Coal-based power must for India’s energy needs: IFC

July 19th, 2008 - 5:15 pm ICT by IANS  

Ahmedabad, July 19 (IANS) To meet its growing energy needs, India will have to continue to rely on coal-fired thermal power plants for quite some time to come, the International Finance Corporation (IFC), the World Bank’s private sector lending arm, says. Explaining the rationale behind its decision to extend a 20-year tenor loan of $450 million to Indian energy major Tata Power for its $4.24-billion Mundra ultra-mega coal-based thermal power project in Gujarat, the IFC has said on its website that given India’s energy needs, generating electricity only from renewable sources is not a viable option for the country.

Hence, despite the IFC’s marked emphasis on renewable energy, it decided to fund the Mundra power project “because of the demonstration effect that the successful realization of this project will have on India’s energy sector and investors,” the IFC’s website says.

If India is to sustain its current growth of 8-9 percent a year, it needs to add about 160,000 megawatts in generation capacity and build associated transmission and distribution infrastructure in the next decade, the IFC website says. Demand will also increase as many households benefit from the government’s accelerated rural electrification program. “Clearly, India needs much more power in a short time frame to continue its economic development,”IFC says.

“While the government is seeking to increase generation of electricity from renewable sources, India still must rely on thermal sources to meet the growing demand. Gas-based power is not a viable alternative to replace coal-based power on such a large scale. Not enough natural gas is available in India, and the power it generates is too expensive for the country’s industrial or domestic use,” the website points out.

Regarding wind-based power, the website says “wind power still has limited reliability,” and “its higher cost of generation makes it unsuitable for meeting large-scale demand.”

On solar power, the website says that although IFC is seeking economically viable ways to develop solar power, the rapidly evolving technology is still unable to “efficiently store solar energy and use it for base load operation, particularly at the scale required to meet India’s needs.”

Moreover, “the cost of solar is also much higher than that of coal-fired power,” the website says adding that “a solar thermal project which could generate the same amount of electricity as the Mundra project would require at least $2.9billion per annum in subsidies to match the Mundra Project’s tariff,” the website says.

Given this scenario, “IFC is supporting thermal power projects that have better greenhouse gas and environmental performance than the average in India, as a way to help the country meet its large need for more electricity,” the website says.

The website points out that the Tata Power Mundra project will be the first private sector power project in India which will use the supercritical boiler technology making it the most energy-efficient coal-based thermal power plant in India.IFC’s participation will boost investor confidence and help other such projects in India, the website claims.

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