IEEE Power & Energy Magazine - January/February 2021 - 81

Attracting new investment in competitive-cost
generation to supply the demand in a timely
manner is a priority objective.
including South Africa (40 GW) and Indonesia (40 GW).
Global coal generation increased from ~6,000 to ~10,000 TWh
from 2000 to 2015 (and global coal production has increased
from 4.6 to 7.3 billion tons over the same period).
However, there is an interesting twist to this growth story
in the last five years, as coal generation is widely believed
to have peaked around 2014-2015, stabilized since then,
and even decreased slightly. The entry of renewables globally, especially feed-in-tariff-driven subsidized renewables
in many markets (including China and India), contributed
to this stabilization of coal. The average utilization of coal
plants globally has dropped from a peak of 66% in 2015 to
51% in 2016, raising concerns around stranded capacity and
the rapid retirement of coal assets.
A 2018 report by the Rocky Mountain Institute posits
an accelerated phase-out of 200 GW of coal over the next
decade and more than 1,200 GW of coal worldwide over
the next 30 years (see the " For Further Reading " section).
According to the report, 42% of the coal capacity globally could already be operating at a loss-a number that is
expected to grow to 56% by 2030.
Coal generation must be reduced substantially to make
room for renewables in Asia and parts of Africa. However, this process will be difficult and expensive. There
are US$255 billion worth of stranded assets in addition
to US$234 billion in decommissioning costs, i.e., a nearly
half-trillion-dollar puzzle that needs to be solved to pave
the way for RE. To integrate renewables into markets successfully, solutions must be found to difficult and expensive challenges, such as paying for stranded assets, closing
mines and plants, undertaking environmental remediation, and developing social programs to compensate/
reskill employees.
These solutions would not necessarily lie in the scope of
markets, but unless they are addressed somehow, it is difficult to see how the transition from coal to renewables can
be accelerated. Many of the long-term contracts that made it
difficult for solar/wind to come in or led to significant curtailment (e.g., 20-30% in parts of India and China in recent
years) could persist.
There are other challenges in supporting solar and
wind that we have alluded to in the preceding discussion,
namely, building and, in some cases, upgrading and reorienting transmission and distribution to accommodate variability in solar/wind. These investments can be substantial
depending on the level of penetration of solar/wind and will,
for the most part, remain in the domain of public finance.
january/february 2021

Some of the mega transmission projects in India and China
have already accounted for US$2-6 billion per project for
±800-1,100-kV ultra-high-voltage (HV) dc and 1,200-kV
HVac projects. Integrating the southern, western, and eastern power pools in Africa would also cost tens of billions
of dollars over the next decade to ensure the connection of
regional scale-efficient hydro and solar/wind.
In general, these upgrades to transmission and distribution are an expensive proposition in most parts of the
developing world, from small island nations to very large
power systems. Even if these upgrades are undertaken,
there remains the issue of flexible generation capacity
that needs to accompany solar and wind. While their
lower costs make solar and wind attractive propositions
to displace expensive thermal energy sources (especially
liquid fuel and gas) in some parts of the world, flexible
generation-be it storage/pumped-storage hydro, opencycle gas, imports from another system, or battery storage-can be expensive.
As markets in Europe, parts of the United States, and
Australia have demonstrated, although it is possible, to some
extent, to attract flexible generation through appropriate
capacity and balancing markets, much work remains to be
done. As noted before, less mature markets in other parts of
the world make renewable integration an even more challenging proposition. Absent adequate transmission/distribution
capacity and/or flexible generation, a very large penetration of
solar/wind would either not be achieved or, if strongly incentivized with a subsidy, would continue to result in significant
curtailment, inefficient dispatch, and grid stability issues.

Potential Solutions: Focus on India
Strategies exist that could accelerate the process of decarbonization, bringing in solar/wind/hydro and other renewables and storage as well as raising the necessary investments. We discuss these in the context of India, which is a
significant RE hub poised for rapidly scaling up its renewable base.
The Indian power system has a total installed capacity of
370 GW (as of March 2020), including 205 GW of coal, 35 GW
of solar, and 37 GW of wind. There is a renewable policy
goal to first get to 175 GW of renewables by 2022, including
100 GW of solar and 60 GW of wind. The medium-term
goal is to scale further to 450 GW by 2030. Although the
country has made significant strides initially with wind and,
more recently, with solar, it has also experienced many of the
problems discussed previously.
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IEEE Power & Energy Magazine - January/February 2021

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