SINGAPORE, Sept 4 (Reuters) – India has ramped up use of coal for power generation in a bid to halt disruptions caused by lower hydropower output and as a surge in renewables struggles to keep up with record energy demand.
It is unusual for India’s electricity use to rise in August, when temperatures are cooler due to the annual monsoon that runs from June to September. Demand usually peaks in May, when Indians turn on air conditioners to beat the heat and industries run without interruptions associated with rain.
However, the driest August in more than a century sent power generation to a record high of 162.7 billion kilowatt-hours, a Reuters analysis of data from federal grid operator Grid India showed.
The share of coal in energy production rose to 66.7% in August, the highest level for the month in six years, according to a Reuters analysis of government data. Decreased rainfall has led to a decrease in the share of hydropower in total production to 14.8%, compared to 18.1% in the same period last year.
The government has repeatedly defended the use of coal, pointing to lower per capita emissions compared to richer countries and higher production of renewable energy.
Despite rising demand for coal, government data showed that power plants cut imports by 24% to 17.85 million metric tons during the first four months of the fiscal year ending March 2024, due to a 10.7% increase in state-run coal production. India (COAL.NS).
Lower imports by the world’s second-largest importer of polluting fuels after China have kept global thermal coal prices low in recent months.
Analysts and industry officials attribute the higher energy use to farmers using more electricity to irrigate fields due to insufficient rainfall, cuts to renewables, and increased demand for cooling with warmer-than-normal temperatures.
“Given the already tense supply situation, as a weak monsoon in August drove up agricultural demand, the sudden drop in wind power generation… exacerbated the situation,” energy analytics firm EMA Solutions said in a LinkedIn post on Thursday.
Indian grid data showed that India’s peak demand – the maximum capacity required during any time of the day – rose to a record 243.9 GW on August 31, exceeding available capacity by 7.3 GW.
The data showed that electricity supply fell short of demand by 780 million units in August, marking the biggest shortage since April 2022, when India faced its worst power outage in six and a half years.
Meteorological officials expect nationwide precipitation in September to be in line with the long-term average, which could provide some relief to utility operators.
The renewed challenge
India Network data showed that the share of coal in production rose to 74.2 percent in the eight months ending in August, compared with 72.9 percent in the same period last year, and is on track for a third consecutive annual increase. The share of hydropower decreased from 10.9% to 9.2%.
Total power generation rose by more than 108 billion units this year, dwarfed by an increase of about 16 billion units in renewable generation.
India failed to meet the target of installing 175 gigawatts of renewable energy by 2022, and has since stated that it will try to boost non-fossil capacity — solar and wind, nuclear and hydro, and bioenergy — to 500 gigawatts by 2030.
Achieving this target would require over 43 gigawatts of non-fossil capacity each year, nearly three times the average non-fossil additional capacity over the two years through July.
(Reporting by Sudarshan Varadhan) Editing by Robert Birsel
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