Friday, September 01, 2017

Following Trump, Modi govt "favours" coal-based power, claims: Renewable energy has higher social costs

By Our Representative
In a shocking revelation, the Ministry of Finance, Government of India, has favoured coal as the source of power instead of renewal, especially solar, energy. An environmental overview of the second volume of the Economic Survey, released recently, says, the top report has "raised issues with investing in renewable energy attributing a social cost of Rs 11 per unit of electricity."
The analysis, published in a well-known environmental journal, run by the Centre for Science and Environment (CSE), New Delhi,says that the "social cost" of renewal energy, as seen by the Economic Survey, is "three times to that of coal", insisting, "This gives the wrong signal to the investors, more or less questioning why renewable energy is being pushed so hard."
Carried out by Aruna Kumarankandath, who specializes in renewable energy with the CSE, which is headed by well known environmentalist Sunita Narain, the analysis says, the social cost of Rs 11 per unit has been arrived at on the basis of several components -- the private costs of generation, the opportunity cost of land, social cost of carbon, health costs, and costs of stranded assets.
"In simpler terms", says Kumarankandath, the Economic Survey appears to believe that "more investment in wind and solar would reduce the operation of coal power plants, which in turn will lead to job losses and coal plant loans turning bad in the books of banks".
Pointing out that "this is similar to the argument US President Donald Trump makes for increasing investment in coal mining jobs", the expert says, "The survey alleges that shift in renewables would leave conventional power plants underutilised, lower than their maximum technically feasible level."
The investments made in these plants, according to the survey, would be deemed “sunk” and would result in loss of revenue. And these stranded assets would impact the banking sector. "It is estimated the total advances to coal sector were Rs 5,732 crore with ratio of non-performing assets at 19.8 per cent", Kumarankandath quotes from the survey.
Aruna Kumarankandath
Wondering why this was not included in social cost estimate of coal-fired energy, Kumarankandath says, "The survey says that the social costs would include the opportunity cost of land required for solar. However, no specific cost is mentioned, which some may argue, is the same as the cost private developers pay for it, which is already reflected in the cost of generation, even if it is as low as Rs 2.44. In addition, the opportunity cost of land is not put on the social cost of coal power plants."
According to the expert, "The estimate assumes that land required of coal power plant is around 2,023 square meters or 0.5 acres per megawatt (MW), while for solar its 10 times in comparison. This is considered a barrier in solar development."
Contradicting this, she quotes a CSE estimate according to which, "on an average, coal power plant require 1.7 acres of land per MW but this does not include the area under coal mines, which increases the requirement to 5.95 or 6 acres per MW." This is comparable with the estimate by the Ministry of New and Renewable Energy, according to which "the land requirement for ground mounted solar is around 5-6 acres per MW."
Noting that "the survey also does not consider installations on rooftops and already developed areas, which will reduce the space needed", the expert says, "According to an analysis by Bridge to India, a renewable consultancy, half the desert area in Barmer, Rajasthan can install 1,000 giga watt (GW) solar. Solar plants largely use barren and unproductive land. Thus, 1000 GW can be installed in the 3.5 per cent of the waste land in the country."
Also not calculated in the social cost of coal are the 115,000 "premature deaths every year, including those of the coal miners, or 800,000 deaths due to ‘chronic obstructive pulmonary disease’ (Lancet estimate), and 100,000 more due to asthma, all of which especially become acute in coal mining areas or the areas where thermal power plants operate.
Sharply criticising the survey for cautioning investment in renewable energy and suggesting a “calibrated” approach due to the total cost accrued to the society, the expert believes, "In essence, it suggests to slow down the pace of renewable energy development."

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