Challenges and strategies that India faces in transitioning its power sector towards decarbonization.
As India throttles to become the fastest-growing economy in the coming years.
It will have to grow in the wake of a global agreement at COP-28 to phase down unabated coal.
In this critical decade, the spotlight will be on how India decarbonises its power sector while ensuring economic development and energy security.
As the seventh most-vulnerable country to the impacts of climate change, India has been at the forefront of climate action.
It has reduced overall fossil fuel subsidies by 76% between FY14 and FY22 and is priming the domestic industry to nearly triple its installed renewable power generation capacity by 2030.
Despite significant climate action and ambition, coal-based power plants continue to provide the base power load support of over 100 GW on most days of the year.
Due to rapidly increasing electricity demand, any future predictions of India’s reliance on coal are laden with uncertainty.
The country has affirmed that while it continues to rapidly expand renewable energy, coal will remain a vital energy source till it reaches the status of a developed country in a geopolitically turbulent world.
But to keep the economy powered while decarbonising, it will have to use its existing assets better, while simultaneously limiting exposure to new coal assets and investing in energy storage capabilities to integrate a higher share of renewable energy in the power grid. Four steps are critical for this.
First, managing thermal plant outages better during peak demand periods.
In 2023, ~38 GW of coal-based power plants across India witnessed unplanned outages or were not called on to generate power during the top 10% peak demand days.
Improved availability and utilisation of existing plants can mitigate the need for investments in new(er) thermal assets to meet peak power demand in the medium term.
This will require power utilities to forecast demand better to anticipate outages, plan maintenance and keep plants online during peak days.
This must be aided by regulations that incentivise plants’ availability during peak periods.
Second, increasing the flexibility of the existing coal fleet.
To seamlessly integrate more renewable energy (RE) into the grid, thermal plants that typically produce a steady load of power must learn to follow the vagaries of the wind and the sun.
This can be done by making our existing coal plants more flexible — reducing their minimum power load and improving ramp rate capabilities.
The Central Electricity Authority of India has already proposed modifying/retrofitting ~92% of the current coal and lignite-based capacity to enable it.
Such a phased plan must be premised on minimising grid emissions and RE curtailment for maintaining demand-supply balance.
Further, such flexible services must be adequately compensated.
For instance, the Central Electricity Regulatory Commission and regulators in States such as Haryana and Uttar Pradesh have devised payment mechanisms to remunerate power plant owners for one-time retrofitting costs and escalation in related operation and maintenance costs.
Other States must follow suit, thereby resulting in a wider pool of plants available to help reduce the burden on a handful of plants today.
Third, incentivising payment for storage services beyond the supply of energy units.
When RE has to contribute significantly to our demand, energy storage systems will have to support the power grid during hours when renewables are not available.
This is the reason for many new ‘round-the-clock’ bids that combine RE and storage, where surplus generation of renewable energy is stored in a battery.
However, standalone battery energy storage systems (BESS) will also be needed but they add a significant cost to each unit of electricity supplied.
Entities that deploy batteries must then be compensated by utilities for the value they bring to grid operation.
For example, numerous studies indicate that BESS increases RE integration into the grid and reduces operational stress on the thermal fleet.
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