India makes abrupt shift away from coal

India currently generates most of its power from thermal coal. Image courtesy of Flickr - Vikramdeep Sidhu
India currently generates most of its power from thermal coal. Image courtesy of Flickr - Vikramdeep Sidhu

A new IEEFA report has shown that India is making big moves away from coal power, and towards renewable solar energy.

As late as last year, analysts had predicted that India would be home to one of the largest growth areas for coal consumption into the future.

This common wisdom has now been thrown into question by a series of new developments chronicled by a new Institute for Energy Economics and Financial Affairs (IEEFA) report.

The most significant of these is that India’s state-run energy utility NTPC, formerly known as the National Thermal Power Corporation, has made big moves towards solar power.

Driving this has been the massive reduction in the cost of solar power over the last few years, culminating in this year, for the first time ever, solar having a cheaper tariff price in India than thermal coal.

“It is clear that renewable energy offers a cheaper way to provide power,” said Tim Buckley, the chief author of the IEEFA report.

“Importantly, solar is now cheaper than coal-fired power even before taking into account the externalities of coal (pollution, emissions and water use) that hold back the nation’s development.”

The other major recent development in the India energy sector has been the government’s decision to halt the construction of new thermal coal power stations, due to concerns that these plans would simply not see high demand.

This, as well as other government policies, has seen the rate of thermal coal generation capacity addition decrease by 50% – a promising trend for one of the most air-polluted countries on Earth.

At the same time, the number of solar installations has doubled in 2015, and then again 2016, a trend that IEEFA believes will hold for 2017 as well.

Australia coal project questioned

Amid this changing energy landscape, controversy has emerged in Australia over the construction of the Adani coal mine.

Backed by Indian investment, this coal mine was planned to supply India with the thermal coal it would need to fulfill its future energy needs.

Despite the rise of solar, the Australian Government still is backing this project, even in the face of critics who now say it will struggle to be economical.

Further crippling this planned mega-mine, the Indian government has regulated that it will not import any foreign thermal coal for Public Sector Enterprises in 2017-18.