Phasing out coal power would benefit Indian consumers, taxpayers: Study

04-December-2018

Renewable source of energy can provide more power in much less cost than new coal-powered power plants in India, and it costs more to run 62 per cent of the country’s coal capacity than to build new renewable power generation facilities, according to a new study.

The study titled ‘Navigating the economic and financial risks in the last years of coal power’ by financial think tank Carbon Tracker, states that phasing out coal power would benefit consumers and taxpayers because India is a regulated market where state support keeps uneconomic plants profitable.

However, it is the state which ultimately underwrites investment risk in regulated markets, where coal is sheltered from competition, it said.

In countries such as China, India, Japan and parts of the US typically approve the cost of generation and pass it on to consumers.

Backing coal in the long-term will threaten economic competitiveness and public finances, because politicians will be forced to choose between subsidising coal power or increasing power prices for consumers, the study said, adding consumers and taxpayers are keeping coal profitable in (many) regulated markets by picking up the bill to support uneconomic coal plants.

A phase-out could save them billions, but would hit coal owners’ profits, it said.

If plants are closed in line with the Paris Agreement the industry could lose USD 92 billion in South Korea, USD 76 billion in India and USD 51 billion in South Africa, compared with business as usual supported by the state, the study by Carbon Tracker said.

It said governments should phase out coal in an orderly manner and develop plans to close the least economic plants first.

“When it is cheaper to build new renewables and gas than to build new coal power, they should ban investments in new coal power. This point has already been reached in Europe, the US, India and parts of Latin America,” the think tank said.

The think tank has carried out the first global analysis of the profitability of 6,685 coal plants worldwide, representing 95 per cent of all operating capacity and 90 per cent (220GW) of capacity under construction, and has published the results in a new coal power economics portal.

In India, the study found that it costs more to run 62 per cent of the country’s coal capacity than to build new renewable energy generation facilities and by 2030 that will rise to 100 per cent.

“India has rapidly become the world’s third largest power producer, adding 157 GW of coal capacity since 2006 to bring its 2018 fleet size to 219 GW. Coal was responsible for three-quarters of the 1,323 TWh of electricity produced in 2017,” the study said.

It also found that new renewables can supply more cheap power than new coal plants in India. Also, phasing out coal power would benefit consumers and taxpayers because India is a regulated market where state support keeps uneconomic plants profitable.

Source: PTI