Karnataka's push towards renewable energy comes as a result of its financially unviable coal sector, a situation largely seen throughout India.
New Delhi: Karnataka has left behind Tamil Nadu in the renewable energy capacity addition race, surpassing the latter by 1.7 GW as at the end of March 2018, according to a new reportby the Institute for Energy Economics and Financial Analysis (IEEFA).
Karnataka’s renewable capacity has also exceeded its coal-fired capacity by 2.5 GW.
According to the report, state added as much as 4 GW solar generation capacity in 2017-18, which took its total solar capacity to 5 GW. Its total renewable energy capacity stood at 12.3 GW at the end of March.
“Tamil Nadu until this year was the frontrunner in the race to renewables and still leads in wind energy capacity. Karnataka, on the other hand, has been rapidly expanding on its solar capacity by adopting industry friendly policies. It’s good to see a healthy competition between the two progressive states, but both could do much more in tapping its wind potential,” said Tim Buckley, director of energy finance studies, Australasia, IEEFA.
According to the IEEFA report, titled ‘Karnataka electricity sector transformation’, the financial troubles for the coal power sector reflects the overall situation of stranded assets in India.
The coal power plants in Karnataka operate at an economically unviable capacity factor of just 35%. IEEFA estimates two projects in the planning phase are unlikely to materialise near term given the current uncertainties around fuel supply cost and agreements, low utilisation factors and increased stranded assets.
“Karnataka does not need any new coal-fired capacity, possibly except replacing the 1.7 GW Raichur Thermal Power Station that should be retired by 2022 as guided by the National Electricity Draft 2018,” co-author Kashish Shah said.
The report also highlights the failure of the state’s longstanding ambition to build a gas import terminal and generation facilities. According to the report, gas-fired baseload generation is economically unviable and poses a major stranded asset risk. The currently under construction gas based 370 MW Yelahanka power plant should be converted to a peaking capacity supported by time-differentiated tariffs, the report said.
IEEFA estimates that the state imported about 7 TWh of electricity in 2017/18. To meet fast-growing electricity demand and become a net zero electricity importer Karnataka would need a net electricity production expansion of 49 TWh by 2027/28.
One TWh is equivalent to one trillion watt-hour.
The report provides a roadmap for Karnataka to meet its additional demand through a zero-emission supply. IEEFA’s relatively conservative forecast for the coming decade is for the addition of 4.5 GW of solar capacity by 2027/28. Combined with 1.4 GW of rooftop solar, some 33% of incremental electricity demand could be met by solar alone.
Building significantly more renewable generation requires an accelerated investment into interstate transmission capacity to allow Karnataka to export low cost electricity during peak renewable generation periods and import during shortages, says the report.
The report further identifies application of retrospective charges and lack of transmission network infrastructure as a possible threat to the accelerated investment and grid integration of new renewable power.
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