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Associated Press
Indian laborers dig a coal depot in Meghalaya, India. For six years in a row, India’s monopoly coal producer has missed its production targets.

Coal shortfall may benefit India

Solar energy up to 2.2 gigawatts in three years

– For six years in a row, India’s monopoly coal producer has missed its production targets, leading to chronic electricity shortages and sending power producers scrambling for pricier imports. But what looks like a looming crisis could turn out to be an almost accidental energy overhaul.

Like many other developing nations, India has relied for decades on cheap coal to provide electricity for burgeoning industry and fast-expanding cities, putting aside worries about pollution and global warming.

But from three years ago when solar capacity was almost zero, the country has added 2.2 gigawatts of solar to its electricity grid, enough to power 20 million Indian homes. It plans another 2 gigawatts this year, toward a total 15 gigawatts by 2017. Individual states plan even more. India has also added about 26 gigawatts in coal-fired capacity since 2011, but already plants are sitting idle for lack of cheap supply.

“I’ve stopped developing coal plants,” said Ratul Puri, chairman of Hindustan Power Projects Ltd. “There’s not enough coal, and I’m not going to rely on imported coal. It’s too risky.”

After building two coal-fired plants due to start generating this year, Hindustan Power plans to invest nearly $3 billion to expand its 350 megawatts of solar generation to 1 gigawatt by 2017.

Decisions like Hindustan Power’s are more pragmatism than idealism as the coal industry trips up on its own dysfunction. Coal India, the monopoly producer, is too large and unwieldy to do any better. Much of the country’s easy-to-access surface coal has been extracted, with the remaining reserves harder to reach: underground, beneath cities or within national parks and tiger reserves.

New projects can take almost a decade to get going thanks to village protests, bureaucratic entanglements and trouble securing fuel. Meanwhile, more than 300 million people still have no electricity, while hundreds of millions more are lucky to have a few hours a day.

Coal-fired thermal power remains the bulwark of India’s energy supply, accounting for 59 percent of the nation’s 234 gigawatts generation capacity. India still has ambitions for another 70 gigawatts in coal capacity by 2017 if it can find the investors.

But there’s an additional crucial factor that is making solar a viable alternative: For the first time, solar electricity prices have fallen to near parity with India’s coal-generated power prices. Subsidies at about a third of cost put solar prices at about 11 U.S. cents per kilowatt-hour, as opposed to coal’s 5-6 rupees per kilowatt-hour.

Solar projects also need fewer clearances and take just six to 12 months to develop, as opposed to about eight years for a coal plant.

Analysts say India is set to surpass its target of having 15 percent of its energy produced by the sun and other minimally polluting sources by 2022.

“Today’s coal availability is inadequate. And investors are worried. In India, if there are coal shortages, there will be power shortages, and industrial growth will be inhibited,” said Vivek Pandit, senior director at the Federation of Indian Chambers of Commerce and Industry.

India’s coal bind is in part a product of its bounty. Declaring the world’s fifth-largest coal reserves, India invested heavily in coal-fired power as a low-cost way of boosting energy production.