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Falling Solar Costs, Mounting Air Pollution Threaten Coal’s Dominance in India

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The plummeting cost of solar, combined with growing concerns about air pollution and water scarcity, is triggering some serious questions about the long-term survival of India’s coal industry.

January saw a number of reports on the weakening of coal’s power in India, including an analysis by Greenpeace India and a report from the World Resources Institute [1]. Summarizing the Greenpeace [2] analysis, RenewEconomy notes that “at least 65% of India’s coal power generation in financial year 2016— representing 94 GW of installed capacity—was being sold to distribution companies at a higher cost than power from new renewable energy projects.” Closing especially the more expensive plants could save as much as $11 billion per year.

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Adding to coal’s woes is the fact that Coal India Limited, chief supplier for most of the country’s power plants, will likely raise its prices in 2018. “With air pollution now a sensitive political issue,” RenewEconomy reports, “new air emission standards will force coal power plants to install pollution control equipment,” with consumers bearing the cost of the upgrades.

“Virtually all of India’s coal power plants are in violation of the new air pollution standards, and the Supreme Court and Green Tribunal are monitoring this closely,” Greenpeace India’s Nandikesh Sivalingam observed. “These plants still have to incur substantial retrofitting costs to ensure legal compliance, costs that will reflect in the tariffs sooner or later.” 

And then there is the problem of water. In his review of the recent World Resources Institute report, Research Associate Tianyi Luo notes that “40% of India’s coal plants are in water-scare areas”, and that a full-scale shift away from coal to (mostly [4]) water-free solar and wind power will save a precious 12.4 billion cubic metres of freshwater per year.

While the International Energy Agency projects that “coal-fired power generation in the country will increase by 4% a year until 2022,” RenewEconomy notes, that growth has slowed [5] dramatically over the last two years to an average of 2.2%, down dramatically from more than 6% over the previous 10 years.