India does not need more coal-based capacity addition till 2022: Central Electricity Authority

Reduced demand projection is based on the past record of slow industrial growth, say Officials

Indicating a significant shift in the Indian power sector, the Central Electricity Authority (CEA) has, in its National Electricity Plan (2017-2022), said the country does not need any more coal-based capacity addition till 2022. CEA said India would add massive renewable-based capacity. 

CEA in its draft plan has also mentioned adequate coal is expected to be available for the coal-based power plants during 2021-22 and 2026-27. The draft is open for comments from all stakeholders till January 2017. CEA is the apex technical authority for the power sector. 

The NEP acts as a guideline for policy-making in the sector. CEA has also said that the renewable energy generation will contribute about 20.3 per cent and 24.2 per cent of the total energy requirement in 2021-22 and 2026-27, respectively.

As most of the coal-based capacity is being built by the private sector, investments are likely to be hit. At the same time, the 4,000 Mw Ultra Mega Power Plants (UMPPs) would also be not needed if the CEA projections are adhered to by the government.

“The government has recently said that it wishes to increase the per capita electricity consumption to 1,200 units per person. Such projections reflect that the economy would not grow in double digits, as estimated by the current government, and industrial growth would be business as usual or may be muted,” said a senior power sector executive.

About 50,000 Mw is under construction and around 180,000 Mw is running at around 50-60 per cent capacity, which would also kick in, he added. “It is enough to meet the current demand, but if CEA is confident that the situation would not change much, government should take that in cognizance when announcing plans,” said a former power sector official.

Business Standard had earlier reported that low gross domestic product growth and stagnant demand is likely to push the ministry of power to pull down the power demand projection to around 235 Gigawatt (Gw) by 2022, from the earlier projection of 289 Gw.

CEA in its draft report said, “In the 12th Plan, likely capacity addition from conventional sources, according to review carried out as on March 2016, will be 101,645 Mw against a target of 88,537 Mw. This is about 115 per cent of the target.” 

Of this, 2.56 per cent of the total capacity addition during the 12th plan is expected to come from the  private sector. 

However, CEA notes, the capacity of 50,025 Mw coal-based power projects is currently under different stages of construction and are likely to yield benefits in 2017-22.  

The projected peak demand is 235 Gw and energy requirement is 1,611 BU at the end of  2021-22, which is around 17 per cent and 15.4 per cent lower than the corresponding projections made by the 18th Electric Power Survey (EPS) report.

At the end of 2026-27, the projected peak demand is 317 Gw and energy requirement is 2,132 BU, which is around  20.7 per cent and 21.3 per cent lower than the corresponding projections made by the 18th EPS report.

Senior power ministry officials said the reduced demand projection is based on the past record of slow industrial growth and their respective power demand, lag in transmission planning and sick health of state owned power distribution companies.

“The projection is based on the estimated GDP growth rate of 8 per cent. Last demand estimate was made in 2013 when it was assumed that demand will touch 199 Gw. It is currently it at 155 Gw,” said the official requesting anonymity.