Tamil Nadu should double its wind energy capacity to 15 gigawatts (GW) and increase its solar capacity six-fold to 13.8 GW by 2026-27 whilst simultaneously delivering cheaper electricity, the Institute for Energy Economics and Financial Analysis (IEEFA) said on Wednesday.
An IEEFA’s report, “Electricity Transformation in India: A Case Study of Tamil Nadu”, showed how Tamil Nadu is building 22,500 MW of expensive coal-fired power plants — almost double the entire existing coal-fired fleet in the state — despite the favourable investment and electricity tariff costs of wind and solar.
It warned that building more non-pithead coal-based plants at a time when existing plants are being used at a low 62 per cent of the time, as opposed to the optimal 80 per cent, will make new and existing plants financially unviable.
The IEEFA’s research and modelling predicts that many new coal-based plant proposals such as the 4,000 MW Cheyyur ultra mega power project will be cancelled due to unfavourable financial factors.
A more diversified electricity generation mix will best serve Tamil Nadu, IEEFA’s Energy Finance Studies Australasia Director Tim Buckley said.
New lower cost solar capital additions and a major repowering of Tamil Nadu’s wind projects, a concerted improvement in energy efficiency plus reduced transmission and distribution losses, should deliver more than 80 per cent of all electricity demand growth over the coming decade while also driving wholesale price deflation, he said.
This investment program would also underpin the attempts of Tamil Nadu’s power utility to operate profitably, something it has not been able to achieve for more than two decades whilst having a positive impact for the state’s consumers.
“Despite being a world leader in wind energy, Tamil Nadu’s wind farms are operating with aging and outdated technology. Upgrading or ‘repowering’ existing turbines alone could double the state’s leading wind energy capacity,” Buckley told IANS.
The IEEFA expects offshore wind to emerge as a new, cost competitive source of electricity generation.
The report highlights that any investment in new coal and nuclear based projects could cause further financial distress to any firm involved.
“This is a clearly identifiable and recurring trend no matter which market or company we research across the globe,” Buckley said.
Tamil Nadu already operates the most diversified electricity generation fleet in India, with renewables representing 35 per cent of installed capacity as on March 2017, contributing to one fifth of India’s total renewables generation.
Hydro represents another seven per cent of the total capacity.
Tamil Nadu’s power utility, Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO), reported a staggering loss of Rs 13,985 crore in 2013-14.
Subsequent reforms under UDAY scheme have helped TANGEDCO not only reduce its losses to Rs 3,783 crore in 2016-17 but also reduced its deficit on energy availability from 12.3 per cent in 2011-12 to a record low of 0.6 per cent in 2015-16.
The IEEFA expects a break-even result for TANGEDCO in the next fiscal and the utility then moving to net profit for the first time in two decades.
Tamil Nadu is in pole position to be the national powerhouse in India and indeed the region for low cost, sustainable energy, added the report.
India has set ambitious plans to diversify its electricity production into zero-emissions, lower cost alternatives at the same time as it doubles installed capacity over the coming decade.
The 2016-17 year was a transformational one for India. Compared to the previous four years, thermal power installations dropped by 60 per cent to just eight GW of the net new capacity, while renewable energy installations more than doubled to a record 15.7 GW. These trends have continued in 2017-18.