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| Srl | Item |
| 1 |
ID:
176706
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| Summary/Abstract |
As India implements its Nationally Determined Contributions (NDC), via an ambitious renewable energy target of 175 GW of renewable energy by 2022, it is faced with an opportunity to further reduce greenhouse gas emissions. This opportunity is provided by the average cost of solar (and wind) energy falling below the variable cost of generating power from many existing coal plants. This indicates that, while other potential uses exist (e.g., making coal plants flexible), such expensive brownfield coal plants could potentially be economically retired today by simply switching to buying power from new solar plants. For example, by switching to a solar plant from a sample 5-year coal plant, the savings can be 33.90% in net present value terms. Further, while the savings on energy procurement is obvious, there could also be savings on committed contractual obligations on paying fixed costs, via a process called securitization. For example, using cashflow analysis, we show that retiring a sample 5-year old coal plant can save an additional 31.57% in value. We also discuss plausible regulatory changes, for which there are precedents in India and elsewhere, that would enable this cost-effective transition to a deeper penetration of renewable energy via retirement of expensive coal plants.
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| 2 |
ID:
177430
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| Summary/Abstract |
The Government of India plans to install 175 GW of renewable energy projects by 2022, and 275 GW by 2027. In meeting these goals, the Indian power sector faces twin challenges: first, managing renewable energy will require increased flexibility in the system; second, there will be under-utilization of existing coal-based plants, which would stress the economics of not only individual plants but also the overall power sector. This creates a need to explore the conversion of existing baseload coal plants as flexible resources. Our analysis shows the following: first, the incremental costs for converting baseload coal plants to flexible ones would be only 5%–10% of the total costs of baseload plants in net present value terms or 8%–22% in levelized terms; second, flexible coal may be the most cost-effective flexible solution in the near-term, by a factor of approximately 4–22, when compared to lithium ion batteries or pumped hydro. Finally, while we have provided an indicative analysis of additional costs of converting baseload coal plants into flexible ones, we recommend that flexible coal be procured cost-effectively using appropriate market mechanisms, such as capacity auctions.
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