The Central Electricity Authority’s (CEA) National Electricity Plan (NEP) proposes the development of over 8.68 GW of battery energy storage systems in place of previously proposed coal capacity, eliminating any new coal plant installations until 2027.

The draft plan released in September estimated a need for approximately ~8 GW of new coal capacity by 2027.

The plan provides a roadmap to the required installed capacity to meet the projected peak demand in the country.

It projects all India’s peak electricity demand and electrical energy requirement to be at 277.2 GW and 1,907.8 BU, respectively, by 2026-27. These figures are projected to increase to 366.4 GW and 2,473.8 BU by 2031-32.

Installed Capacity

Capacity planning is a crucial element of the NEP, with a required projected installed capacity of 609.6 GW by 2026-27.

India must install 273.03 GW of conventional capacity and 336.553 GW of renewable-based capacities to meet the peak power demand until 2027.

The conventional capacity includes 235.13 GW coal, which comprises of only under development projects with no additional capacity to be installed during this period. CEA had initially projected ~8 GW of additional coal capacity in the draft NEP, which is now replaced with 8.68 GW/34.72 GWh of battery energy storage system (BESS) capacity.

The required capacity also includes gas (24.82 GW), and nuclear (13.08 GW), alongside large hydro (52.446 GW), solar (185.566 GW), wind (72.89 GW), small hydro (5.2 GW), biomass (13 GW), and pump storage plants (7.44 GW).

These capacity projections align with India’s goal of achieving a non-fossil fuel-based installed capacity of approximately 500 GW by 2029-30.

Looking ahead to 2031-32, India must achieve an estimated installed capacity of 900.4 GW, comprising 304.14 GW of conventional capacity (coal: 25.9 GW, gas: 24.8 GW, nuclear: 19.680 GW) and 596.2 GW of renewable-based capacity (large hydro: 62.178 GW, solar: 364.5 GW, wind: 121.89 GW, small hydro: 5.45 GW, biomass: 15.5 GW, pump storage plants: 26.68 GW). The plan also includes 47.24 GW/236.22 GWh of BESS capacity required by 2031-32.

The NEP highlights the anticipated increase in the share of non-fossil fuel-based capacity from around 42.5% (as of April 2023) to 57.4% by the end of 2026-27 and further rising to 68.4% by the end of 2031-32.

The targets reflect India’s determination to significantly reduce its reliance on fossil fuels and embrace renewable energy.

India’s installed renewable energy capacity, including large hydro projects, stood at 170.32 GW, accounting for a 41% share of the overall power capacity mix at the end of the first quarter of the calendar year 2023, according to data from CEA, Ministry of New and Renewable Energy, and Mercom’s India Solar Project Tracker.

Fund requirement

According to the NEP, India will need ₹33.6 trillion (~$407.9 billion) to build additional electricity generation capacity to meet the growing demand.

The total fund requirement for 2022-2027 is estimated at ₹14.5 trillion (~$176.02 billion), covering both conventional and renewable power capacity.

Out of this amount, ₹3.4 trillion (~$41.27 billion) must be allocated for conventional power capacity addition, with ₹2.2 trillion (~$26.7 billion) for coal-fired plants and ₹1.2 trillion (~$14.56 billion) for nuclear plants.

The remaining ₹11.15 trillion (~$134.75 billion) must be allocated for renewable energy, with ₹6.8 trillion (~$82.5 billion) for solar and ₹2.3 trillion (~$27.92 million) for wind.

From 2027 to 2032, the total fund requirement is estimated to be ₹19.06 trillion (~$2.31 billion).

This includes ₹2.28 trillion (~$27.92 billion) for conventional capacity addition (coal: ₹1.85 trillion (~$21.85 billion), nuclear: ₹430.5 billion (~$5.22 billion) and ₹13.84 trillion (~$167.5 billion) for renewable energy. Additionally, ₹2.92 trillion (~$35.45 billion) will be allocated for battery energy storage systems.

Developers must invest a total equity amount of ₹3.63 trillion (~$44.07 billion) and arrange for a total debt of ₹10.9 trillion (~$132.35 billion) from 2022 to 2032. Similarly, from 2027 to 2032, the estimated equity and debt requirements (excluding projects beyond March 31, 2032) are ₹4.76 trillion (~$57.8 billion) and ₹14.3 trillion (~$173.63 billion), respectively.

Emissions

The total CO2 emissions projected will increase from 1,002 million tons in 2021-22 to 1,057 million tons in 2026-27 and 1,100 million tons in 2031-32. The average emission factor is expected to reduce to 0.548 kg CO2/kWh in 2026-27 and to 0.430 kg CO2/kWh by the end of 2031-32.