The role of social cost in the future of renewable energy





Earlier this month, the Ministry of Finance released the second volume of the economic survey. It has since raised the issue of investment in renewable energy which has attributed to a social cost of Rs. 11 per unit in electricity, which is thrice the social cost of coal. This statistic has raised the question as to why renewable energy is being pushed so hard and is giving a wrong idea to the investors.

While people were hoping for a low cost of renewable energy, the current price of Rs. 11 per unit has put a lot of critics under confusion as to how the number was derived. It says that an added investment in wind and solar would reduce the operation of coal power plants which will lead the investors to turn to renewable energy.

The survey also suggests that the shift to renewable energy would leave the traditional power plants under-utilised below their maximum feasibility level technically. The investments made in these facilities would eventually sink and would result in loss of revenue. And these standard assets will impact the banking sector. The social costs would be inclusive of the opportunity cost of land required for solar, according to the report. But the specifics have not been mentioned.

Incorrect estimates

The estimates for a coal power plant is around 0.5 acres or 2,023 square meters per megawatt (MW), but it is ten times more for solar. It is a barrier to the development of solar energy. According to the Center for Science and Environment, the coal power plants require 1.7 acres of land per MW on an average. The Ministry of New and Renewable Energy states that the land requirement for ground-mounted solar is around 5 to 6 acres per MW, which will undoubtedly increase the costs of renewable energy.

Other than the underestimated requirements for coal plants, the survey has also not considered installations on rooftops in already developed areas that can reduce the space requirement.

A renewable consultancy called Bridge to India states that half the desert area in Barmer in Rajasthan can install 1000 GW of solar plants. Since solar plants are mostly fixed in barren and unproductive territories, the 1000 GW can be easily used in 3.5% of the wasteland in the country.

The survey also mentions that the death toll in coal mines is very high and the estimated cost is around USD 4.6 billion. There are also other health troubles that occur when you live near these plants. So, it is safe to say that these deaths are a result of the pollution caused by thermal power plants.

The survey further suggests that the pace of renewable energy development is slow because coal power still seems to be playing an essential role in the coming years. So, achieving low cost renewable energy still seems like a pipe-dream. 

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