Coal, the kingpin of energy supply in India, has had to make way for the clean energy sector renewables – solar, wind, hydro, nuclear and biomass — over the past few years. Renewables constituted more than two-thirds of India’s energy generation in the 2019- 20 fiscal year. Eighty percent of India’s total energy comes from coal, but economics have completely changed the country’s dependency on this fossil fuel. Sixty-two per cent of India’s coal power plants are producing electricity at a higher cost than it could be produced by setting up new solar energy and wind power systems.

Wind and solar energy are now 20 per cent cheaper than existing coal-fired generation’s average wholesale power price. Sixty-five per cent of India’s coal power generation is being sold at higher rates than renewable energy bids in competitive power auctions. A combination of a 50 per cent drop in prices of renewables in the country over the last few years along with a surge in coal prices has led to this development.

The cost of adding solar electricity stands at about 2.5 rupees per unit generated, compared with around 4.5 rupees for new coal power generation, according to analysts. Despite the use of more expensive batteries to store electricity after dark, solar energy was auctioned at a cheaper price than new coal earlier this year. The levelised cost of electricity using solar power is $ 38.2 per megawatt hour (Rs 2.62 per unit), which is 14 per cent cheaper than coal fired power, at $ 44.5 per MWh (Rs. 3.05 per unit).

India’s levelised cost of onshore wind power generation, estimated at $48.9 per MWh (Rs 3.36 per unit), is likely to be competitive with coal as soon as wind power benefits from efficiencies of scale. With the growing energy demand, the Modi government has made pioneering measures to boost India’s energy security by subsidizing some renewables. $ 6.1 billion of foreign direct investments were placed in India’s clean energy sector in the last five years. India surpassed its initial goal of 20 GW solar energy by 2022 by achieving it four years ahead of the scheduled time.

India’s thermal generation sector is carrying US$40-60 billion in nonperforming or stranded assets supported by the troubled banking sector. Besides being a burden on the banking sector, it also hampers the bank’s ability to invest in clean new renewable energy projects to meet both India’s electricity demand and the country’s ambitious renewable energy targets. At present, there is upward of US $100 billion of nonperforming or stranded assets shared between distribution companies and the thermal coal- and gas-fired power plant sectors.

Hence, it would be wise not to waste financial resources on building uncompetitive and expensive coal power plants. Instead, investments should be made in solar and windbased power systems. India is now working on a Rs.39,849 crore expansion of the Kudankulam Nuclear Power Plant, Tamil Nadu, due to be completed by 2020-21. Electricity from these reactors would be priced at Rs.6.3/unit. The cost of generating solar power is set to fall to as low as Rs 1.9 per unit through 2030. In the next decade, the cost of wind will be between Rs 2.3-2.6 per Kilowatt hour and solar will be Rs 1.9-2.3 per Kilowatt hour, according to a recent report by The Energy and Resources Institute (TERI).

A joint study by TERI and Climate Policy Initiative estimates that the baseline projection for 2030 for the levelised costs of wind at Rs 2.58 per Kilowatt hour could be as low as Rs 2.26 for power plant projects with higher energy production capabilities. By contrast, coal could be as expensive as Rs.6.98 per Kilowatt hour.

(The writers are, respectively, a recent graduate of the Jindal Global Law School and professor of law and Dean of the Jindal School of Environment and Sustainability)