India has ramped up its use of coal for electricity generation in a bid to combat power outages caused by a significant decrease in hydroelectricity output. The move comes as an increase in renewable energy struggles to keep pace with record-breaking power demand in the country.
Unusually, India witnessed a spike in electricity consumption during the month of August, traditionally marked by lower temperatures due to the annual monsoon season, which runs from June to September. Typically, power demand peaks in May, driven by the use of air-conditioners to combat the scorching heat, and industrial operations running without rain-related disruptions.
However, this year’s August has been marked by the driest weather in over a century, leading to a surge in power generation. According to a Reuters analysis of data from the federal grid operator Grid India, power generation reached a record high of 162.7 billion kilowatt-hours (units).
During this period, coal’s share in power output climbed to 66.7%, the highest for August in six years, as per a Reuters analysis of government data. Conversely, the share of hydropower in the overall output plummeted to 14.8%, down from 18.1% during the same period last year.
The Indian government has defended its increased reliance on coal, citing lower per capita emissions compared to wealthier nations and the continuous rise in renewable energy output.
Despite the surge in coal demand, power plants have managed to cut imports by 24%, amounting to 17.85 million metric tons, during the first four months of the fiscal year ending in March 2024. This reduction in imports is attributed to a 10.7% increase in production by state-run Coal India. Consequently, lower imports by India, the world’s second-largest coal importer after China, have contributed to keeping global thermal coal prices depressed in recent months.
Analysts and industry insiders attribute the higher power consumption in India to factors such as increased electricity use by farmers for irrigation due to inadequate rainfall, intermittency of renewable energy sources, and a surge in cooling demand amid warmer-than-usual temperatures.
EMA Solutions, a power analytics firm, noted, “Given the already stressed supply situation, as poor monsoon in August resulted in high agricultural demand, the sudden fall of wind generation… has further aggravated the situation.”
Coal’s share in power output for the eight months ending in August rose to 74.2%, based on Grid India data, compared to 72.9% during the same period the previous year. This trend appears to be on track for a third consecutive annual increase, while the share of hydropower has dwindled from 10.9% to 9.2%.
Overall power generation has surged by over 108 billion units this year, far surpassing the increase of about 16 billion units in renewable generation. India previously fell short of its target to install 175 GW of renewable energy by 2022 and has since aimed to boost non-fossil capacity, including solar, wind, nuclear, hydro, and bio-power, to 500 GW by 2030.
Achieving this ambitious target would require adding over 43 GW of non-fossil capacity each year, nearly three times the average non-fossil capacity added over the last two years leading up to July.
The situation underscores India’s ongoing energy challenges and the complexities of transitioning to a more sustainable and renewable energy future while ensuring a stable power supply for its growing population and industries