National electricity policy to consider demand, climate targets

As the Centre prepares for the new National Electricity Policy (NEP), in the wake of the climate commitments, key ministries say they will balance the rising demand of electricity with sustainability measures.

While the ministry of power is of the view that electricity production has to become “greener”, the ministry of coal believes that coal production will not be hampered as there is enough demand to be met.

An expert committee set up for consultation on the new NEP, in its draft report said new coal-based power generation should not be taken up unless it is for replacing older units and/or non-fossil sources cannot meet the demand. The first NEP came in 2005.

Senior officials this paper spoke to said the recommendations would be looked at in totality with “demand projections and fuel optimisation.”

“The ministry of power is looking into the draft submitted by the expert committee and may come out with a suitable modification while we circulate the official draft for consultation,” said a senior power ministry official.

The expert committee consulted state governments, power generators, distribution companies and lenders, said officials. With regard to retiring coal completely, senior officials said, India has “several options” to consider for planning electricity generation and meeting demand. “While currently there is sufficient capacity to meet the demand, we will remain committed to the targets committed in COP26 while planning for the future,” said the official.

The ministry of coal — which in the past couple of years has ramped up domestic production with push to state-owned Coal India (CIL) and private players — is of the view that even if it is decided that the country does not need any new power plant, it will not impact coal production in India.

“The current PLF (operating ratio) of thermal units is 55 per cent; if it were to rise to 65-75 per cent, that itself requires coal. Coal production will not be in jeopardy as electricity demand will rise in the coming decades. Renewable energy is currently not replacing coal-based power,” said a senior coal ministry official.

The expert committee, in its report, said coal-based generation will be needed to meet the base load and balancing requirements till commercially-viable energy storage solutions are developed and available at scale.

It, however, added, “No new coal-based capacity will be taken up for construction for power supply to the distribution licensees unless it is for replacement of old units.”

The current installed power generation capacity in the country stands at 392 Gw, of which coal has the lion’s share with 202 Gw.

Against this, the peak electricity demand of the nation stood at 167 Gw (as of November 2021). With less than half the demand, coal units in the country are running at a plant load factor (PLF) of 53 per cent (in November 2021).

The committee also called for the retirement of older thermal power generation units. It added that existing thermal plants should be incentivised to carry out retrofitting and enhance a flexible operation.

With regard to the increasing share of renewable energy sources (solar, wind, hydro, biomass and waste to energy) in the energy mix of the country, the committee has said grid operations need to be optimised to meet the growing ratio of renewable energy.