India is turning to coal to meet its energy needs

India is seeing a significant decline in hydropower production, down 17% in fiscal 2024. The situation is exacerbated by lower water levels in the country’s main reservoirs, which currently stand at 22% of their total capacity. These unfavorable climatic conditions, in particular the impact of El Niño, continue to negatively impact hydropower generation, reducing its share in the national energy mix. As a result, the use of coal for energy purposes is increasing. According to the Central Power Authority, the share of hydropower in India’s total power generation declined to 5.95% in April 2024 from 7.05% in the previous year, while the share of coal power reached 90.78%.

Increase in coal imports

At the same time, India imported about 85 million tonnes of thermal coal in 2024, highlighting the growing dependence on imports to compensate for declining hydropower production. Experts predict that this trend will continue, especially during the summer months, to meet the increased energy demand. Despite efforts to increase domestic production, demand still exceeds supply. The government measures include directives for offshore plants fueled by imported coal to operate at full capacity by mid-October, and for domestic coal-fired power plants to continue blending 6% of imported coal until the end of June.

Coal dominates the energy mix

Despite the Indian government’s commitments to become carbon neutral by 2070 and expand renewable energy infrastructure, the share of renewable energy sources in total electricity production remains marginal. Currently, only 8.5% of electricity comes from renewable sources, compared to 80.63% from coal. In response to growing energy demand, the Federal Department of Coal projects that coal demand for power generation will reach 1.16 billion tons per year by fiscal year 2030. Additionally, India is adding 27 GW of coal-fired power generation capacity and plans to achieve 80 GW of thermal capacity to 2032

Economic and industrial impact

According to the International Energy Agency, India is one of the major countries where industrial energy demand exceeds the energy demand of other countries. This growth is driven by GDP growth, urbanization and increasing demand for materials such as cement and steel. As a result, by 2050, India’s energy demand will exceed that of any other region in the world. The focus on increasing coal-fired generation capacity underscores the key importance of this fuel in India’s energy landscape. This strategy, while necessary in the short term to meet growing demand, raises questions about India’s long-term sustainability goals. In short, India must strike a balance between meeting its immediate energy needs and long-term commitments to environmental sustainability. This duality reflects the challenges the country faces in managing the energy transition.