New Delhi: Coal will and should remain the primary source of energy for India in the short to medium term as the fossil fuel remains the cheapest source of energy for India’s development needs, chief economic advisor Arvind Subramanian said on Thursday.

Renewable energy, on the other hand, comes with hidden costs, Subramanian said in a lecture organised by think tank The Energy and Resources Institute (TERI).

Subramanian called for setting up a global coalition for clean coal technology, mirroring the international solar alliance, which could find ways of sustainable use of coal in power generation.

“India needs coal in the short to medium term. Renewable sources must be part of the energy mix but they also come with hidden costs, which should not be overlooked in our headlong embrace with renewables," said Subramanian.

India cannot allow the narrative of “carbon imperialism" to come in the way of realistic, rational planning for the country’s energy future, he added.

Subramanian’s call for caution in the adoption of renewable energy comes at a time when many state power utilities are forcing solar power developers to lower their power tariffs in a market where tariff discovered in subsequent auctions keep declining.

Although the solar power tariff keeps declining due to a fall in imported solar panel costs, renewable power projects bear the extra cost of power storage equipment. However, industrial consumers, which bear cross-subsidy for domestic consumers, find solar power cost attractive. This leads to reduced capacity utilisation of coal-based thermal power plants, adding to the stress in the power sector.

“Coal will remain and should remain. The time is ripe for creating a green and clean coal coalition mirroring the (international) solar alliance. That, rather than unconscionable calls to phase out India’s cheapest source of energy, will serve the cause of climate change and India’s development needs," said Subramanian.

The chief economic advisor also said that policy decisions on coal and renewable sources of energy have to be taken jointly as these two are connected. Declining prices of renewable energy is threatening to upend the thermal power sector as prices are renegotiated by distribution companies, which themselves are in stress, Subramanian said. This renegotiation could transfer the stress in the power distribution sector to the renewable energy sector.

Railway minister Suresh Prabhu, who was present on the occasion, said the country’s energy policy was forward looking and was adequate to achieve overall economic growth as it captures the linkage between economy, environment and social development.

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