PV and Storage Threatening Coal’s Future in India

World’s Single Largest Coal Producer Coal India Ltd. Says Solar PV and Storage Industries “Cast Serious Doubts” For Coal’s Future
06:47 PM (Beijing Time) - 12. February 2018
n_mar_Asia_India_PV & Storage Threatening Coal’s Future1_ab 2018-02-09

The cost for battery storage has dropped substantially over the years and is expected to go down further by 2030. At the same time, cost of solar and storage together has fallen significantly, according to Coal India Limited, the world’s single largest coal producer. This could encourage consumers to replace coal-fired power generation with off-grid solutions, it fears (Source: Coal India Limited)

Key Takeaways

  • Coal India Limited says development in the solar PV sector and the growth of energy storage technology has cast serious doubts on the future of coal in its Coal Vision 2030 report
  • Coal is losing it traditional edge due to falling prices of solar power and ancillary technology, along with improving competitiveness and regulatory support
  • In its Vision 2030 report, the company says it expects solar power prices to reach about INR1.9–2.0 ($0.029 to $0.031) per kWh by 2025, comparable to coal-based generation cost; it could go lower, meaning  substitution of coal-based power sources with renewables is increasingly likely
  • Consumer awareness in terms of climate change and sustainability will drive consumers to opt for off-grid solutions powered by solar plus storage, driving down demand for coal even further down  

Development in solar PV and energy storage technologies is casting serious doubts on the future of coal, believes the world’s single largest coal producer company. Coal India Limited (CIL), which is backed by the government of India, made these assertions in a document titled Coal Vision 2030. The report points out that coal mining and coal-fired thermal power generation are the two core industries that account for around 10% of India’s Index of Industrial Production (IIP). The domestic coal industry employs about 500,000 people directly and almost the same number indirectly.

In fact, demand for coal in India has increased nearly one-third in the last 5 years, driven by the power sector and non-regulated sector. The power sector remains the key consumer segment with nearly 70% of the overall coal demand.

However, the popularity of solar PV and new technological breakthroughs in the energy storage industry, among other factors, have started negatively influencing the coal sector in India. In the last two years, total solar capacity addition in India has been over 8 GW, registering an increase of approximately 200% in installed capacity (see India’s Cumulative PV Capacity Exceeds 17 GW). Improving competitiveness and regulatory support have increased interest in renewables. On the other hand, the growth in coal demand flattened – while demand strongly grew from 683 million tons in 2012 to 867 million tons in 2015, it only slightly increased to 874 million tons in 2016 and 894 million tons in 2017.

Growth in coal demand has flattened in India in recent years, according to data published in Coal India Limited’s Coal Vision 2030 report. (Source: Coal India Limited)
Growth in coal demand has flattened in India in recent years, according to data published in Coal India Limited’s Coal Vision 2030 report. (Source: Coal India Limited)

  Falling costs of solar PV products, coupled with efficiency improvement, will continue to drive solar’s competitiveness in the future as well. “The prices are expected to reach about INR1.9–2.0 ($0.029 to $0.031) per kWh by 2025, which is comparable to coal-based generation cost,” the report says. “A still lower range is entirely feasible. Such price levels could drive the substitution of coal-based power sources with renewables.”

Battery storage

Another factor threatening coal-fired power plants is the rise of energy storage solutions. Referring to US Department of Energy and KPMG analysis, the document says battery storage costs have come down from $1,000 per kWh to $250 per kWh in the last few years. It is expected to further drop to around $50 per kWh by 2030. “This may have significant implications on coal-fired power plants in terms of replacing the thermal capacity required to meet the peak demand,” says CIL.

Off-grid systems

CIL is also concerned that consumers shifting to off-grid systems, thanks to solar-plus-storage solutions, may “reduce the coal demand still lower.” The report also says that coal could affected by increasing consumer awareness of climate change and sustainability considerations.

“It is futile to project beyond this period in such a dynamic environment,” says the report. “Instead, it is recommended that every three years, the progress of key technologies that may alter the energy-mix dynamics need to be assessed and technological impact on coal demand be ascertained. A greater coordination between various end-use ministries and key consumer groups is recommended to closely track the demand evolution.”

The document suggests that the global coal sector must focus on research and development in carbon sequestration and other clean coal technologies. “If the amount of R&D funds that are now being attracted into solar would have been invested in the last few decades into carbon sequestration globally, this exercise may not have been required,” the document notes.

While the last date for stakeholders to comment on this document was January 30, it is still available on the CIL’s website.


Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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Anu Bhambhani