Costs of avoided carbon emission from thermal and renewable sources of power in India and policy implications

Abstract

India is the third-largest carbon emitter after the USA and China due to its over-reliance on low-efficiency coal-fired power plants. To reduce carbon emission, India has set up an ambitious target to harness power from renewable energy resources. To examine whether solar and wind are the least cost options to reduce carbon emission, the study estimates the cost of avoided carbon emission from thermal and renewable power generation in India. The study first estimates the Levelized Cost of Electricity Generation (LCOE). These LCOE estimates are then extended to calculate the avoided cost of carbon emission (CAC) from coal-based super and ultra-supercritical technologies along with solar, wind, and combined cycle gas-based power with respect to the subcritical power plant. The study also conducts sensitivity analysis and scenario building exercises. It establishes that super and ultra-supercritical power plants and not the solar or wind are the least-cost options for India to reduce its carbon emission. The study concludes with a set of important policy prescriptions.