Tamil Nadu, Rajasthan, and Karnataka could declare ‘no new coal’ policy: Report

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Tamil Nadu, Rajasthan, and Karnataka could
declare ‘no new coal’ policy: Report

New Delhi, December 5, 2019: According to a new analysis titled ‘Winds of Change: No New Coal States of India’,
three Indian states of Rajasthan, Tamil Nadu, and Karnataka could follow in the
footsteps of Gujarat and Chhattisgarh to declare a ‘no new coal’ policy.

This implies
that these states will not need any new coal power plants in the future, and
all of their future energy demands could be cost-effectively met by renewable
and flexible based energy alone. 

 The report, released by Climate Trends – a New
Delhi based climate communications organisation — bases its findings on the
analysis of current economic indicators, the states’ installed power
capacities, electricity generation and renewable energy (RE) potential, as well
as the impacts of air pollution and water stress, that is aggravated by coal
power.

 “Our
analysis confirms the beginning of the end for coal in India. The decision by
Gujarat, the country’s most industrialised state, and Chhattisgarh, the largest
coal bearing state, to exit new coal power highlights the poor economics of the
fossil technology which powered the world so far. At the same time, it’s an
enormous vote of confidence for the reliability and competitiveness of
renewable energy,” said Aarti Khosla, Director Climate Trends.

 Karnataka, Rajasthan, Tamil Nadu are states
with the highest RE potential in the country. Their installed RE capacities are
either higher than coal power or are on a path to overtake it.

In Rajasthan,
the total installed coal capacity stands at 11.6GW whereas RE + hydro stands at
11.1GW. In Karnataka installed capacity of non-fossil stands at 63%, coal
capacity stands at 9GW whereas RE + hydro stands at 17.9GW. Similarly, in Tamil
Nadu non-fossils exceeds fossils by 2.3GW, coal stands at 13.5GW whereas RE +
hydro stands at 15.6GW.

Coal power is
also more expensive there due to low availability and high transportation cost.

On the other
hand, the cost of solar and wind power is 30-50% less than power
from new non-pithead coal plants. Coupled with the shortage of water, plant
utilisation in the three states is at less than 60% on average. This has led to
high financial stress for both the power producers as well as the distributors.

Rajasthan,
with the highest renewable energy potential, has the lowest discovered per unit
price for solar energy (₹2.44/unit or $0.034/unit). Similarly, Tamil Nadu has
the highest installed capacity of wind energy, as well as the largest wind
power farm at 1500MW. Karnataka, with a population of 65 million (about the
same as the population of France, and twice that of Canada), met more than 50%
of its electricity demand from solar and wind energy projects for three
consecutive days in July this year.

 The figures indicate that the high cost of
buying electricity from coal power generators, along with heavy subsidies for
end customers, is thus increasing the burden of debt for their power
distribution companies. The combined debt for Rajasthan, Karnataka and Tamil
Nadu stands at $6bn, or ₹43,562cr.

 “Rajasthan,
Karnataka, and Tamil Nadu account for more than half of the country’s DISCOM
(Electricity Distribution Companies) debt. Yet, Tamil Nadu has the highest new
coal power pipeline in India. The Tamil Nadu and Rajasthan state governments
cannot afford to hand out free electricity when their DISCOMs are bleeding. The
only way for them to repay their dues is to buy cheap electricity, which must
be renewables-based” said Ms. Khosla. 

Electricity
demand in India has also been at an all-time low, possibly due to the economic
slowdown.

Coupled with
an extended monsoon season and increasing capacity of solar and wind power,
electricity output from conventional sources in October 2019 declined by 12.9%
(year-on-year). Meanwhile, renewable energy generation has grown by 9.3% during
the same period. It is expected to receive a further boost from the National
Energy Storage Mission (NESM), that intends to augment India’s energy storage
capacity and enable greater reliance on solar and wind power.

The current
economic and weather situation has had an unintended effect on the way
electricity is produced and consumed. Power generation from hydro and
renewables is up whereas coal is down. These are perfect conditions to revisit
electricity generation plans for the future. RE can not only help solve DISCOM
debts, but also help create new jobs in a slowing economy.

 The report’s analysis further details that 12 other Indian states could comfortably announce a ‘no new coal’ policy, as each of them has high RE potential. Several of them lie in India’s north-east and have low coal power capacity on the ground. Their economic and power demand profiles make them well suited for the transition. 

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