Significant investment needed to increase Kerala’s power generation capability

Kerala State Electricity Board estimates ₹42,800 crore investment needed to add 7750 MW capacity by 2030.

Augmenting Kerala’s internal power generation capability is not going to come cheap, if a Kerala State Electricity Board (KSEB) estimate is any indication. The power-deficit State, which has seen a sharp increase in electricity demand in recent years, will need an investment of about ₹42,800 crore for adding 7,750 megawatts (MW) to its installed capacity for power generation, according to the state-run power utility.

The KSEB estimate gains significance in the context of a plan to raise the capacity to 10,000 MW by 2030.

The investment projections are tied to per-MW costs for establishing hydropower, wind, solar and pumped storage projects (PSP) and battery energy storage systems (BESS). KSEB chairman and managing director Biju Prabhakar presented the estimates at a public hearing held by the State Electricity Regulatory Commission last week on proposals for revising the electricity tariffs.

In 2023-24, the State’s installed capacity – KSEB units and other sources combined – stood at 3,419 MW. Mr. Prabhakar’s presentation at the hearing covered “immediate investments needed” spanning different power sources, including those in the KSEB wish list such as BESS and offshore wind energy, for adding another 7,750 MW.

The KSEB estimate calls for an investment of ₹12,000 crore each for adding 1,500 MW through hydropower projects and 2,000 MW through PSPs. In wind energy, 370 MW can be added in onshore projects at ₹2,200 crore, 50 MW through offshore wind projects at an estimated ₹800 crore, and 30 MW via vertical axis wind turbine (VAWT) projects with an investment of ₹300 crore. Ground/floating solar projects will require an investment of ₹2,500 crore for adding 500 MW, while 3,300-MW BESS projects will require ₹13,000 crore.

The per-MW cost of establishing the projects vary for the power sources, ranging from ₹4 crore per MW for BESS projects to ₹ 15 crore-₹17 crore/MW for offshore wind projects. For hydel projects, the mainstay of Kerala’s internal power generation, it is estimated at ₹6 crore to ₹8 crore per MW.

Current capacity accounts for only about 30% of Kerala’s electricity requirement. The spending on power purchases to fill the demand-supply gap rose from ₹7,393 crore in 2016-17 to ₹11,241 crore in 2022-23 and ₹12,983 crore in 2023-24, according to the KSEB.