6 Myths Blown Away By India's Power Crisis

The power crisis in India has received enough coverage in the media, with focus now on the barely 3 days coal supplies with a significant segment (Over 40%) of the country’s thermal fleet of power stations. While the use of the word energy transition is designed to soothe nerves and allow the huge changes underway to happen with fewer obstacles, the fact remains that these events, however unexpected they might be, should not shock anyone. In a decades long change that is underway in India, some small spikes or disruptions are inevitable, as assumptions go awry, or events have a bigger impact than anticipated every now and then.

September-October truly is the one period when you would bet on things going wrong, as summer and agriculture demand peaks, before finally dropping off as winter sets in across large parts of the country. So while the country copes with the new challenges, it’s a good time to consider a few myths that have been blown away by the current ‘crisis’. Keep in mind that a lot of these were pushed by politicians eyeing short term approval, or vested groups pushing for a certain narrative. Suffice to say, there is a need to consider the facts on the ground too.

Myth 1 : Renewables Are Too Expensive

Detractors of the renewable sector, especially solar and wind energy, never tire of pointing to the high cost of renewable energy. When that issue was settled with dropping costs by 2018, they have taken to pointing out the ‘subsidies’ the sector continues to enjoy by way of access to the transmission network and exemption from other charges. Well, guess what? Today new renewable energy generation, if charged for those fees and charges, would still be competitive with similarly placed new coal and gas fired stations. Or Hydro for that matter. One after another, renewable energy proponents have overcome challenges, be it on cost, on efficiency, on maintainance, or on speed of capacity building. Today, the need of the hour is actually a more liberal open access system across the country, to enable more industrial consumers to opt for renewable energy, and reduce demand stress on the grid from a consumer market that is consuming more and more power as incomes rise. While a small part of total renewable energy capacity does throw up rates as high as Rs 8 to Rs 12 per unit, these will only be projects installed before 2016. Projects commissioned since then have moved to a far lower and competitive pricing structure, be it the outliers at Rs 7-8, or the overwhelming majority below Rs 3. Considering the fact that over 80% and rising of India’s renewable capacity by 2022 would have been capacity established since 2016, its time to drop the cost argument. Soon, some of the oldest projects will reach the end of their lives, and you can be sure that renewals or repowering (in case of wind), will be at far more lower and competitive rates. Even today, Wind+Solar together have a combined generation share of just around 10%. A small proportion of this is at the high prices detractors highlight, a share that is going to reduce continuously as newer, lower cost capacity comes up almost every week. So dump the high power argument for good perhaps. Incredibly, even the highest priced renewable generation capacity would have found a market on the power exchanges in September, if we go by prices on some days.

The callous handling of rooftop residential solar is borderline criminal, when one considers the opportunity missed to build both resilience and a higher renewables achievement that has been missed here.

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Myth 2: Storage is Not an Immediate Need In India

From starting the year with arguments around unfair curtailment of renewable power generation, to a final quarter where people are complaining about how little renewable generators still contribute. How quickly things change! Curtailment, or where state discoms would tell power generators to shut off some generation as they don’t need the power, is far from everyone’s mind right now. But believe it, the issue will always be around, when the situation improves. And that makes the case for energy storage in India, large energy storage. While the government has finally seemed to acknowledge the issue with both large power generators and discoms calling for EOI’s and tenders for energy storage bids, it was as recently as 2020 when we heard many experts at seminars speak of storage about something that would be relevant in the distant future for India. Large scale storage, that is. The high solar capacity that India is targeting actually means that the country’s power sector will have to be much more flexible than it is presently, to absorb the burst of solar power in daylight hours. Or the wind energy in evening hours, when demand peaks. What that means is that as early as 2023, we may have to consider every large solar project with a storage component, to store any excess energy for later in the day. From grid balancing, to ancillary services to larger off grid plays, storage is here to stay. Costs are still an issue, but we saw every indication in the recent REI show, that the costs are dropping, and set to drop significantly over the coming 2-3 years. That simply expands the case for larger storage in the future. Small experimental projects tried so far need to be scaled up to much larger pilots or confirmed projects, to build the right kind of experience with the larger storage options in the market today.

Myth 3 : Coal Is On its Way out

For too long in India, coal has been equated to Coal India Limited, the public sector monopoly with an unhappy tendency to miss targets and struggle to deliver. Production was 596 million tonnes in 2020-21, as compared to 601 million tonnes in 2019-20. Which itself was a drop from 607 million tonnes in 2018-19. From a target of 1 billion tonnes by 2019-20, CIL, which had deferred the target date to 2023-24, seems unlikely to get to a billion tonnes even then. But the crisis does show that like another critical source nuclear, simplistic assumptions on coal use in India that follow western media postulates are way off. Coal, as the government has repeatedly stressed, is a critical part of the country’s energy mix to 2045 and beyond for now, and this might be one of the key reasons India has held off on any net zero commitments till date. Even China, with its 2060 net zero commitment, has a high coal consumption plan right to 2030, before it starts declining slowly. The two countries together account for 65% of global coal consumption today.

It will take a pretty special breakthrough, in energy generation, or even more unlikely, energy efficiency, for coal to be pushed off the table in the next two decades. For Coal India Limited to distract itself with diversifications into other areas, namely solar, EV charging and solar manufacturing, does not seem like the best recipe to avoid this stagnation in coal production. At least the Adani Group will be pleased about the slack off, as Coal India’s mission to limit imports falls by the wayside for at least the next 12-24 months, right on time for Adani’s Carmichael coal from Australia to find grateful buyers in India.

Myth 4: Gas Will Play The Role of a Bridge Fuel

One of the biggest points of contention between international activists, when it comes to Indian strategy to manage the transition from coal to renewable energy, has been the use of gas as a ‘bridge fuel’. There is no doubt that while less polluting than oil or coal or the other polluting options it replaces, gas offers respite for the country. Despite being well on its way to being ‘criminalised’ as a fossil fuel on par with coal today, possibly as soon as 2030. The fact that there is possibly no better alternative available for now, considering the expected rise in demand for energy in India. Faster electrification, of the type being attempted in the US and Europe, where some areas have even banned new builds from having gas supplies, is simply not possible. India’s per capita energy consumption as compared to the rest of the world also supports its views, for now.

But here’s the problem. Where the country has 90-95% self sufficiency in coal supplies, in gas supplies, our dependence on imported gas is going up all the time. Currently at over 45% (with a high share of long term supply contracts), that is one reason the huge spike in global gas prices has been contained for now to just 10-12% increases in domestic markets.

Electrification of the kind being attempted in the US and Europe is simply unviable for the huge demands it will place on the power sector, well before cleaner options start to reach a market share that will stabilise supplies. The 15% target for gas by 2030 thus, looks safe for now, but not for much beyond that time, especially if the proven impact of climate change escalates to a point where the pressure to change is irrisistible. What will hasten the shift will be higher gas prices and a more efficient, renewables powered economy. Stable, or lower gas prices will make this one of the most contentious points of argument between the developed and developing countries by 2030.

Myth 5: Ignore Nuclear

One of the most ludicrous sights of the past couple of years has been the one where large economies have claimed a low existing carbon emission level to justify their slower push into renewables. Or worse, lecture poorer countries like India to do more. It is incredible how in the noise around solar, wind and sometimes Hydro, the nuclear option is quietly ignored. Supplying over 70% of electricity in France, close to 20% in the US, almost 12% in Germany, and even in China, close to 5%, India can ignore the nuclear option at its own peril. Keep in mind that in all cases, share of nuclear power in generating capacity is much lower, nuclear simply works at higher efficiency.

The accident at Japan’s Fukushima Daiichi plant, which caused a worldwide push against nuclear, led to that country’s nuclear energy share going from 30% to just over 6% today. But even Japan has made it clear that its net zero goals will have nuclear as an indispensable component, perhaps as high as 30% of total energy generation.

It has been strange to see plants being shut down in the US and UK, only to be replaced with more generation from thermal or gas-fired plants as renewables struggle to keep up. Even the Fukushima disaster, caused by an immense 9.0 richter scale earthquake and resultant tsunami, appears to have led to only one direct death. The closure of the nuclear stations caused by that has probably led to thousands of avoidable deaths, and ecological depredations on a massive scale as the world tried to replace most of that energy with fossil fuels. It’s a point worth considering. Add in the worst nuclear disaster of all time, Chernobyl, and the actual toll from nuclear power accidents will be insignificant, when compared to deaths at thermal plants, or their suppliers, coal mines. The association of nuclear energy with nuclear weapons has not stopped Russia’s Rosatom, or Chinese firms, from aggressively pushing nuclear power to ever more corners of the world.

It’s time the broader world acknowledged the critical role of nuclear power, and worked to ensure further spread follows globally recognised quality norms and conditions, instead of an outright avoidance that is beginning to look more counterproductive by the week.

Exciting new options in the form of SMR’s (Small. Modular Reactors) are months away from final demonstration, and only need a more open regulatory regime to move ahead faster. These are cleaner, simpler, and much less resource intensive in terms of land requirements, staffing, and safety protocols. And importantly, construction times, when it comes to it.

India itself, with its use of Pressurised Heavy Water Reactors (PHWR) technology for a planned 14 plants of 700 MW each, has made progress slowly. The PHWR option was considered better since it uses natural uranium, removing the need for expensive uranium enrichment processes. The country has struggled to make progress on Thorium based reactors, but the advent of SMR’s offers a new opportunity to consider nuclear ambitions afresh, perhaps as early as 2025.

Myth 6: Electric Vehicles Will Solve The Pollution Issue

The most obvious of them all. With close to 75% share of power coming from fossil fuels, EV’s will have only limited impact unless we take a more determined approach to the challenge they seek to address. A key attraction for India is a cut down on our huge crude oil bill. At $62.7 billion in 2020-21, this figure could test $150 billion at current crude rates for 2021-22. Not good for the economy or the environment at all.

For EV’s to truly make a mark, there needs to be a concerted effort to fix, not just the charging problem, as the government seems to be doing, but to do it using renewable energy as far as possible. Plans for a green corridor for agricultural use might be struggling to take off for many reasons, but green transport corridors along national highways powered by solar for EV’s and everything else along the way are definitely needed, and possible, given the will.

Seen together, these 6 myths actually make a case for a stronger push for renewables. That will include Offshore wind as one additional spoke in the wheel for India, even as we ramp up our expectations from and the share of nuclear power. With total renewable capacity at just over 100 GW today( 45 GW Solar+ 40 GW Wind +15 GW (Small hydro and Biomass), India will need to take its targeted capacity well beyond the current 450 GW target for 2030. The nuclear target of 22500 MW by 2031 also needs to be ramped up significantly, depending on the impact of SMR’s and other breakthroughs.