New coal plants may be asked to have mandatory renewable power generation

Power Ministry proposes changes to policy to meet country's climate goal of 50% green electricity by 2030

In what could pave the way for boosting renewable energy generation capacity in India, the power ministry plans to make it mandatory for thermal power producers to build or purchase renewable energy if they set up anew or expand coal-based power generation.

The ministry has proposed amendments to the Tariff Policy 2016 to include the provision of ‘renewable generation obligation’ (RGO). It has proposed that after April 2024 any new thermal power capacity would need to build or procure a similar quantum of renewable energy. It also has proposed an alternative where the Centre will prescribe the quantum of renewable to be built but the minimum threshold would be 25 per cent of the coal capacity being built. 

“In order to promote renewable energy sources, any generating company proposing to establish a coal/lignite based thermal generation station after a specified date shall be required to establish such renewable energy generating capacity or procure and supply renewable energy equivalent to such capacity, as may be prescribed by the Central Government from time to time after due consultation with stakeholders,” said a note by the ministry dated November 9.  

The ministry has invited stakeholders' views on the draft proposal to be submitted in 21 days from the date of notification. 

The note said the renewable energy produced by each generator “may be bundled with its thermal generation for the purpose of sale.” In case, a thermal power entity procures this renewable power, then the state electricity regulatory commission will consider it under the Renewable Purchase Obligation (RPO), it said.

The move is part of the push towards meeting one of India’s nationally determined contributions (NDC) which entails having 50 per cent of electricity demand to come from non-fossil fuel sources. It now stands at 40 per cent, if hydro power is included in the non-fossil mix, without that (solar + wind + biomass), it stands at 28 per cent.

Regarding the quantum, the Centre has kept the discussion open wherein renewable energy procured will either be similar to the amount of thermal power capacity being set up or as prescribed by the Centre. “The capacity of renewable energy to be established/ procured/ supplied by new coal/ lignite based thermal generating stations to be minimum 25 per cent of the capacity of thermal generating stations being established,” said the note.

This move is likely to impact state-owned NTPC Ltd and Adani Power, which are the only leading power generators with a thermal expansion plan. NTPC which is the largest thermal power player with 66 Gw of power generation capacity has 11 Gw of coal power projects under construction. It has also announced plans to construct 60 Gw of renewable energy generation capacity by 2032. It currently stands at 1.1 Gw.

Adani Power has five thermal power plants totalling 8.7 gigawatt (Gw) in the pipeline. It has also announced to triple its renewable power generation capacity over the next four years to 63 per cent from 21 per cent currently in their energy portfolio. Other leading players such as Tata Power, JSW Energy have announced no further investment in coal-based power generation going forward.

Another state-owned entity that is investing in coal thermal is hydropower producer Satluj Jal Vidyut Nigam (SJVN). It is constructing a 1.3 Gw coal power plant in Buxar, Bihar.

In April this year,  the power ministry had notified a scheme for flexibility in power generation through bundling thermal and hydro with solar and wind power. It allowed conventional power generators to set up renewable capacity at their units and sell at average rates.