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Indian states sign coal power agreements to meet increasing demand

Indian state electricity distributors sign long-term contracts to coal-fired generators in order to meet an expected surge in evening demand. This is despite efforts by the country to increase clean energy capacity.

Bid documents examined by reveal that Uttar Pradesh, India’s most populous State, and Assam, a state in eastern India, have recently withdrawn incentives for clean energy project, are hoping to sign deals within the next two month for at least seven gigawatts coal-fired electricity, collectively to be delivered in 2020.

India Ratings & Research reports that more than 17 GW coal-fired power capacity was contracted in various stages during the 16 months leading up to July. This is the largest pipeline of this kind since the Covid Pandemic.

Analysts say that the rush to purchase, fueled by the projected increase in demand for air conditioning during non-solar times and the slow expansion of battery storage capacity, is driving investment. It is also expected to slow down decarbonisation efforts, in the third largest emitter of greenhouse gases in the world.

Ashis Kumar Prdhan, senior consultant at Wood Mackenzie said that he believes the government's push to promote renewable energy will only prolong India's dependence on coal.

India plans to increase coal power by 46%, from 210 GW to 307 GW in 2035. It also targets non-fossil energy capacity of 500 GW or nearly twice the current 251.4 GW.

Pradhan stated that "we have revised our projections for coal-fired electricity generation in India. The peak is now expected to occur in the early 2020s as opposed to our previous outlook of the late 2030s."

COSTS ARE RISING

Adani Power announced in August that it would invest $5 billion into two coal-powered power plants.

Torrent Power is evaluating plans for 5-7 GW in capacity over the next decade. This was announced by Jigish Mehta, the company's full-time director.

Analysts say that while the plans could increase the coal share of the mix, solar energy is expected to be more popular during the day because it is cheaper.

Mehta stated that "grid instability is a problem for state distribution companies due to the variability of renewable energy and the lack of scalable storage."

Alexander Hogveen Rutter is an independent energy expert based in India. He said that building renewables and storing them was cheaper than adding new coal-fired power plants.

He said that "new coal power is becoming more expensive, and the gap will continue to widen as batteries scale up."

According to a report published by the Institute for Energy Economics and Financial Analysis in August, India has sold approximately 12.8 GW of battery energy storage for its development. However, only 219MW hours have been operational.

Filings reveal that states such as Madhya Pradesh and Tamil Nadu have chosen to build new coal-fired power plants this year despite citing delays in renewable energy projects.

Narendra Bhooshan is a senior official in the Uttar Pradesh Energy Department. He said that renewables alone could not fill the gap.

(source: Reuters)