Coal India Report Acknowledges Solar as Key Substitute for Coal in India
The report, commissioned by Coal India Limited, highlights the challenges facing the country’s coal sector and provides a vision statement for the year 2030 with key action areas
February 14, 2018
A new report sheds light on the increasing significance of renewable sources, especially solar, which could soon become key substitutes for coal-fired power in India.
The Coal Vision 2030 report commissioned by Coal India Limited (CIL) assesses future demand scenarios for India’s coal sector through the year 2030 and identifies the key action areas.
The report found that technological changes, changes in environmental and regulatory regimes, global trade, and economic ambiguity have jointly created uncertainty in the energy markets. It also attempts to formulate a vision statement for the coal sector that details its future evolution and identifies key actions.
Emphasizing the uncertainties surrounding the future of coal in India, the report observes, “With the increasing threat of climate change impacting humanity and the global funding focus on renewables, it is a matter of time when the alternate clean energy would displace coal. To complicate matters further, immediate events such as short-term price movements, out of line with the dominant trend since 2008, have given people the ammunition to argue against a wider and over-arching trend.”
The Coal Vision 2030 report, while sounding a warning about the probable future of the coal sector, also highlights the rising significance of renewable power across the country. Renewable energy and storage are seen as likely to emerge as key coal substitutes in coming years, the report notes.
“The policy push from the government and improving competitiveness are driving the strong capacity addition in the overall renewables sector. Government has set the target for renewable sources to reach 175 GW by Financial Year (FY) 2022. Against it, industry stakeholders’ perspective is that India is likely to reach about 125 GW by 2022 and achieve the 175 GW target two–three years hence,” the report said.
However, the report observed that this is no easy feat and the clean energy targets set by the government underline the commitment of both the government and industry players to the expansion of India’s clean energy base.
In January 2018, Mercom India Research reported that India achieved a milestone of 20 GW in cumulative solar installations. 20 GW was the initial goal set for 2022 by the National Solar Mission, and it was reached four years ahead of schedule.
Even though coal continues to account for majority of the power generation, for the first time in India more solar capacity was installed than coal in 2017.
“The renewable prices are expected to reach about ₹1.9 to 2.0 (~$0.03)/kWh by 2025, which is comparable to coal-based generation cost. A still lower range is entirely feasible. Such price levels could drive the substitution of coal-based power sources with renewables,” the report added.
Another key determinant of the inflexion point, according to the report, would be the emergence of battery storage solutions in the country. With better technology and increasing supply, battery costs are expected to continue declining coming years. This, in turn, is likely to have significant implications for coal-fired power plants in terms of replacing the thermal capacity needed to satisfy peak demand.
The Coal Vision 2030 report also recognizes the growing importance of EVs in India. While the country’s EV industry is still in its nascent stage, it has the potential to grow to account for more than 5 percent of annual vehicle sales in a few years, the report said, citing estimates from the Society of Manufacturers of Electric Vehicles (SMEV).
In India, the EV category includes e-cars, e-buses, e‑scooters, e-rickshaws, and other two-wheelers that can run on electricity.
Talking about the road ahead for EVs in the country, the report said that it is estimated that EVs could emerge as a key segment in the overall automobile sector. Assuming a market share of 15 percent by 2030, EVs could also result in incremental power demand of nearly 160 billion units (BUs) by then.
With an eye toward accelerating EV adoption, the Indian government launched the National Electric Mobility Mission Plan (NEMMP) in 2013 with an investment of approximately ~$3 billion (~₹192.8 billion) to promote hybrid and EVs in India, but not a lot has been achieved under the program due to a lack of action.
Then, in August 2017, Mercom reported that India was targeting the deployment of five to seven million EVs in the country by 2020 under the NEMMP.
Today, the EV market in India is slowly gaining momentum after a few years of relative inaction. Though the country still lags behind other nations when it comes to EVs, several states have stepped in to develop their own policies to promote EV adoption.
In the recent past, Karnataka and Maharashtra launched their own EV policies that provide various subsidies and incentives to consumers.
India has also launched the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) program, which is providing a major push for early adoption and helping to create a market for both hybrid and EVs. As of October 2017, the program had provided a cumulative subsidy of ₹1.98 billion (~$30.54 million).
In November 2017, a study by the Niti Aayog and the Rocky Mountain Institute found that India could account for more than one-third of the global market for EV batteries by 2030 if it becomes a 100 percent EV nation. The study also revealed that India’s market for EV batteries alone could be worth as much as $300 billion (~₹19.38 trillion) from 2017 to 2030.
After analyzing the numerous global and domestic events that have intensified doubts about the future of coal, the Coal Vision 2030 report also suggests that no new coal mines need to be allocated or auctioned beyond the current pipeline. If this suggestion were implemented, it would likely further accelerate India’s move toward renewable energy.
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Ankita is an editor at MercomIndia.com where she writes and edits clean energy news stories and features. With years of experience in the news business, Ankita has a nose for news and an eye for detail. Prior to Mercom, Ankita was associated with The Times of India as a copy editor for the organization’s digital news desk. She holds a Bachelor’s degree in Psychology from Delhi University and a Postgraduate Diploma in journalism. More articles from Ankita Rajeshwari.