India’s coal conundrum: Do energy needs trump environmental concerns?

Raghav Mahobe

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Raghav Mahobe

18 reads

At a time when battery storage and renewable energy prices are falling, the Indian government is doubling down on thermal power to service the country’s surging demand for electricity. Energy experts, though, question the economic and environmental viability of this approach.

March 26, 2024

11 MINS READ

Key Takeaways

The Indian government plans to add around 80 GW of coal-based power capacity by 2031-32 to meet the country’s surging demand for electricity
This is a marked change in tact, with the past decade marked by a greater emphasis on expanding the country’s renewables capacity
Experts question the viability of new coal plants, especially against the backdrop of falling renewable energy costs and a steep decline in battery storage prices
While renewables become more competitive, inconsistency and nascent energy storage infra remain key bottlenecks to replacing coal as India’s primary energy source

In 2022, as the gears of India’s economy slowly creaked back into motion after a pandemic-induced two-year lull, India’s power generation struggled to keep up with the pent-up demand. Indeed, despite India’s power generation growing at its highest rate in three decades in the year ended March 2023 (FY23), the country experienced its highest peak power demand deficit in eight years.

India’s appetite for energy has only risen since. India’s peak demand jumped 12.6% to 243.3 GW in September last year from 215.9 GW in April 2022. Power demand itself has grown at a compounded annual growth rate (CAGR) of 8.9% between FY21 and FY23.

The government was forced to sit up and take notice. Late last year, it announced plans to add 80 gigawatts (GW) of thermal power capacity—27 GW of which are already under construction—by 2031-32. The announcement came just over a week before the United Nations Climate Change Conference in Dubai which started on November 30, and was a clear signal that India would not shy away from adding coal-based thermal capacity despite its long-stated desire to transition to renewable energy sources.

This push for more thermal power will see India add more annual coal power generation capacity in 2024—13.9 GW—than in any of the last six years, as per reports.