Retail power prices not high enough to be profitable
May 22 2014
“Many of India’s huge power plants have been unable to source discounted domestic Indian market supplies of coal. This leaves two equally unappealing options – operating well below designed utilisation rates, and/or sourcing significantly more expensive imported coal,” IEEFA said.
Significantly, IEEFA is of the view that wind, solar and hydro facilities can be built faster at lower PPAs. Additionally, the use of renewable energy incorporates a zero fuel cost, such that there is an inbuilt deflationary driver, that is, zero indexation.
Given the recent drive by the RBI to prioritise sustained reduction in inflation, renewables support a series of GoI/ RBI targets. Importing thermal coal achieves none of these goals, and more likely contradicts them, the report said.