Cost–benefit analysis of coal plant repurposing in developing countries: A case study of India

Abstract

In the context of climate change, developing countries with sizeable coal capacities; such as South Africa, Chile and India; are exploring coal plants retirements by repurposing them for productive uses. However, a framework to establish the economic rationale for repurposing does not exist. We develop a detailed cost-benefit framework for the same; for three applications – solar energy, battery energy storage and synchronous condenser; and apply it to a representative coal plant in India. Our findings reveal a strong economic rationale for repurposing. First, the present value of repurposing benefits outweigh corresponding decommissioning costs – the direct, indirect and total decommissioning costs are $58.11 million, $45.80 million and $103.91 million, respectively; the corresponding gross benefits from repurposing are $122.79 million, $468.03 million and $590.82 million, respectively. Second, even after excluding social benefits, net benefits of repurposing cover 10%–32% of capital expenditure of the repurposing options. Third, decommissioning costs are about 50% for coal plants in India (at $58 million) vis-à-vis plants in the US (at $117 million). Finally, we provide a methodology for selecting plants for repurposing; based on age, energy charges and qualitative factors. Our methods will serve as a template for coal plant repurposing in developing countries.