and load shedding for consumers and this can be rolled out in a large-scale manner only when the cost of storage drops substantially. The planning processes need to consider all resources spread across the country and system inefficiencies and losses to arrive at an optimum decision, which is what CEA has prioritised through the NEP.

Encouraging storage technologies

The NEP plan has also introduced measures to make renewable power available 24X7 through Battery Energy Storage Systems (BESS) and Pump Storage Plant (PSP).

A BESS is an electrochemical device that charges (or collects energy) from the grid and discharges that energy at a later time to provide electricity or other grid services when needed. The NEP estimates a BESS with capacity of 8,680 MW/34,720 megawatt hour (MWh) for 2027 and 38,564 MW/201,500 MWh for 2032. A megawatt hour refers to electricity generation of 1 megawatt produced over one hour.

The pumped storage target has been significantly scaled up for 2027-32 from 12,020 MW in the draft to 19,240 MW in the notified plan.

Talking about the role of storage, Jairaj from WRI India further elaborates that an increased target for renewables, in turn, will trigger significant growth of storage capacity; otherwise, fossil fuels will continue to play a vital role.

“Right now, we are exploring PSP and BESS. While PSP has issues with water reservoirs and where to locate them, we still have some time before BESS + Solar can provide 24X7 power, due to higher cost. Therefore, we need to discover efficient and effective battery chemistry and start identifying other storage mechanisms. In addition to the chemistries, enforcement of energy storage obligations and introduction of regulatory measures to push storage products and services at both transmission and distribution levels would be necessary,” he said.

Hogeveen Rutter from ISA also says that new alternative storage technologies such as thermal storage, sodium ion, and other alternative battery chemistries are expected to be economically feasible during the 2027-32 period.

Commenting on the BESS addition in the final notification, Lolla from Ember said the addition of BESS is encouraging, as building an equivalent amount of battery storage capacity mitigates the risk of missing coal power plants. It also reflects that the government is probably circumspect about building excess new coal capacity.

Read more: Coal will stay strong even as solar shines in India’s energy transition

Coal, a financial burden

India plans to add 51,060 MW of new coal power capacity over the next decade.

Experts say these new coal plants as unnecessarily planned and not just a misallocation of scarce capital but also due to the lock-in effect of expensive electricity and ancillary impacts on the renewable energy industry. According to an Ember and Climate Risk Horizon study, India does not require additional coal capacity to meet expected demand growth by 2030. The study also concludes that generating electricity from renewables and storage will be cheaper than any of the planned coal power plants.

On financing the coal, Lolla said that very limited private investment is lined up for coal power. As per Global Energy Monitor data, most new coal is being built by government entities. The risk premium of these projects has gone up significantly. It will be easier to switch from building new coal plants to new renewable assets in the future.

With cost analysis, Hogeveen Rutter claims that it is not wise to go with coal plants. He said that the per unit cost of under-construction and planned coal plants would be Rs. 5.3 – 5.4 per kilowatt hour (kWh) or higher. To meet the current power shortage, renewables can replace uneconomical coal plants to meet immediate power needs, as new coal power has a longer gestation period. Currently, wind-solar-storage hybrid costs Rs. 4-4.5 per kWh. There is a perception within policymakers and regulators that coal is necessary for the development of the nation and solar-wind-storage is for environmental reasons. It is important to shift the mindset and recognise that renewable and storage together are not just environmental options but also economic and pro-development options. It is crucial government and regulators select the least-cost options on a technology-neutral basis, he adds.

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Banner image: Inside an electricity grid tower. Photo by ANKIT KUMAR/Wikimedia Commons.