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India’s power sector faces potential coal overcapacity as the country met its record electricity demand of 250 GW on May 30, 2024, without utilizing full thermal capacity, according to a study release by the Centre for Research on Energy and Clean Air (CREA). The analysis indicates that existing and under-construction coal capacity exceeds projected requirements as renewable energy increasingly meets peak demand.
CREA’s analysis found India has 32.3 GW of thermal capacity under construction and 23.55 GW of stressed capacity. Total coal capacity would rise from 215 GW to 271 GW if all projects are commissioned, exceeding projected installed capacity requirements of 251 GW by the Central Electricity Authority and 262 GW by the National Electricity Plan. During fiscal year 2024-25, authorities awarded 22.6 GW of new coal capacity, with 5.6 GW already under construction.
The study revealed that on the record demand day of May 30, 2024, only 188.24 GW of thermal capacity operated online, with remaining capacity offline due to maintenance or forced outages. Peak loads were met largely through strong solar generation, which can contribute over 60 GW during daylight hours. The country experienced only a 0.1 GW shortage during solar hours.
Renewable energy’s share in total gross generation increased from nine percent in fiscal year 2023-24 to 15 percent in fiscal year 2024-25. Coal and lignite’s share declined marginally from 71 percent to 70 percent during the same period.
The analysis showed that 305 out of 366 days in fiscal year 2023-24 saw daily peak demand during solar hours, compared to 256 out of 365 days in fiscal year 2024-25. Peak demand during non-solar hours rose from 210.64 GW to 224.18 GW. Power demand crossed 250 GW on only one day in fiscal year 2024-25, with 232 days recording demand under 220 GW.
India currently maintains 234 GW of renewable energy capacity in the pipeline, which will further reduce pressure on thermal resources as solar continues to dominate during peak hours.
“The government’s plan to raise the coal-based power capacity target for the next seven years from 80 to 100 GW reflects an intent to meet India’s growing electricity demand. However, the country is already undergoing a structural transformation in which existing capacity is sufficient to meet future power demands. Instead of expanding coal-based power generation, India has an opportunity to strengthen its energy future by focusing on accelerating renewable energy development, modernizing the grid, increasing storage capacity, and improving the flexibility of the existing thermal power plants,” said Manoj Kumar, Analyst at CREA.
CREA recommends reconsidering new coal investments, citing research showing India can meet projected electricity demand by 2030 without adding new coal capacity if it achieves a 600 GW non-fossil target comprising 377 GW solar, 148 GW wind, 62 GW hydro, and 20 GW nuclear capacity. The organization advocates investing in energy storage, transmission, and grid technologies, noting that if battery storage costs decline by 15 percent annually, India can cap coal capacity at 260 GW by 2030 as planned in the National Electricity Plan.
The study indicates that renewables, including integration and balancing costs, have become cheaper than coal-based generation, reducing reliance on thermal plants. Even with slower seven percent storage cost declines, coal use would plateau with only limited additional capacity needed to manage non-solar peaks.
This article first appeared on Autocar
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