At COP26, India announced its ambitious target of achieving net-zero emissions by 2070. To reach this goal, India must transition to a low-emissions power sector as soon as possible. Currently, nearly three-quarters of India's electricity is generated from coal, making the phase-down of coal generation crucial for staying on track with the net-zero target.

ABOUT

This report is part of a series examining key drivers to accelerate India's power system transition over the next decade. It aims to identify conditions conducive to accelerating decarbonization of the power system in India. The focus is on highlighting priority areas for Indian policymakers and global stakeholders to prioritize.

This report focuses on BESS cost decline as an important driver for reducing coal dependency in the Indian power sector. It explores the least-cost pathways for the supply and storage mix required to meet future electricity demand from 2024 to 2032. The analysis2 evaluates various scenarios of battery energy storage system (BESS) cost declines and their impact on coal generation and capacity buildup.

CONCLUSIONS

To achieve a faster coal phase-down:

Battery storage costs need to fall more rapidly

As the share of solar energy in the grid increases, integrating these renewables while maintaining grid reliability is crucial. Battery Energy Storage Systems (BESS) are key to this integration, storing excess energy for use during non-solar hours. Facilitating BESS cost declines is vital, with policy tools like the VGF playing a crucial role. It is essential for policymakers to avoid committing to new coal capacity without considering future battery cost trends. If battery costs drop faster than expected, it could accelerate coal phase-down, reduce new coal needs, and lower overall costs, but care must be taken to avoid peak power shortages.

Better utilization and improved flexibility of existing coal capacity

Efforts should prioritize optimizing existing coal capacity to avoid unnecessary new coal plants. Enhanced power sharing and Security-Constrained Economic Dispatch (SCED), coupled with the phased implementation of Market-Based Economic Dispatch (MBED), will improve coal resource efficiency. Additionally, enhancing the flexibility of the current coal fleet is crucial. This includes retrofitting plants for efficient two-shift operation, allowing them to reduce output during high solar production and increase during non-solar hours. Mechanisms to help coal generators recover costs associated with increased flexibility will also be essential.

Annual RE build rate needs to be ramped up in the coming years

To achieve the energy transition, it is essential to regularly and significantly add solar, wind, and pumped hydro storage plants (PSP). Meeting annual addition targets for these technologies is crucial to keep pace with growing energy demand and renewable goals.