Coal on its way out as rising costs make production unviable; renewable energy sources much better, cheaper option

Earlier this month, fishermen in North Chennai sighed in collective relief after the Madras High Court ruled in their favour — even if temporarily — by stopping the Vallur Thermal Power Plant from building yet another fly ash pond in the Athipattu Pudunagar area of Thiruvallur district and also from dumping sludge in the old one. In an interim junction, the court observed that continued dumping in the pond will lead to environmental hazards and natural disasters.

In North India, stubble burning by farmers combined with coal-fired power plants are facing the brunt for polluting Delhi's air and making the city unlivable. In Central India, several communities face respiratory disorders due to extensive mining in the region for several decades.

Nearly a hundred years after the first coal-fired thermal power plant was installed in India, the outdated mode of generating electricity now seems to be on its way out. While activists have been trying to drive home the point that coal-fired thermal power plants are an environmental and social disaster, the factories are now becoming economically unviable, as well. This could be the last straw.

 Coal on its way out as rising costs make production unviable; renewable energy sources much better, cheaper option

Reuters

The year 2014 was a turning point in the solar energy industry. It also marked the year the proportion of coal power plants being installed in the country began to drop drastically. A new report released by CarbonTracker on Friday revealed that it costs more to run 62 percent of India's coal capacity than to build ways to generate renewable forms of energy. By 2030, this number will rise to 100 percent, according to the report.

India's coal capacity has risen by 157 gigawatts from 2006, bringing the total capacity to 219 gigawatts in 2018. "The Ministry of Power currently considers 30 gigawatts of coal capacity to be distressed assets and a further 10 gigawatts to be unviable," the report read. "Renewable cost deflation underpins India's ambition to build 275 gigawatts of renewable energy capacity by 2027. Indeed, for the fiscal year 2017, India installed more renewable capacity than coal and gas capacity. These dynamics, plus a failure to pay generators, has placed significant stress on India's coal assets."

As much as 42 percent of the coal capacity has already become unprofitable worldwide, and by 2040, this figure could reach up to 72 percent as existing carbon pricing and air pollution regulations drive costs up.

In India, energy economists say that apart from falling prices of solar parks, higher dependence on imported coal, increasing cess and a rise in train freight charges are behind coal's downfall, making it more expensive than renewable energy in India. While solar power prices have reached a record low of Rs 2.44 per unit (or kilowatt hour), coal energy costs more than Rs 5 per unit.

"While in 2015, coal formed nearly 70 percent of the power plants in the country, it was only 20 percent in 2017," said Chandra Bhushan, deputy director general at the Centre for Science and Environment, an environmental research and advocacy organisation.

He believes that by 2050, India will not have a single coal plant, and that the only new coal plants that have been proposed are a result of a "legacy proposal". "In my estimate, we can expect up to another 15 gigawatts of coal plants to come up. By 2025, there will be no economic rationality to build new plants. By 2050, India will not have a single coal plant. By then, storage for energy from renewable energy will also be strengthened," he added.

The proposed plant in Khurja, Uttar Pradesh, is a case in point, said researchers from the Institute for Energy Economics and Financial Analysis. "Project developers estimated that electricity from the plant would cost Rs 4.88 kilowatt hour — far above the current solar costs.

"The institute's estimate — accounting for coal freight costs and coal price inflation after Environmental Impact Assessment and adjusting for the lower capacity factor — is that the plant's electricity would cost at least Rs 5.67 kilowatt hour," read their report titled 'The Khurja Power Project - A Recipe for an Indian Stranded Asset'. "It is effectively reliant on a taxpayer-sponsored subsidy of Rs 6,946 crore over a period of 25 years."

Energy economist Vibhuti Garg said there were too many uncertainties for the coal industry, which is bound to increase the price of the commodity. "As India embraces more stringent regulations and increase in coal taxes, producing coal will become totally unviable soon," she said.

Apart from logistics and taxes, the cost of coal will also rise by several times if environmental and social costs are considered. In Ennore, Tamil Nadu, mangroves and other water bodies provide several "eco-services", said Pooja Kumar, a researcher and activist from Coastal Resource Centre, a Chennai-based fisher solidarity organisation. The Kosasthalaiyar river would have been an effective floodplain and macro drain for excessive water from floods if it had not been silted with sludge, and the mangroves are a breeding ground for several species of fish that fishermen depend on for their livelihoods.

"The damages from the 2015 floods would have been a lot less if these were still intact. These costs arising from damages to this ecosystem are externalised to those depending on them directly and indirectly," she explained.

This story was supported by the 2018 Climate Change Media Partnership, a collaboration between Internews' Earth Journalism Network and the Stanley Foundation

Updated Date: Dec 12, 2018 13:58:50 IST