India has deferred its initiative to enable coal-fired power plants to reduce output during periods of high solar generation by one year. This postponement is linked to ongoing regulatory discussions on how to fairly compensate plants for the increased expenses associated with retrofitting, as revealed in official documents.
Experts warn that the absence of flexible coal generation, while renewable capacity expands, could undermine green investments, escalate compensation payments, and lead to higher emissions from coal usage that might otherwise be avoided. This development coincides with India, the world’s second-largest coal consumer, curtailing solar output due to insufficient dedicated transmission infrastructure, while coal plants face operational challenges.
Solar power producers, instructed to reduce generation because coal plants cannot sufficiently ramp down, may receive compensation estimated at up to $76 million for the eight months ending December, energy think-tank Ember. These costs are expected to be passed on to consumers.
Government officials attribute the one-year delay to the lack of established rules for compensating coal plants for the higher maintenance and retrofitting costs required to lower the minimum operational level from 55% to 40%, as noted in the minutes of a January 16 meeting. The Central Electricity Authority (CEA) highlighted that retrofitting coal plants would increase tariffs by only 0.28 to 0.60 rupees per kilowatt-hour, significantly less than the 5.76 to 6.04 rupees per kilowatt-hour for battery storage, making flexible coal generation at least ten times more cost-effective.
Meanwhile, India’s power ministry has not provided comments on the matter.
In a significant development, India’s plan is less ambitious compared to China’s efforts, which last year reduced the minimum coal plant utilization rate to between 25% and 40% from the previous 50% to 60%, aiming to enhance renewable energy integration.
At the January meeting, NTPC, India’s state coal plant operator, cautioned against the accelerated wear and tear of critical equipment caused by operating at minimum loads of 40%. It recommended comprehensive studies to explore ways to reduce usage without damaging equipment, noting that its new project contracts already incorporate the 40% minimum load requirement.
CEA officials responded by citing international examples where coal plants operate safely at lower output levels if properly retrofitted. However, the federal regulator has yet to approve the increased maintenance costs proposed by CEA, citing insufficient operational data.
Senior representatives from the federal power ministry, CEA, the federal regulator, the grid operator, NTPC, and the Association of Power Producers agreed to further study the plan’s impact based on the latest cost estimates, as documented in the meeting minutes.
