States gun for coal power in setback for renewables

Stability, assured fuel supply prompt discoms to seek costlier thermal power

- Rituraj Baruah & Utpal Bhaskar

King Coal is tightening its grip as discoms flock to thermal power while cheaper green power waits for buyers, raising questions over India’s ability to meet its energy transition goals.

States such as Madhya Pradesh, Bihar, Assam and West Bengal have recently signed power purchase agreements (PPAs) for thermal power at tariffs as high as ₹6.64 a unit, even though solar and wind power come for ₹2.5-4. The key reason is the ‘infirm’ nature of renewable powerlack of generation when the sun doesn’t shine, and the wind doesn’t blow.

Even those renewable projects with combined solar and wind generation, plus battery storage, are not finding takers despite being available at ₹5 a unit or lower, as discoms remain wary of battery supply chains. Meanwhile, thermal provides the necessary base load. According to four people aware of the growing problem in India’s green energy space, this signals a continued weakening in demand for renewable power in the days to come.

“We are not sure about the viability of these proposed (green power) projects, with tariffs being quoted very low for standalone battery projects,” an official at a state power distributor that has signed up for thermal power said. “Further, there is an 18% GST on battery services, which would increase the cost of power. Batteries are currently imported, and there remain supply chain concerns. Thermal, on the other hand, is reliable with assured fuel supply and its baseload availability. Also, batteries currently can supply power for up to seven hours, and 24X7 supply would continue to require thermal power in the near future,” the official said on condition of anonymity.