Solar beats Coal Cost: Implications

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1. India’s coal demand is likely to reach a peak for thermal power generation during the 2025-27 time frame. This has significant planning implications for the coal and logistics ecosystem.

2. The strong demand surge for solar power would be driven by the relative economics; however, technical  issues related to grid integration remain a concern.India doesn’t seem to be taking adequate action to address this. As per our simulation, day time Plant Load Factors (PLFs) of coal plants are expected fall to 38 per cent in a 100 GW solar power scenario by 2022. Thermal plants in India may not be ready to handle such low PLFs

3. The competition from solar is certain to lead to pressures on coal pricing as well. Coal companies willhave to work urgently on efficiency measures and cost reduction.

4. The wide scale deployment of solar is expected to impact the revenues of the Indian Railways as coal plants further away from coal sources are less likely to get dispatched as per the merit order.

5. Various ecosystem players will need to respond to this high renewable energy scenario in different ways. The ecosystem players include equipment makers for thermal power generation, mining companies and EPC providers. New opportunities are likely to emerge in areas such as grid integration-related services, electricity storage and even electric vehicles. 

 

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