Cost-effective Power Generation

Creating generation assets with the lowest unit cost is linked to optimizing plant capacities and using private investment. How has India been performing? India has been aggressively expanding its power generation capacity. India’s current installed capacity of 358 GW is about four times that of in 1997-98. India has doubled the capacity in the past two decades achieving around 75 MW per day. India is targeting renewable power generation, with an aim of 175 GW and 500 GW of renewables capacity by 2022 and 2030 respectively. What is the importance of the thermal sector? Thermal generation capacity accounts for about two-thirds of the installed generation capacity in the country. Even though there is increasing awareness about the environmental impact of fossil fuels, the reliance on thermal plants is unlikely to end soon. Thermal plant capacities are large and fewer such plants can fulfil the targeted capacity additions. It would take 18 solar or wind projects to generate the same quantity of power as one thermal plant. The average cost per MW for a thermal plant is about 25% lower than that of a solar plant.

Why should the private sector be promoted? The private sector currently accounts for almost half of installed generation capacity. Private investment is significant in the renewable energy sector. It accounts for almost 90% of investment in wind and solar projects. Private sector plants have an average cost per MW which is affordable to common people. So, Private investment in the power sector has not only helped in augmenting capacity but has also helped in lowering cost. It has the potential to bring innovations that can transform the sector. So, it should be promoted. Where the solutions lie? The power sector is the growth engine of India’s progress. So, to meet the demand of a huge population, the sector should be transformed. India should create power generation with the lowest unit cost by optimizing plant capacities and encouraging private sector investment.