Why India will continue to rely on coal for foreseeable future

So, why is India so heavily dependent on coal? How much energy is generated by non-fossil fuel resources? And what might happen next?

India’s growing energy demand

The power demand in India is surging. In 2022, the requirement grew about 8% — or at nearly double the pace of the Asia Pacific region, around more than 149.7 terawatt-hours (TWh) in comparison to the previous year, according to a recent report by Reuters. In the first two months of 2023, demand jumped 10% from a year ago, it added.

The primary reason for this increase is higher economic activity. Industrial and commercial activity are among the biggest consumers of energy in the country. Homes account for a fourth of India’s power use and agriculture for more than a sixth in recent years, the report said.

Moreover, India will witness the largest energy demand growth of any country or region in the world over the next 30 years, according to the latest World Energy Outlook by the International Energy Agency (IEA). It also added that the country’s requirement for electricity for running household air conditioners is estimated to expand nine-fold by 2050 and will exceed total power consumption in the whole of Africa today.

Coal, the only fix

The staggering levels of power demand have become a formidable challenge for India. As a result, it has doubled down on its coal production. It spiked from 778 million tons in 2021-22 to 893 million tons in 2022-23, a 14% growth, according to the coal ministry. India has also set a target of 1.31 billion tonnes of coal production for 2024-25 and aims to increase it to 1.5 billion tons by 2030.

But why is coal so essential to India’s plan to meet the growing power demand? Because coal is the only viable option for the country right now. There are four reasons for this.

First, although India has been trying to push up its renewable share of power generation in recent years, it’s nowhere near meeting the requirement. Currently, out of the total energy produced in the country, only 22% of it comes from renewable sources, according to a recent report by Wood Mackenzie, a global research and consultancy group. Fossil fuels, mainly coal, still provide 75% of India’s power supply, it added.

Second, renewables aren’t a reliable source of power generation. Energy sources like solar and wind are variable as they rely on natural factors like sunlight, wind and water availability. To ensure a steady supply, India has to heavily invest in battery storage — it “needs more than 60 GW of battery storage to fully utilise the potential of its 2030 renewables goal,” a report by Context News said. However, grid-scale battery storage is expensive due to supply chain disruptions.

Third, hydropower, a key renewable energy source for India, has its own complexities. Numerous hydropower projects are under construction or in the planning stages in the Himalayan region, including in Arunachal Pradesh and Sikkim. But they have come under fire as the projects have caused ecological damage and raised concerns about the potential conflicts over water resources in the area. Another issue is that hydropower requires a more “advanced infrastructure… to ensure it serves as a reliable alternative to coal in the future,” a report by CNBC noted.

Fourth, the country’s plans to generate energy with the help of nuclear power plants have not really taken off. During 2021-22, the plants produced about 3.15% of the total electricity generated in India, said Union Minister Jitendra Singh in a reply to the Lok Sabha last month.

What’s next

India aims to reach 500 GW of renewable energy capacity by 2030, about three times the current capacity of about 180 GW. However, given the constraints regarding renewable energy, it will continue to fall back on coal-generated electricity.

Last year, Union Minister of Power and New and Renewable Energy, R K Singh, in an Idea Exchange with The Indian Express, had said it was wrong to expect India to start reducing its coal capacities and the country would implement plans to phase down coal use, not phase out.

“As per the targets we have set for 2030, the fossil fuel capacity (in electricity generation) would come down from the current about 60% to about 35%. This is the phase-down. If you are talking in absolute terms, the numbers (installed capacity of coal) will go up because our demand (for electricity) is going up (between now and 2030). In percentage terms (as a share of overall production), it will come down,” he had explained.