Coal Power Is Four Times Costlier Than Renewable Energy From New Units In India

Renewable power is proving to be competitive in India as the generation cost of coal or gas-based plants is more than four times that of new clean energy projects.

The average fuel-only cost for producing electricity by burning coal in India in 2022 is as high as $127 per megawatt hour compared with around $30-35/mWh for new onshore wind and solar projects commissioned in 2021, according to the International Renewable Energy Agency.

That reflects a larger global trend where renewables emerged as the cheapest form of electricity amid a global energy crisis. "The situation in 2022 provides a stark example of just how economic new renewable power generation has become and the benefits it has in insulating economies from volatile fossil fuel prices," IRENA said.

Globally, the intergovernmental body said that two-thirds—163 gigawatt—of the newly installed renewable capacity in 2021 had lower costs than the cheapest fossil fuel-fired option anywhere in the Group of 20 countries.

Even as project costs for installing renewables rose due to supply-chain snags from the Covid-19 pandemic, the cost of clean power across the globe continued to decline. In 2021, the levelised cost of electricity from solar fell 13%, while that of onshore wind fell 15% over the previous year.

However, IRENA said some of the material cost increases in 2021 are yet to pass through into equipment prices and project costs. Those price pressures will be more pronounced and overall costs may rise in 2022, it added. This has already started playing out in India where solar project costs, according to Crisil, have gone up about 30% from last year.

Still, India continues to be the most competitive country for installing renewable projects, IRENA data showed. For onshore wind, the average total installed costs in the country come up to $926 per kilowatt in 2021. For solar, the figure is even lower at $590/ Kw.

In both cases, the weighted average costs in India are the lowest in the world.