Budget push for new thermal plants, pumped storage in India’s power mix; focus on baseload capacity

“A joint venture between NTPC and BHEL will set up a full scale 800 MW commercial plant using AUSC technology. The government will provide the required fiscal support,” Sitharaman said. In 2021, BHEL had completed a research and development project to develop indigenous technology for AUSC thermal plants, which boast higher efficiency and lower fuel consumption, with a project outlay of around `900 crore. “In Phase-II, the world’s first 800 MW AUSC Technology Demonstration Plant (TDP) is planned under the aegis of the Ministry of Power (MoP) and NTPC,” BHEL says on its website.

Sitharaman also announced a 2,400 MW thermal plant in Bihar’s Pirpainti at a cost of `21,400 crore.

India’s thermal capacity addition has slowed down in recent years, growing only at 6 per cent to 218 GW in FY24 from 205 GW in FY20. At the same time, generation by coal-fired thermal plants grew by 34 per cent from 960 billion units (BU) to 1,290 billion units (BU) and the average plant load factor (PLF), or capacity utilisation, jumped from 53 per cent to 68 per cent.

The slowdown in thermal capacity addition has come at a time when lack of effective storage options to counterbalance the variability of surging renewables capacity has increased the pressure on India’s grid managers. Peak electricity demand, typically during late evenings, often coincides with reduced output from solar and wind capacities due to natural constraints. As a consequence, the grid depends heavily on thermal and nuclear plants to maintain base load capacity and ensure overall system stability.

Recognizing the need for boosting electricity storage options, the Finance Minister unveiled plans to formulate a policy on pumped storage projects (PSPs). “A policy for promoting pumped storage projects will be brought out for electricity storage and facilitating smooth integration of the growing share of renewable energy with its variable & intermittent nature in the overall energy mix,” she said.

Pumped hydro storage is a large-scale energy storage technology that uses gravity to generate electricity. During low demand, excess power is used to pump water to an elevated reservoir; when demand peaks, this water is released through turbines to generate electricity. It is considered a supplement to renewables like solar or wind.

As of May 2024, eight PSPs are operational in India with a cumulative storage capacity of 4,745 MW, according to data with the Central Electricity Authority. At the same time, four projects of 2,780 MW are under-construction and 33 projects of 42,150 MW are undergoing feasibility studies.

Nuclear power

The budget has signalled a fresh push for nuclear energy through the deployment of still-under-development small modular reactors (SMRs). Sitharaman said the government will partner with the private sector for research and development and deployment of indigenous SMRs. But she did not offer any timeline or deployment target.

SMRs are advanced nuclear plants with a capacity of up to 300 MW per unit, much smaller than conventional reactors. Their modular design ensures faster construction and deployment. Potential advantages include lower capital costs, scalability, and enhanced safety. At the same time, SMRs are not considered replacements to conventional nuclear plants, which serve as base load plants.

Barring one reactor in China and another in Russia, SMRs are not in operation anywhere in the world right now, and the technology is still under development.

But much more nuclear energy is needed to power India’s clean energy transition. Since it is available all the time, nuclear energy is considered the only viable alternative to thermal power for providing baseload electricity. SMRs are meant to serve this demand for a quick ramp up of nuclear energy, even though integrating them into the electricity grid may still be a few years away.