Why Coal Power Plants Will Be A Thing Of The Past Now!

Large Number Of Thermal Coal Power Plants In India Get Canceled As Solar Power Strikes Fear

The recent crash of solar power price to just 4 cents/kWh has led to a massive change in the Indian power sector. We had predicted that solar prices falling by as much as 40% below a new thermal coal power plant mean that the industry is effectively dead, given that coal has huge unaccounted costs in the form of pollution and greenhouse gas emissions. Besides coal mining is also responsible for water and air pollution and also accounts for a large number of deaths of coal miners.

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Building a new coal and gas power plant looks highly unlikely, with even wind power prices in India falling as low as 5.5 cents/kWh. This means that coal has little space in terms of economic viability. Even the government recognizes the dominance of solar energy and has put an 18% GST tax rate on solar as compared to 5% on coal. The new paradigm is solar energy is the dominant source of energy while coal needs to be supported by the government.

Nor surprisingly, about 14000 MW of planned new thermal coal power capacity additions has now been canceled as per a report by IEEFA. Even the existing thermal coal power plants are facing low utilization and losses. There are many coal power plants that do not have long-term power purchase agreements in place with distribution utility buyers. These plants were built in an era when power deficits were high and the market price of power was quite high. However, the situation has totally changed for the industry in the intervening years. Power price in stock exchanges have crashed and the levies on coal have increased. Even the power deficit situation has gone making it extremely difficult for these expensive assets to run profitably.