Ditching coal can help Kerala save Rs 9k cr in electricity costs in 5 years, say experts

More than 63% of the state’s projected electricity consumption is dependent on coal power plants in Tamil Nadu, Andhra Pradesh and Odisha

Doing away with coal is the catchword in the world’s efforts towards ensuing a cleaner earth. The context of doing away with coal has been discussed and debated across the world, and most world nations have kickstarted efforts to reduce their dependence on the fossil fuel. The Kerala context has come up for parleys and it has been estimated that replacing coal power with renewable energy will help the state reduce its electricity costs considerably to the tune of Rs 9000 crore in the next five years. The consumers also would be benefited through reduced tariffs.

According to speakers at a two-day national consultation on energy transition in Kerala, organised under the aegis of research organisations Equinoct and Asar, though Kerala has no coal power plants or energy-intensive industry, and it is not considered a large emitter among Indian states, over 63 percent of the state’s projected electricity consumption is dependent on coal power plants in Tamil Nadu, Andhra Pradesh and Odisha. A coal crisis in these plants in March and April 2022 had led to power cuts in the state. Kerala has ambitious renewable energy targets, but is struggling to achieve them. A concept note to this effect circulated among over 200 experts and stakeholders from across the country who are attending the consultation speaks about how Kerala would benefit if it cuts down on its dependence on coal.

Reliance on coal power purchase deals pushing up tariffs

Kerala faces rising electricity tariffs due primarily to a reliance on expensive coal power purchase agreements. Experts cited a KSEB tariff petition submitted to state electricity regulatory commission which says average cost of power purchased from coal plants will jump significantly, implying either higher tariffs for consumers or a greater subsidy burden on the state’s finances.

Despite its land constraints, Kerala can transition its electricity system to reduce dependence on increasingly unreliable and expensive coal power, it is believed. This energy transition can save the state thousands of crores of rupees over the coming years, and a phased energy transition plan to replace all coal power contracts with renewable energy would save an estimated Rs 1,843 crore annually, or over Rs 9,000 crore over a 5-year span.

If Kerala were to replace its scheduled purchases of coal power from only central sector plants with new renewable energy at an average of Rs 3/kWh it would save approximately Rs 775 crore per annum, based on the tariffs sought by KSEB for the control period of FY2022-2027. Based on pre-2022 tariff, the savings would still be a significant Rs 372 crore per year. It was also pointed out that Kerala has the potential to install over 5 GW of floating solar if it utilises 20 percent of its existing reservoir area. It can also increase its purchase of inter-state renewable energy through contracts with SECI. Pumped storage projects have a role to play in balancing renewable energy, but have to be approached on a case-specific basis. Pumped storage hydropower’s higher costs and longer gestation period could impact state finances negatively in case of a large-scale, rapid expansion.

The capital investment plan submitted by KSEB entails an expense of Rs 150 crore for solar and battery storage, as against Rs 4100 crore for hydel over the next five years. Of this, Rs 3062 crore is for the Idukki Extension Scheme. This is a significant imbalance in light of the fact that solar and battery storage appear able to deliver cheaper power with a shorter gestation period, speakers noted.

power coal
Kerala can transition its electricity system to reduce dependence on increasingly unreliable and expensive coal power.

Green image belied by reliance on coal power

Pointing out that Kerala’s green image is belied by its reliance on coal power generated outside the state, the consultation opined that these coal power plants are linked to environmental problems arising from air and water pollution, fly ash spills and such, apart from contributing to carbon emissions. These plants almost without exception have a combined tariff higher than that of new renewable energy. This offers the state a potential cost-reduction opportunity if it can phase out of more expensive coal contracts and replace them with cheaper renewable energy purchases, while ensuring that there is sufficient supply for periods when renewable energy generation is low.

Augmenting supply through incentives for battery storage, selective pumped storage and the like, will enable a progressive reduction in the cost of power purchase, experts said.

One Comment

  1. Let’s definitely leave coal at any opportunity we have. Way too dirty and inefficient. Thanks for sharing this post.

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