In response to reduced hydroelectricity production due to unusually dry weather, India has increased its reliance on coal for electricity generation. This move aims to prevent potential power outages, despite the country facing a record surge in electricity demand.
August 2022, typically a month of lower power usage due to the monsoon season, has seen India’s electricity consumption reach an unprecedented level. The country generated a record 162.7 billion kilowatt-hours, according to data from Grid India. This spike in electricity use is attributed to lower rainfall during what has been the driest August in over 100 years.
Coal’s contribution to India’s total power output rose to 66.7% in August, the highest for this month in six years. In contrast, the share of hydropower fell to 14.8%, down from 18.1% in the same period last year. The Indian government continues to advocate for coal use, citing the country’s lower per capita emissions and growing renewable energy sector.
Despite the increased domestic demand for coal, power plants in India have reduced coal imports by 24% to 17.85 million metric tonnes in the first four months of the fiscal year ending March 2024. This reduction is a result of a 10.7% increase in production by Coal India, a state-run company.
Global thermal coal prices have remained low due to India, a major importer, reducing its coal imports. Analysts and industry experts link the heightened power consumption to a mix of factors: greater electricity use by farmers for irrigation, the intermittent nature of renewable energy sources, and higher cooling needs due to warmer temperatures.
India’s peak electricity demand reached a record 243.9 gigawatts on August 31, surpassing available capacity by 7.3 GW. The country experienced its highest power shortfall since April 2022, with a deficit of 780 million units in August.
Weather forecasts for September anticipate average rainfall, which may alleviate some pressure on utility operators. However, coal’s share in India’s power output has been increasing annually, reaching 74.2% in the eight months ending in August.
While overall power generation has risen significantly this year, renewable energy generation has seen a comparatively modest increase. India, which did not meet its renewable energy installation target for 2022, aims to achieve 500 GW of non-fossil fuel capacity by 2030. This goal requires a substantial increase in non-fossil fuel capacity additions annually.
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