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Will India Ever Need Another Coal Plant?

The country’s energy infrastructure is changing rapidly as solar prices plummet.

A view of a grid station of a coal-fired power plant of Essar Power is pictured in Salaya village in the western state of Gujarat, India, October 4, 2016.
Amit Dave/Reuters

In 2010, India was experiencing a massive boost in coal power—but not everyone was benefitting. Those in the Siddhi community, spread across the foothills of the Western Ghats, were almost entirely left in the literal dark. Francis Wilson relied entirely on kerosene lamps since the power grid didn’t cover his area. Mohan Appu had no direct connection to electricity because he had no documents to prove ownership of the house he had lived in for years. Residents of this rural community would have to travel almost 13 miles to charge a mobile phone.

This scenario, which plays out often across pockets of rural areas in the country, reflects the curious situation of India’s energy landscape. For the past two years, there’s been an overabundance of coal power, even though 240 million people in India still have little to no access to electricity. Meanwhile, over the last five months, the price of renewable energy has plummeted so low that analysts have hailed it as both “record-breaking” and “unsustainable” in the same breath. In fact, the pace of change in the country’s energy infrastructure has been so swift that even researchers are scrambling to keep a steady pulse on a constantly developing beat.

As China slowly cut down on its own coal infrastructure, the International Energy Agency in 2015 projected India to be the next coal center in the near future. It stated that “half of the net increase in coal-fired generation capacity worldwide [through 2040] occurs in India.” Nearly a year later, in July 2016, the nonprofit CoalSwarm put out a report that found 370 proposals for coal plants in the works across the country.

The findings revealed a pretty explosive conclusion: that India’s outsized plans for coal energy would wipe out climate goals set out in the Paris Agreement. Merely a few months after the report, the researchers at CoalSwarm were surprised by a new twist. In December 2016, the Central Authority of India (CAI) laid out an electricity plan that said no new coal plants, beyond those already under construction, are needed for at least the next decade. The CAI also put forth new renewable energy goals—a production of 275 gigawatts (GW) generated from solar, wind, and hydro by 2027.

This means that the majority of the plants that CoalSwarm tracked are now going to be shelved. It’s also a show of India’s push towards reforming its energy infrastructure: the country added more renewable power than thermal in the 2016 fiscal year. “It was hard to keep up,” says Christine Shearer, a senior researcher at CoalSwarm and lead author of the report. “The country is supposed to be at the heart of coal plant growth, but it’s interesting to see the tide go against what we often hear about China and India—that they’re going to keep building coal plants—when actually, they’re both stalling production.”

The glut of power doesn’t mean that every corner of the country is electrified— rather, it gestures strongly towards inertia, uneven distribution, and redundancy. “There are many coal plants which aren’t functioning at full capacity,” says Ashish Fernandes, a senior campaigner at Greenpeace. This underutilization, he points out, has led to an abundance of stale power contained inside state-owned distribution companies.

Another reason for the overabundance: rural areas that lack electricity can’t seem to afford the price of it. The cost can range from around Rs. 120 ($1.86 USD) to Rs. 500 ($7.75 USD) per month for domestic utilities, depending on the state. “If [residents] can’t afford the power, it doesn’t matter what fuel they use,” says Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis (IEEFA). “You’ve got to solve energy poverty, education, and employment to address that problem,” he adds. “You can’t keep building expensive coal-fired power plants that pollute the country and think there’s going to be demand—[some residents] just can’t afford it.” Even when data shows an area as having electricity, it may not mean much, Fernandes says. “We need to look at individual households that have power. According to the government data, if you have one building or streetlight in a rural area that has power, the entire town is considered to be connected,” he adds.

A look at the annual growth of coal capacity, in megawatts, added in India between 1960-2015, right before the country declared an oversupply of coal power. (Courtesy of CoalSwarm)

A report by Greenpeace published in October 2016 identified 65GW of coal power stations under construction in India and an additional 176GW of projects at various stages of obtaining permissions. The report forecast that 94 percent of the capacity being built would not be needed by 2022, representing a waste of $49 billion in investments. This could partly explain why a $150 million coal plant in the state of Maharashtra is currently sitting idle, with a lack of demand from power generators. And it could also explain why another state in India, Gujarat, has walked away from a $4 billion coal plant of 4000 megawatts this month. “There is no financial investment to fund coal in the Indian market because they’re simply not competitive against solar energy prices right now,” says Buckley.

As prospects for India’s coal sector are falling, so is the price of renewable energy. In turn, the country’s future outlook, if all goes accordingly, is pretty good news for the planet. India first set a record-low price in February this year when a kilowatt-hour of solar energy was selling at Rs. 2.97 ($0.046 USD). This month, the country hit another record low—the price of solar dropped 12 percent further, currently selling at Rs. 2.62 ($0.041 USD) per kilowatt-hour. “To spell it out, new solar is 15 percent cheaper than existing domestic coal. No one, anywhere in the world, was expecting solar to get that cheap for at least a decade,” Buckley says, “and India just got there this year.” It’s a marked shift for India—which, in a matter of months, went from potentially thwarting global climate goals to possibly saving them.

The news of falling solar prices in India, and the country’s recent (but significant) efforts to divest from coal as the fundamental energy source, stands in contrast to the current scenario in the U.S. Analysts fear that President Trump’s “America First Energy Plan” will put the country behind China and India in the push to reinvigorate renewable solutions. “What gives me hope is that at a time when Trump is busy trying to destroy the Paris Agreement, the two most important countries in the world for the agreement are China and India,” says Buckley.

According to a study released last week by the Climate Action Tracker, India and China are on pace to “overachieve” their climate goals by 2030. While Trump has taken recent action to revitalize the coal industry, the report finds that China and India’s recent aggressive stances on carbon emissions “significantly outweigh” America’s lack of clean energy initiatives. Ultimately, Buckley points out that it might come down to those two countries taking the lead. “If Trump backs out of the Paris Agreement, which [is] a very likely scenario, he would be ceding America’s leadership in energy markets to China and India,” Buckley says.

Out of the world’s top three carbon transmitters, the U.S. is the only one at risk of missing its target goal, the Climate Action Tracker report concludes. An energy blueprint released this week by the Indian government predicts that 57 percent of total electricity capacity will come from non-fossil fuel sources by 2027—exceeding the Paris Agreement’s target of 40 percent by 2030. Currently, almost 33 percent of the country’s total energy comes from non-fossil fuel, which makes the Paris target relatively unambitious—it looks like India is almost three-and-a-half years ahead of schedule.

The research is undoubtedly positive and the numbers trumpet a new standard being set by two unlikely countries. But in terms of large-scale implementation, neither solar nor coal are easy options in India. For solar energy to be reliable and widespread, the country would need to build grid infrastructure on an unprecedented scale. The dwindling prices of non-fossil fuel energy is encouraging, and the slow-but-steady withdrawal from coal is optimistic, but is it enough to plug the gaps? Fernandes doesn’t think so. “The biggest threats to renewable expansion are the distribution companies,” he says, adding that this is the root of the problem. “Unless the distribution model is overhauled, the same issues will be transferred.”

Solutions like off-grid solar panels are one kind of sustainable technology that could address the distribution problem, says Harish Hande, co-founder of SELCO, an enterprise that introduced off-grid solar energy in the Siddhi community in 2010. Within a year, 100 homes in the area were connected to power in the Western Ghats region. SELCO has been nationally awarded for its energy work in under-served households and areas—but, as Hande points out, a long-standing solution has to go beyond the mere mechanics of the supply chain. “It’s much larger than providing electricity,” he says, “and there have to be enough public-private partnerships that cross over education, health, and the bigger ecosystem for sustainable energy services to become more accessible.”

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