As head of The Energy and Resources Institute (TERI) Dr Ajay Mathur exudes energy in more senses than one. Energy is also his area of specialisation.
Mathur, the Director General of TERI, is also a member of the Prime Minister’s Council on Climate Change. In his former role as Director General of the Bureau of Energy Efficiency (BEE), he was responsible for bringing energy efficiency into homes, offices and factories, through initiatives such as the star labelling programme for appliances, the Energy Conservation Building Code, and the Perform, Achieve and Trade programme for energy-intensive industries.
He has been a key Indian climate-change negotiator and was also the Indian spokesperson at the 2015 climate negotiations in Paris. He recently joined the global group of industrial, financial and think-tank leaders to co-chair an Energy Transitions Commission, which will suggest ways for companies and countries to move towards climate-friendly energy futures.
Mathur spoke to ASHA RAMACHANDRAN on the energy issues plaguing India, given the country’s commitment to move towards renewable energy and its commitment at the Paris Climate Change Summit in December 2016. Excerpts:
Q: On the energy front are we moving forward because we often appear to be moving in circles?
A: We are clearly in a turbulent transition state which means we know that change is happening but we don’t know the next challenge. And the next challenge gets thrown at you some day. And that also reflects the feeling that we are working in different directions. The long-term prognosis is that, even today, the newest rates that we have for solar electricity show that it costs less than coal-based electricity at Rs 2.44 per unit. And coal is Rs 3.50.
Q: Then where is the catch?
A: But solar is available only when there is sunshine. And the peak electricity demand we have is at 11 p.m. Therefore, we need to have coal plants. How else will we get electricity at 11 p.m.? But if I start buying electricity from solar during the day, the coal plants operate for a shorter period of time. So the coal electricity becomes expensive. This is the current dilemma. This is not helped by the fact that over the past few years, we have built up more coal-based power plants than we can buy electricity.
The total installed capacity is to the tune of 330 GW. And the highest amount of electricity sold is 165-167 GW. Coal alone is 190 GW. Most of this capacity has been put up in the last few years. Most of these companies have taken bank loans. They can’t sell electricity, they can’t pay back the loans. The bank does not have money to lend. So growth is suffering. So it’s very important that coal sector starts functioning.
Q: How about renewable energy?
A: If we want prices of renewables to continue to drop, we have to continue to make sure that we have newer bids and tenders so that there is a certainty in the renewable industry. So there is clearly a tension at this point of time.
As we move ahead, by 2020-21, coal power plants will be operating at a power plant load factor of 60-65 per cent or so. At that plant load factor they should be able to meet their financial obligations. That is the next challenge.
Once we come there, as far as coal-based electricity is concerned, I have already paid the fixed cost. Now, if I have to buy electricity from them I only have to pay the variable cost, which is less than Rs 1.50. So, it’s better to pay Rs 1.50-2 to get coal electricity instead of paying Rs 2.44 and get solar energy. So, it is important to get the solar electricity price to about Rs 1.50. Then the distribution companies will become indifferent whether they buy electricity from coal plants or solar plants.
Q: What does that mean for the consumer?
A: Demand is still growing in India. The coal power plants that exist ~ 330 GW ~ will start operating at 75-80 per cent plant load factor. Now the company has more electricity and says, should I add more coal or should I add solar. If I’m getting solar at Rs 1.50-2 and coal at about Rs 2 ex-cost, or Rs 1.50 variable cost, I’ll invest in solar energy. So if solar energy is able to reach a price of Rs 1.50 by 2020-25 we will see that additional capacity that is installed would come from solar.
Q: But solar power is available only during the day. What happens at night?
A: The only way to address this is to have a system that stores electricity generated during the day and provides it at night. The cheapest form is hydro pump storage. So, we’ll probably have 8-12 GW of pumped hydro that is available.
Q: After that?
A: Then we will have to go in for something more expensive like batteries. Today, if you set up a system with solar and batteries, the cost is around Rs 11-12 per kilowatt hour. But in the newest bids this is fast coming down to Rs 9. If by 2025, the price of solar goes down to Rs 1.50 and price of batteries goes down from Rs 6 to Rs 3, we’ll have electricity that costs less than Rs 5.
Now we’re in an interesting situation. If I build new coal plants with new environmental norms, I’ll produce electricity at Rs 5. And if I’m able to halve the cost of batteries, I’ll be able to also produce solar electricity at Rs 4.50-5. Therefore, when we set up new plants, the preference will be for solar plus batteries.
Q: Even in climate change negotiations, there is a strong stress on solar power.
A: Yes. But first, it is important that price of solar falls to half of where it is today ~ from Rs 2.40 to Rs 1.50. The price of batteries must fall to half over the next 10 years. If we are able to do that ~ it’s not easy ~ then we may see no more investment in coal plants. Those which are under construction will be constructed but no more new investment.