Over Rs 3,00,000 crore “is being wasted” by India on building an additional 62GW of coal power plants that will remain idle due to huge overcapacity in the power sector, Greenpeace India said and asserted that the “unjustified” expansion plans pose a “threat” to the country’s commitments to climate change.
“With India’s Cabinet signalling readiness to ratify the Paris Agreement on climate change, Greenpeace India is highlighting the threat posed to these commitments as well as to the economy, in particular the energy and banking sectors by the unnecessary and unjustified plans for coal expansion.
“India is making laudable progress towards its clean energy commitments, installing 175GW of solar and wind power, and looking to attract multi-billion dollar investments in the renewable sector.
“At the same time, Greenpeace’s analysis shows that over Rs 3,00,000 crore (close to USD 50 billion) is being wasted on building an additional 62GW of coal power plants, which will remain idle due to huge overcapacity in the power sector,” it said in a statement.
The threat of excess coal power comes even as the sector has already seen plant load factors (PLF) drop to 62 per cent in 2015-16, and as low as 54 per cent in July, 2016, leading to under-recoveries and financial distress, it said.
The green body said that at least 31GW of coal power plants are currently idle and stranded due to a lack of coal supply or purchasing agreements with state discoms.
“It is clear that there is no need for any additional coal power till 2022 at least, and probably beyond that too, even if we work with the governments own estimates of 6.7 per cent per annum growth in electricity demand (based on a projected GDP growth of 8.3 per cent).
“And yet, to continue building, at enormous expense, an additional 65GW of coal plants that will not be utilised, is shocking evidence of poor planning in the infrastructure sector. In effect, 94 per cent of the coal power capacity that is currently being built will be lying idle,” said Jai Krishna, research consultant for Greenpeace India.
Greenpeace India said that in addition to 65 GW of coal power under construction, there are an estimated additional 178 GW of coal power plants at various stages in the permitting process.
If even a fraction of this gets built, the overcapacity problem in the power sector will be magnified and this has follow-on implications for the banking sector with the risk of further growth in Non-Performing Assets, it said.