Coal will remain as the power generating monarch in India as Social Costs are likely to erode the attractiveness of renewables as cheap sources of power.
India’s ambitious renewable energy mission in place is well-known. Many even claim that renewables will eventually lower the share of coal in power generation. But, a subtle discovery made recently in the latest Economic Survey indicates that there is a hidden aspect that could be liable for eroding the attractiveness of renewables in the long run, and thereby coal will continue remain as the undisputed monarch in the power generation segment in India.
The latest Economic Survey brought forth a concept, termed as the ‘social cost’, which is calculated while factoring in the private costs of electricity generation, opportunity costs of land, health costs and the costs of stranded assets of the conventional energy generation plants, which are likely to become idle if renewables are switched over to. The ‘social cost’ in respect to renewables was calculated at INR 11 per KWh, which is three times excess of that for coal in 2017. In the current scenario, the social costs are, however, not reflexive due to the extensive subsidies awarded by the government in the renewable energy space. Moreover, the declining tariffs in the renewable energy segment are actually an outcome of the government subsidies in place.
Coal, thus, will continue to be a cheap source for power generation in the years to come.
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