India has an ambitious goal to achieve 500 gigawatts of renewable energy capacity by 2030 and net zero emissions by 2070. Despite the substantial capacity expansion in the renewables space, Moody's states that coal will still remain an important source of electricity generation in the next 8–10 years.
This mitigates stranding risks for coal-based power assets of companies like NTPC Ltd., Tata Power Ltd., Adani Power Ltd., JSW Energy Ltd., and more.
Capacity Additions
India currently has 189 coal based plants operational in India with a combined capacity of 217.59 gigawatts, according to data from NITI Aayog. The data also shows that 52 gigawatts are currently in the pipeline.
Moody's expects India to add another 40–50 gigawatts of coal-based capacity over the next six to seven years, in order to meet rising power demand, which is likely to grow 5-6% annually over the same period. According to the Ministry of Power, India will start operating new coal fired power plants of 13.9 gigawatts in 2024, reported Reuters.
Expenditure
The expected capacity addition will translate to capital spending of $45–55 billion over the next six to seven years, added Moody's.
According to the Ministry of Power, the estimated cost of setting up a new coal-based thermal capacity as considered in the National Electricity Plan is Rs 8.34 crore per megawatt. Thus, the ministry expects expenditure on thermal capacity additions to be a minimum of Rs 6,67,200 crore by 2031-32.
Utilization Rate
Moody's also states that the utilisation rate for coal-based capacity is likely to remain high, around 65–70%.
This occurs despite capacity expansions. Furthermore, plans for the early closure of some coal-based projects might also get delayed, mitigating risks for coal-based power assets, according to the rating agency.
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