WP_402_2023.pdf

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• Though the royalty rates vary by the quality of coal, ranging from Rs 250 per MT for the best grade coking coal to approximately Rs. 60 for the lowest grade, Rs 120 /MT would be a reasonable average for the total payments to theDMF and the state governments.

• The impact could be quite substantial, adding 8.66% to the combined deficits of the VRE poor states under fairly conservative assumptions.

• The impact is most severe on the three coal-rich states of Jharkhand, Odisha and Chhattisgarh.

• existing

• coal reserves occur mainly in the eastern part that also happen to have the lowest VRE endowments.

• the attainment about 40 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030.

• It is expected that OGM, under which the VRE share to rise from about 18% in 2022 to about 30% in 2030, will require about 895 MT of coal @ 0.7 kg/ Kwh (CEA2020-p 36), nearly 555 MT lower than the coal requirements were the share of VRE to remain unchanged during 2022- 2030 (BAU)

• On the other hand, 10 other major states, (categorized as VRE Poor each with less than 5% of the total potential in the country) in the east and the north, including three of the largest in terms of population, Uttar Pradesh, Bihar and West Bengal have a much lower (13%) share of India’s VRE potential.

• Despite the endowment, they are unlikely to play a role in the renewables-based generation scenario in 2030. The solar potential is located in inaccessible and ecologically fragile trans-Himalayan zones

• Historically, power sector siting in India has been both technically and politically determined; for example, the original NTPC power plants of Farakka, Ramagundam, Singrauli and Korba were partly chosen because of their ability to supply electricity to multiple states power at the same time.This was possible because state-owned entities were commissioning these power plants and were balancing between technical and political criteria.

• The majority of India’s VRE grid- connected capacity is being constructed by private companies, and cross-subsidization dynamics and other kinds of budgetary support will not be easily available to such entities. They will naturally gravitate towards regions and sites with greater insolation and wind densities, predominantly in VRE rich states.

• many states have made out-of-state power sales and purchases a central part of their energy policy (eg. Gujarat, Rajasthan, Chhattisgarh).

• For example (as its share of solar power grew beyond 15%), California had tooffload nearly 18% of its power sales in 2017 free of cost to Arizona

• The extent of VRE exports would primarily depend on the willingness and ability of the “importing” states. Rather than a purely techno-economic matter related to the national climate commitments, it is most likely to be a political issue related to the rise in deficits, sustained resources outflows and perceived loss of autonomy over a critical sector of enormous significance to public order and the political fortunes of the parties in power.

• Over a 35 year span, until it was closed in 1991, FES neutralized this regional advantage and enabled users at the opposite ends of the country, the west and the south to get access to iron and steel at the same price.

• The electricity distribution sector continues on a “Business As Usual” trajectory.

• We have assumed that all states growat the same rate irrespective of their VRE endowments.

• Electricity demand is also expected to grow uniformly across the states at rates equal to the rates for the general economic growth

• This is necessitated by the paucity of standardized projections for state-level economic growth and electricity consumption. Available literature indicates that electricity demand growth is elastic with respect to economicgrowth, but the elasticities are typically much lower than 1 (https://doi.org/10.3390/en10030347). For our analysis, we have taken the elasticity tobe unity, given the possibility of sharper demand growth following the enforced lockdown.

• Coal production has been projected from 2022 to 2030 under two scenarios-BAU- where VRE share in actual generation remains unchanged and OGM-under which VRE capacity grows much faster. (Table 1). State -wise production under BAU and OGM is estimated assuming that production shares remain unchanged throughout the period 2019-2022-2030