In a recent declaration, the G20 called for an accelerated “phasedown of unabated coal power,” a move that presents a formidable challenge for India, a nation heavily reliant on coal to meet over 70% of its electricity needs. Coal power is considered “unabated” when the carbon emissions produced during coal combustion are not captured, a practice prevalent in India, where carbon capture, usage, and storage (CCUS) technology remain underutilized due to its high cost.
While India boasts the world’s fourth-largest renewable energy capacity, it is unlikely to swiftly comply with the G20’s mandate. The implementation of CCUS would place an additional financial burden on consumers, already grappling with challenges in recovering costs incurred by distribution companies (discoms). Consequently, CCUS adoption is expected to be delayed.
According to the National Electricity Plan (NEP), India can only reduce the share of coal power in its total energy mix, given the significantly higher cost of generating electricity from new coal projects compared to renewable sources. Incentives like low-cost green finance and disincentives such as carbon taxes are driving the promotion of cleaner energy alternatives.
India has made substantial strides in strengthening its renewable energy capacity, currently at 130 gigawatts (GW), along with approximately 180 GW from large hydro power projects. The nation aims to raise its non-fossil fuel-based capacity to 500 GW by 2030, thereby increasing the share of clean energy in its installed capacity mix from 40% to 50% by 2030.
However, coal-based power generation still accounts for a significant portion of the energy mix, hovering around 70% to 74%. Even the National Electricity Plan envisions an increase in coal-based capacity from 212 GW in March 2023 to 260 GW by 2032, an addition of 48 GW. Notably, all capacity expansions are undertaken by central and state public sector units (PSUs) rather than private players.
Goldman Sachs’ July report on India’s clean energy estimates suggests that India would require an additional 23 GW of coal capacity beyond the government’s target of 48 GW by 2032 to meet projected peak demand shortages.
To address the baseload demand, continuous generation stations capable of consistent operation over time are essential, a feat not entirely achievable with renewable energy without sufficient storage capacity. The government recently introduced a viability gap funding scheme with an outlay of Rs 3,760 crore to incentivize investments in Battery Energy Storage Systems (BESS).
In conclusion, India faces a significant challenge in reconciling its heavy reliance on coal-based power with the global push towards cleaner energy sources. While the transition is underway, the nation must navigate the complexities of cost, technology adoption, and energy demand to achieve a more sustainable and inclusive energy future.