Cheaper solar sparks change in energy use

State govts cancelling coal power projects of 13 Gw indicates shift, says report

Solar power becoming cheaper than its coal-based alternative for the first time in the country seems to have sparked an energy transformation, according to an analysis by the Institute for Energy Economics and Financial Analysis (IEEFA).

Various state governments have, in recent times, cancelled nearly 13 Gw of coal power projects. This has happened, according to the IEEFA, because of a record low rate for solar power at Rs 2.44 per unit ($0.038 per per kWh). “For the first time, solar is cheaper than coal in India and the implications this has for transforming global energy markets is profound,” said Tim Buckley, director of Energy Finance Studies, Australasia, at IEEFA. Uttar Pradesh has cancelled bids for projects with capacity of 3.8 Gw and Odisha for 7 Gw. Gujarat has shelved plans for a 4,000-Mw ultra-mega power project.

The report also noted the effect of the recent order by the Supreme Court in the case of compensatory tariff for Adani Power. The order could potentially turn the project, dependent on imported coal, unviable. 

“Admissions by the Adani Power management that close to $9 billion worth of existing import coal power plants at Mundra, Gujarat, are no longer viable, because of the prohibitively high cost of imported coal relative to the long-term electricity supply contracts signed, is adding to the rise of stranded assets across the Indian power generation sector,” it said. Adding to the transformation is the falling price of solar power and several measures taken for energy efficiency. 

The report said energy efficiency coupled with ambitious renewable energy targets and the plummeting cost of solar has had an impact on existing as well as proposed coal power plants, “rendering an increasing number as financially unviable”.