India has cancelled its plans to build 14 gigawatts (GW) of coal power projects. One driving factor is the fact that recently solar power tariff stooped lower than coal. To be precise a total of 13.7 GW of proposed thermal power plants across the country has been cancelled. Moreover, as much as 8.6 GW of already operating import-thermal power plants are potentially not viable any more. Analyst Tim Buckley in his article said the shift away from the dirtiest fossil fuel in India would have “profound” implications on global energy markets.
Why Coal is not a necessity anymore?
National Thermal Power Corporation Limited (NTPC) currently generates power from coal at an average rate of Rs 3.20 per unit. Whereas, lowest recorded solar power tariff is around Rs. 2.44 per unit. Last year, a Finnish company Fortum agreed to generate electricity in Rajasthan with a record low tariff, of 4.34 rupees per kWh. At that time analysts said this is the lowest solar tariff can go. However, since then the solar power tariffs have been in a free fall. Every solar auction in the country has seen aggressive bidding in the past year. For the first time solar is cheaper than coal in India and this has implications in global energy markets.
Around $ 8.96 billion-worth of existing coal power plants at Mundra in Gujarat are no longer viable. Due to the high cost of imported fossil fuel, relative to the long-term electricity supply contracts, feasibility of keeping these plants running is going down. Investors from all over the world are showing an interest in India’s growing solar market. This trend of falling solar tariff is likely to continue as more and more investors seek to enter the market. This may be followed by the trend of shutting down coal-powered plants.
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