Experts in the Indian power sector feel that the huge capacity addition planned in the renewable energy sector could spell doom for the thermal power sector.
India plans to have an operational renewable energy capacity of 175 GW by March 2022. The Central Electricity Authority reports that thermal power projects are currently operating at plant load factor of 50% and once large-scale renewable energy projects the PLF could fall even further.
These are real concerns for several thermal power project developers and operators. The Ministry of New and Renewable Energy has announced plans to add upto 17 GW solar power capacity every year till 2022. The government has also given ‘must run’ status to wind and solar power projects which means that utilities will have to acquire electricity from these projects even if demand falls. In order to match the falling demand the utilities must first shutdown thermal power projects and make savings on coal and greenhouse gas emissions.
The central government is also trying to persuade states to strictly implement the Renewable Purchase Obligation that require utilities to acquire a set minimum percentage of their electricity from renewable energy projects; there is a separate RPO for solar power as well.
If RPO targets are implemented judiciously the procurement from renewable energy projects will increase significantly while procurement from thermal power projects will very likely fall. This will further impact the performance of thermal power plants.