Coronavirus risks future of thermal power plants

New Delhi: The coronavirus pandemic and subsequent nationwide lockdown have highlighted the growing financial risks to India's coal-fired power plant sector, a technology being replaced by new, cheaper, and cleaner renewable energy, an IEEFA note said on Monday.

Entitled 'Who Would Still Fund a New Coal Power Plant in India?', the note said renewable energy delivered more than two thirds or 9.39 gigawatts (GW) of India's new generating capacity additions in the fiscal 2019/20, while new thermal power plants delivered 4.3GW, net of the 2.5GW removed due to end-of-life plant closures.

Further, coal-fired plants today are running at half their capacity assumed in the Central Electricity Authority's modelling guidelines used to evaluate the financial and operating performance of new coal-fired plants.

Note author Tim Buckley, director of energy finance studies, Institute for Energy Economics and Financial Analysis (IEEFA), said the National Electricity Plan of 2018 is predicated on an additional 70GW or more of new coal-fired power plants installed by 2026-27, and the closure of another 39GW, relative to the position as on March 31."That assumes some US$70bn of new investment in coal-fired power," said Buckley.

"Yet, renewable energy installs nearly doubled traditional thermal power capacity installs during 2019-20, and the pricing trends for new electricity generation entirely favour renewable energy over coal, particularly when it comes to expensive non-mine mouth or import coal-fired power proposals.

"Instead of backing coal, new finance is getting behind renewable energy."

The Covid-19 pandemic and national lockdown has reduced power demand, with the casualty being coal-fired power generation.

In the first 25 days of the 2020-21 fiscal year, coal-fired power generation was down 22,300 gigawatt hours (GWh), amounting to 600GWh more than the total decline in demand during lockdown.