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Karnataka overtakes Tamil Nadu and emerges as a new leader in renewable energy

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According to a recent report from Institute for Energy Economics and Financial Analysis (IEEFA), the Indian state of Karnataka has become the new national leader in renewable energy generation.

Karnataka had been building its wind energy capacity steadily over the past 10 years, but it moved ahead of Tamil Nadu due to a rapid scaling up of solar capacity in 2017/18, when it installed more than 4 GW of new photovoltaic generation. Currently, the state has 5 GW of solar capacity and 4.7 GW of wind capacity. The remainder of its renewable portfolio (2.6 GW) includes small hydro, biomass, plus heat and power cogeneration.

The report “Karnataka’s Electricity Sector Transformation” describes a trend driven by state and national energy policies that have encouraged less reliance on imported energy and how declining costs have helped build momentum around the uptake of renewables, especially solar.

The report states that recent solar tenders in Karnataka have seen near record low bids of Rs 2.82-3.06 per kilowatt-hour (kWh) (US$41-44/MWh), materially less than the average Rs 3-5/kWh for domestic thermal power tariffs and the Rs5-6/kWh tariffs required for imported coal fired power.

India’s National Electricity Plan 2018:

The NEP includes a new target for closing 48 GW of end-of-life coal plants. Specifically, the plan forecasts 22.7 GW of coal power plant closures by 2021/22, which includes 6 GW of normal end-of-life retirements and 17 GW of closures due to inadequate space for flue gas desulfurization (FGD) equipment. The plan notes that these retirements “would not likely pose any problem in meeting the demand (for electricity) during 2021/22.” An additional 26 GW of coal capacity is slated for retirement in the following five years to 2026/27.4

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Accounting for these planned retirements and expected new construction totaling 94 GW, the NEP 2018 sees India’s coal power capacity hitting 238 GW in 2027, 11 GW lower than the 2016 draft.

IEEFA has modelled a likely pathway for Karnataka’s electricity sector development over the coming decade to 2027/28. Key modelling parameters include:

  • Karnataka is set to move from being a net importer of electricity to a net balance. There is clear scope for the state to become a net exporter, but this is currently constrained by insufficient interstate grid capacity
  • Renewables moving from 12.3 GW or 46% of state capacity (27% of generation) in 2017/18 to 23 GW or 60% of capacity (43% of generation)
  • Hydroelectricity at 3.6 GW or 13% of current capacity provides much-needed dispatchable energy to balance the state’s growing, but variable wind and solar output. Government planning suggests little scope for this to be enhanced. IEEFA recommends evaluation of pumped hydro storage, as well as solar thermal and lithium-ion batteries
  • Thermal power currently totals 10 GW (38% of capacity and 49% of generation), and IEEFA expects this to remain steady, but critically this needs to better incorporate more flexible, peaking capacity; and
  • For coal power, IEEFA models an improvement to a 53% average capacity utilisation rate by 2027/28, on the premise the current 35% utilisation rate is unsustainably low, involving such operating inefficiencies that the alternative is accelerated plant closures.

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