There is no economic case for new coal plants in India

Shoibal Chakravarty, E. Somanathan, There is no economic case for new coal plants in India, World Development Perspectives, Volume 24, 2021, 100373, ISSN 2452-2929

Abstract

India is the world’s third-largest emitter of CO2 and coal-fired power plants contribute approximately half of India’s CO2 emissions. Indian government policies assume a significant expansion of coal-fired power in India over the next two decades. This paper compares the costs of coal and renewable power, including quantifiable domestic external costs, in 2018 as well as projections for 2025. Our estimate for the environmental cost of coal is 2.4 US ¢/KWh (1.64 ₹/KWh) in the financial year 2018–19. The average cost of electricity from nearly all coal plants in India is greater than the cost of new solar and wind generators in 2018–19 when environmental costs are taken into account. More than 50% of the coal capacity has a social operating cost that is higher than the average social cost of power from renewables. By 2025, the cost of electricity from renewables with storage will be comparable to the domestic social costs of the cheapest new coal plants. We emphasize that this analysis holds without any accounting of climate change impacts in the form of a cost of carbon. There is, therefore, no economic case for new coal plants in India.

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