How Karnataka could become self-reliant in electricity in just 10 years with investments in clean energy

By Bhasker Tripathi New Delhi: By adding 11 gigawatt (GW) renewables capacity in the coming decade, or as much as 11 coal-fired power plants of 1,000 MW each, Karnataka–the national leader in renewable energy generation–could become self-reliant in electricity by 2027-28 and not add to its current fossil-fuel capacity, according to a new study. If successful, renewables with 23 GW or 60 percent of the state’s installed capacity will generate 43 percent of the 110 terawatt-hour (TWH) electricity demand of Karnataka by 2027-28, up from 27 percent today, said the July 2018  report by  The Institute for Energy Economics and Financial Analysis (IEEFA), a think-tank. Coal with 9.4 GW or 25 percent of the state’s total installed capacity will make up 39 percent of electricity generation in a decade, down from 49 percent today. The journey may not be tough: In 2017-18, Karnataka added about 5 GW in renewables to reach a renewables installed capacity of about  12 GW— 46 percent of state’s installed capacity of 27 GW. Thus, Karnataka became the number one renewable energy producing state by ending the long reign of neighbouring Tamil Nadu, which had about  11 GW in renewables capacity installed as on March 2018. “Karnataka’s progressive leadership offers a positive role model of electricity system transformation for the rest of India,” said the report written by Tim Buckley, IEEFA’s director of energy finance studies, Australia, and Kashish Shah, an IEEFA research associate. [caption id=“attachment_4190017” align=“alignleft” width=“380”] Representational image. Reuters[/caption] “As other states follow Karnataka’s lead, India is set to take its place as a global leader in decarbonisation,” the report said, adding that the merits of adopting increasingly low-cost renewables technology provide India with an alternative path to the “now outdated plan of increased reliance on expensive fossil fuel imports”. In line with its climate-change  commitment to the  Paris Climate Agreement 2015, India is running one of the world’s largest programmes to install 175 GW renewables power capacity by 2022, thrice its current figure. This is enough to replace 175 coal-fired power plants of 1,000 MW and reduce India’s dependence on fossil fuels that produce greenhouse gases and hasten global warming. Of India’s renewables target, 100 GW is to come from solar sources, with solar-radiation rich states such as Karnataka and Tamil Nadu playing key roles. From import of electricity to self-reliance Karnataka’s installed capacity, including renewables, thermal, hydro and nuclear, is estimated to reach 38 GW by 2027-28, up 43 percent from 27 GW as on March 2018. The state will have to achieve an additional electricity supply requirement of 49 TWH from this increased installed capacity to reach “net zero imports”, meaning no imports to meet domestic demand, according to the report. While net-zero imports by 2027-28 is a conservative estimate, Karnataka could become an electricity exporter through expansion of its renewable generation resources, the report said. Karnataka produced about 61 TWH electricity in 2017-18, and imported about 7 TWH from the inter-state grid to meet its total demand of about 68 TWH, according to the report. Of the 61 TWH produced by the state, 27 percent was generated from renewables through an installed capacity of 12 GW or 46 percent of state’s installed capacity of 27 GW, the report said. The largest proportion of electricity, about 49 percent, came from coal-based power plants, with 9.8 GW capacity, working at 35 percent capacity factor. The other 24 percent was generated by hydro and nuclear sources with a combined installed capacity of 4.5 GW, as per the report. As we earlier said, if Karnataka successfully adds 11 GW of renewable capacity in the next decade to the already existing 12 GW, and maintains the installed coal capacity at the current levels of >9 GW with increased capacity utilisation, it could comfortably meet the entire demand of the state without importing any electricity, the report estimated. The only hiccup is that about 1.7 GW of state’s coal capacity may retire in the next decade, the report estimated. It also assumed that projects currently in the pipeline accounted for 1.32 GW of new coal capacity will be completed, and they will partially offset the retired capacity. The state will thus be left with a cumulative coal capacity of about 9.4 GW in 2027-28, a 4 percent drop from 9.8 GW as on March 2018. Coal plants can fill in for reduced capacity by working more efficiently. “The current 35 percent utilisation rate [of the capacity] is unsustainably low,” said the report.

The slightly reduced net capacity over the coming decade, coupled with an improved average capacity utilisation of 53 percent, appears to be the only hope for the already stressed coal-fired power generation sector of the state, the report said. Why moving away from coal is the way forward for Karnataka As we said, Karnataka’s electricity generation mix is heavily dependent on coal. Since Karnataka does not mine coal, it depends on coal delivered via the railways from mines in the Odisha, Telangana and Jharkhand, about 700 to 1,200 km away from its power plants. The state also depends on imported, seaborne coal. Coal from other states adds about Rs 2,130 per tonne of rail-transport expenses (about 90 percent extra of basic coal cost) over mine-mouth coal cost of Rs 2,268 per tonne, including taxes, and poses “severe logistics issues”, according to the report. Karnataka’s coal-fired power plants have spent about Rs 2,000 crore ($300 million) over two years in annual imported fuel costs, the report said. These conditions make coal power costly, about Rs 3-5 per kilowatt-hour (KWH) using Indian coal and Rs 5-6 per KWH for imported coal. Increasing domestic and international coal prices (coupled with currency devaluation for international coal) have taken these tariffs higher and the varying fuel prices are passed on to the consumer, Kashish Shah, co-author of the report, told IndiaSpend. Given the expensive coal-based tariffs, Karnataka’s distribution companies have a “major incentive” to contract for new solar and wind at below Rs 3 per unit, the report said. Recent solar tenders in Karnataka have seen near record low bids of Rs 2.82-3.06 per unit. In June 2018, Karnataka introduced reverse auctions–where the prices are decided through competitive bidding and the lowest bidder wins–for wind-powered electricity, with an upper cap of Rs 3.45 per unit, the report said. These rates are 30-50 percent less than coal-fired power tariffs. (Tripathi is a principal correspondent with IndiaSpend) (Indiaspend.org is a data-driven, public-interest journalism non-profit initiative)