By VP Singh & Pradeep S Mehta
Carrying coals to Newcastle is the closest metaphor to Rajasthan importing coal from the distant Chhattisgarh for thermal power stations in the state. What would make more sense is that Rajasthan could promote power plants at the pithead and carry power through the national grid.
Fortuitously, the coal ministry is planning such pithead plants with a capacity of 5,000 megawatt (Mw) in the coalfields of Chhattisgarh, Odisha, and Jharkhand with a total generation capacity of 30 gigawatt (Gw) through partnerships with public and private sector players. What Rajasthan could do is establish power plants around coal mines and auction them to the private sector for tariff-based bids. An ever-increasing electricity demand, coupled with inefficient utilities, paints a lacklustre future, underscoring the need for immediate and comprehensive reforms in the state’s power sector.
Rajasthan is a leading solar power producer, contributing 28% of India’s total utility-scale solar power capacity. The state is poised to play a crucial role in achieving the national goal of 50% installed capacity from renewable energy (RE) by 2030. Despite this promising outlook, the electricity demand and supply situation in Rajasthan lacks resilience.
As of May, Rajasthan had a peak power demand of 17.56 Gw and an installed RE capacity of 28 Gw, suggesting the state is power-surplus and meets its daytime demand entirely through RE. However, distribution utilities have not been able to meet their renewable purchase obligations (RPOs). Each year, the state scrambles for coal, resorting to ad hoc measures to secure the necessary supply to meet power demand.
The failure to fulfil RPOs stems from the lack of confidence power producers have in state utilities, due to their poor financial health and a history of delayed or non-payments. The grim state of power utilities is reflected in the 12th Integrated Report on Power Distribution Utilities (Discoms), which ranks Ajmer discom at 17th, Jaipur at 23rd, and Jodhpur at 35th out of 53 utilities evaluated. Many solar parks fall under the Jodhpur discom area. The role of the state electricity regulatory commission in ensuring discoms’ compliance with RPOs is also a concern that requires further examination and fixing of responsibility.
Without RPO compliance, thermal power remains the major source of electricity in a state with no coal reserves. Most of its coal is transported from Chhattisgarh or imported, significantly increasing the landing cost of coal. In 2024 alone, the Rajasthan Rajya Vidyut Utpadan Nigam (RUVNL) is set to procure 0.4 million metric tonnes of imported coal at Rs 12,780 per tonne, resulting in an additional financial burden of Rs 430 crore. This expense is likely to translate into a fuel surcharge of Rs 0.35-0.4 per unit for consumers.
Recent trends indicate a substantial increase in electricity consumption, from over 8.2 gigawatt hours (Gwh) in May 2023 to over 10.3 Gwh this May, marking a year-on-year increase of over 25%. This rising demand, driven by a growing economy and the effects of climate change, exacerbates the reliance on thermal power due to the poor state of utilities.
The interstate transmission network can be utilised to evacuate power from pithead plants to Rajasthan. The Centre has recently approved a new power transmission scheme to evacuate 4.5 Gw of RE from Rajasthan with a financial outlay of Rs 122 billion. Similar expansion of transmission lines can be made to evacuate power from pithead plants, ensuring power at reasonable prices and reducing exposure to the volatility of international coal prices by lessening the need for imports.
Making regulators accountable to ensure discom compliance with RPO norms could significantly increase RE penetration. Further, to assure payment to producers escrow facilities need to be built in, to build confidence and reduce reliance on thermal power. The Rajasthan Solar Policy 2023 aims for 90 Gw of RE by 2030, but absorbing this magnitude of energy necessitates revitalising the regulatory framework governing discoms.
There is a need to look at nuclear energy too. The Mahi Banswara nuclear power plant, proposed by the department of atomic energy in 2018, has seen little progress. A joint venture (JV) between the NTPC and the Nuclear Power Corporation of India has been planned to develop 2,800 Mw of nuclear energy. Expediting this project is crucial for Rajasthan and India in achieving their clean energy commitments.
Lignite-based electricity generation also offers a promising avenue to enhance energy security, given Rajasthan’s substantial lignite resources of 6.5 billion tonnes. The 250 Mw Giral power plant in Barmer and the 135 Mw VS power plant in Bikaner, operational since the early 2010s under the RUVNL, serve as significant examples. Besides, a JV between NLC India Limited and the Rajasthan government is underway to develop a 125 Mw lignite-based power plant in Bikaner.
However, despite advancements in fossil fuel technologies like the integrated gasification combined cycle, these plants fall short of RE sources such as solar and wind in terms of economic viability and environmental benefits. Therefore, a balanced approach is crucial to address both energy security and the imperative to reduce greenhouse gas emissions.
If thermal power is expected to remain the mainstay of power generation in Rajasthan for the foreseeable future, the state must pursue sensible action to ensure a long-term cost-effective strategy, such as pithead plants on a public-private partnership basis, to develop resource supply chain resilience.
(VP Singh is the former Governor of Punjab, while Pradeep S. Mehta is the Secretary-General of CUTS International.
With contributions by Akash Sharma and Pracheta Acharya, CUTS International)
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