Coal power plant capacity falls in India, Paris Agreement goal still far

The decline is attributed to cheaper renewable energy resources and increasing public resistance towards polluting sources

India saw a steep decline in coal-based power projects in CY2019, with 47 gigawatts of projects being cancelled at various stages, reducing the under-development coal capacity to 66 Gw. This was revealed in a report released by four non-governmental organisations, which looked at key indicators of the coal power sector globally.

Pre-construction capacity in India halved to 29.3 Gw in 2019 from 60.2 Gw in 2018, the joint study conducted by Global Energy Monitor, Sierra Club, Greenpeace International, Centre for Energy for Research on Energy and Clean Air (CREA) found.  

The fall in coal-based power generation is being attributed to surplus generation and subdued demand for electricity. The power plants are operating at a lower plant load factor (PLF) and are unable to sell the electricity they produce.

Falling renewable energy prices and rising public resistance to polluting sources have also led to lower profits, forcing the private sector to make an exit. This has led to a substantial reduction in investment forcing the government to step in.  

Globally the amount of power generated from coal in 2019 declined by three per cent. Photo: Shutterstock.com

Speaking to Business Standard, Sunil Dahiya, Analyst CREA said “Globally 80 per cent of the coal capacity has to retire by 2030 if we have to stick to the Paris Climate Agreement to keep global warming below 1.5-degrees Celcius. Keeping with the agreement, environment, and economic crisis, India needs to make sure that no new investment goes into the coal sector and there should be no construction of even a single new coal power plant and an aggressive retirement of old power plants needs to be conducted.”  

Despite the falling coal capacity generation, the government has been investing in new projects. Coal-based thermal capacity amounting to 8.1 Gw was commissioned in CY 2019 and 8.8 Gw of new coal-fired capacity entered the under-construction phase in the same year. The new construction was financed by the Power Finance Corporation (PFC) or the Rural Electrification Corporation (REC).

An official in the ministry of power said that India is a developing country and with increasing industrialisation power demand will rise, “in the domestic sector, 26.3 million new connections were issued in 2018-19 and their uses will also increase.” He added that capacity demand does not depend on a day consumption and will go up in the long term.

Globally, coal is losing viability due to cheaper renewable sources and rising climate concerns. The number of coal-based power plants under development fell for the fourth consecutive year worldwide. The fall is despite an uptick in the number of power plants going operational in 2019.

Globally the amount of power generated from coal in 2019 declined by three per cent, as a result, the global average utilisation of coal power plants fell to a record low of 51 per cent.

Despite the fall in the coal-based plants, countries are still far away from meeting the standards of the Paris Climate Agreement. As the US and European Union (EU) move away from coal, Japan is now the biggest driver of new coal power. Japan has 11.9 GW of coal power under development domestically.