On not-so-abandoned coal mines; green hydrogen prices; and water – #137
The week gone by saw a lot of frenetic activity on the energy front.
News of the week
The Financial Times picked up on Coal India’s decision to re-open abandoned coal mines.
“Coal India, the world’s largest coal-producing company, is reopening more than 30 mines and launching up to five more on greenfield sites this year, saying the country’s renewables sector is not yet able to meet growing energy demand,” the newspaper wrote. “By the time renewable generation and battery storage systems become bigger, better and more efficient, then the share of coal can come down,” PM Prasad, chair of state-owned Coal India, told the FT.
In the interview, Prasad also told FT these 32 coal mines would now be handed over to private firms on a revenue-sharing basis, with half a dozen scheduled to start production in fiscal 2025-26 itself. As things stand, over the past two or so years, this decision by Coal India to revive abandoned mines has resulted in a lot of chatter in Kolkata’s coal mining circles. Amongst the questions are the private firms bagging these blocks. Also amongst the questions, as discussed by CarbonCopy earlier, are the impacts of this policy on Coal India (beneficial) and coal-workers (not so beneficial).
The other notable bit from the FT is Prasad’s suggestion that renewables are not efficient enough. The problem lies less with renewables and more with the rentier economy that has emerged around these. In March this year, Andhra Pradesh decided to buy 7,000 MW of RE power from Tata Power Renewable Energy for Rs 49,000 crore. As this newsletter had written at the time, it was an odd decision. Apart from militating against Naidu’s own statement that Andhra had bought more renewable power than it needed under his predecessor Jaganmohan Reddy, the transaction was also costlier than other renewable power purchases by states like Chhattisgarh and Assam. Under Jagan as well, AP had bought costlier renewable power, landing itself in the SEC’s cross-sights for corruption.
If anything, as global trends showed last week, the price of solar panels continues to plummet. “Global solar photovoltaic module shipments reached a record 500 gigawatts (GW) in 2024, nearly doubling the previous year's volume, while the top 10 manufacturers posted collective losses of USD 4 billion,” reported Economic Times, citing a report by Wood MacKenzie. Price competition, continued capital investment as players add further scale and the loss of US demand are all driving bottomlines down.
Continuing with energy costs, an interesting number surfaced last week. Indian Oil Corporation held reverse auctions for green hydrogen and netted a price of Rs 397/kg, about $4.67/kg. At this price, as the Economic Times was told, “L&T’s hydrogen offering is already aligned with global low-cost producers such as Saudi Arabia and the UAE, whose prices range between $4.50–$6.00/kg.”
What does this number tell us? One kilo of hydrogen produces 120-140 kilojoules of energy. That is three times more than petrol, diesel and LNG, which produce between 44-50 kilojoules/kg, but are also one-third the price. Is hydrogen edging towards competitiveness? In that case, why do green hydrogen manufacturers want India to create a purchase obligation to save assets from stranding? “Without HPOs and adequate off-take and demand creation, NGHM 2030 targets and combined hydrogen-related investments worth $ 80 billion are at risk,” the Indian Hydrogen Alliance had said just last month.
This really needs to be understood better.
One cost of getting large firms into solar generation is their propensity for erecting large solar parks. Gujarat’s Khavda solar park, as we are told, is five times the size of Paris. This model, however, comes with land acquisition and resettlement problems. For this reason, countries like Germany, which bet on rooftop solar, have been posited as an alternative model. Last week, a new study from The Energy and Resources Institute (TERI) added to that debate. India’s solar potential can jump from the current 748 GW to 10,830 GW if the country looks beyond large ground installations, it said. “The earlier… estimate by the Ministry of New and Renewable Energy had assumed 3% of wastelands for calculating solar potential,” reported Economic Times. “In contrast, the TERI study integrates barren lands, floating solar, rooftop systems, agri-voltaics, building-integrated PV, and infrastructure-based installations like railways and highway to arrive at a more comprehensive solar landscape.” India can produce 4,909 GW from “ground-mounted” solar PV on barren and unculturable lands; 900 GW from floating solar; 960 GW from rooftop solar (600 rural, 360 urban); 4,177 GW from agri-voltaics; and 684 GW from rail tracks and highways, it said.
Last week also saw an excellent long read from Reuters on how most of India’s new thermal power projects are coming up in water-scarce areas. “Thirty-seven of the 44 new projects named in the undated power ministry shortlist of future operations are located in areas that the government classifies as either suffering from water scarcity or stress,” the newswire wrote. “Among the facilities that have struggled with shortages is the 2,920 MW Chandrapur Super Thermal Power Station, one of India's largest. Located about 500 km northeast of Solapur, but also in a water-stressed area, the plant shuts several of its units for months at a time when the monsoon delivers less rain than usual… Despite the challenges, the plant is considering adding 800 MW of new capacity, according to the power ministry list seen by Reuters and half a dozen sources at Mahagenco, which operates the station. The document indicates the plant hasn't identified a water source for the expansion, though it has already sourced its coal.”
The last line really says it all.
Last week also produced a small flurry of reports on how India’s fossil fuel PSUs are preparing for the future. Here is NTPC, profiled by the ever-excellent ET Prime in a piece titled Coal on one hand and green on the other; this company balances both.
Also see this report on IOC’s tightrope act. Here, ET asks: “IndianOil has announced a 31 GW renewables target through its subsidiary Terra Clean Ltd. What’s the roadmap and how do you plan to finance it without over-leveraging?” The answer: “Terra Clean Ltd. is our dedicated platform for clean energy, and we’re serious about scale. The 31 GW target includes solar, wind, compressed biogas, and waste-to-energy projects. It’s not just about decarbonisation, these assets will be commercially viable… Terra Clean will have a separate governance structure and financial model. We’re evaluating green bonds, external funding, and potential equity partnerships to ring-fence risk.”
Also see this update on ONGC, again from ET Prime.
In other news, with the rains coming in earlier than expected, peak energy demand forecasts for June have been revised downwards as well. With global growth slowing, both Nayara and Reliance are trying to boost domestic sales in India. India has rolled out a reduced customs duty (15%) for electric cars costing above $35,000 and imported as completely built units. $35,000 translates to Rs 28 lakh. This is not gonna set the market on fire.
And Anil Ambani is making a big play in energy as he plans his return. “Earlier this month, Reliance NU Energies, a subsidiary of Reliance Power, secured an allocation of 350 megawatt (MW) of solar-generation capacity coupled with a 175 MW/700 MWh (megawatt-hour) of battery energy storage system (BESS),” reported Economic Times. “Another subsidiary, Reliance NU Suntech Private Limited, has recently signed a 25-year power purchase agreement (PPA) with the Solar Energy Corporation of India (SECI) to develop Asia’s largest integrated Solar and Battery Energy Storage System (BESS) project. The project will have a solar power capacity of 930 MW, paired with a 465 MW/1860 MWh BESS, and will have an investment outlay of up to INR10,000 crore. The group has also partnered with Druk Holding, the investment arm of Government of Bhutan to set up a 500 MW solar project and a 750 MW hydro electric project.”
The world itself stayed eventful. Elon Musk and Donald Trump had a very public falling out. The Atlantic has the inside details on the breakup. And this chart from Bloomberg tracing the fall in Tesla’s shares as Musk and Trump traded insults is epic.
The world’s most beautiful electric motorcycle
We finally saw Royal Enfield’s famed Flying Flea reborn as an electric motorcycle. This Is Hands Down The Most Beautiful Electric Motorcycle On The Planet. Take a look. And read this report too.
CarbonCopy read of the week
“On the climate action front, there is some good news. For the first time ever, a European high court has ruled that major greenhouse gas emitters can be held liable under civil law for the specific consequences of the climate crisis,” from Major Emitters are Liable to Pay for Climate Damages: German Court’s Seminal Ruling.
How Trump 2.0 is reshaping science
“Since US President Donald Trump took office in January 2025, his team has made major changes to the federal government that have disrupted research and research institutions in the United States and beyond.” Here, a collection of reports on the ensuing devastation from Nature.
Climate longreads of the week
Where Is Barack Obama? The “audacity of hope” presidency has given way to the fierce lethargy of semi-retirement (The Atlantic)
The Renewables Industry’s New Message: It’s the Demand, Stupid. At a conference in New York, solar and wind developers warn of spiking electricity prices if IRA tax credits are cut (Heatmap)
It Took a Decade, But Big Tech Finally Loves Nuclear (Heatmap)
The last two weeks, we have been gushing about Patrick McGee’s Apple in China. Check this out too: Apple’s Supply Chain: Economic and Geopolitical Implications (AEI)
Broken Signals: India's Heatwave Warnings Are Missing the Mark (The Wire)
Five Stark Instances Counter Environment Minister's 'Democracy Walking Alongside Development' Remark (The Wire)