India expects utilities’ annual coal demand to surge about 8% after renewables shortfall
India expects its power plants to burn about 8% more coal in the fiscal year ending March 2024, according to a senior government official and a power ministry presentation, after the country missed its 2022 renewable energy goal by more than 30%.
The world’s third-largest energy consumer and emitter of greenhouse gases has been clinging to coal for energy security as it tries to get its economy back on track after a COVID slowdown and stave off power shortages that led to idled factories and villages without electricity during a blistering heatwave.
India expects utilities’ coal demand to reach 821 million tonnes in 2023-24, according to the presentation. The government official said that would be about 8% more than demand during this fiscal year.
At the same time, an uptick in economic activity and the heatwave during the first quarter triggered a surge in power demand – an increase the government expects to persist in 2023-24, according to the senior official and the presentation, seen by Reuters.
State-run Coal India COAL.NS, which accounts for 80% of India’s coal production, is seen supplying 620 million tonnes to the power sector in 2023-24, compared with a projected 580 million tonnes in 2022-23, according to the presentation, made to the federal power minister on Dec. 29.
Coal India, the world’s largest miner, is expected to produce 770 million tonnes of coal in 2023-24, leaving it with more to sell at higher margins to the .
India is expected to produce about 735 million tonnes of domestic coal in the 2022-23 fiscal year, according to the presentation.
The government has estimated that the coal demand can’t be met through domestic sources and because of logistical challenges, and has asked power plants to import 6% of their requirement.
Availability of trains for transportation of coal were at least 11% short of targets on an average during both the first and second half of the 2022-23 fiscal year, according to the presentation.
The federal push to increase imports by the world’s second-largest coal importer could drive up global demand prices as China ends its zero-COVID policy and attempts to ramp up industrial activity.
China and India together account for three-fourths of electricity consumption in Asia-Pacific, with coal fuelling more than 70% of India’s power generation. Coal-fired power plants, which account for more than three-fourths of India’s use of the polluting fuel, ramped up generation by about 10% in 2022 to address higher demand.
Utilities would need 453 trains during the first half of 2023-24 for domestic and imported coal to be transported, 68 trains more than the December average of 385 trains, according to the presentation.
Source: Reuters (Reporting by Sudarshan Varadhan in Singapore. Additional reporting by Sarita Chaganti Singh in New Delhi. Editing by Gerry Doyle)