India's Coal Use Rises Amidst Unprecedented Dry Spell

India, known for its annual peak electricity demand in May, faced an unexpected surge in electricity consumption this August, primarily driven by the driest weather in over a century. With lower hydroelectricity output and an increasingly unpredictable renewable energy supply, the nation grappled to meet record-high electricity demand.

Coal's Resurgence in Power Generation

A Reuters analysis of data from the federal grid operator, Grid India, revealed that power generation reached a record 162.7 billion kilowatt-hours in August. To meet this demand, the share of coal in power output spiked to 66.7%, marking the highest for the month in six years. The drop in rainfall resulted in hydropower's contribution plummeting to 14.8%, down from 18.1% during the same period last year.

The Indian government defended the increased reliance on coal, emphasizing its lower per capita emissions compared to wealthier nations and the simultaneous rise in renewable energy production.

Reduced Coal Imports and Global Impact

Despite the surging demand for coal, India managed to cut coal imports by 24%, bringing the total to 17.85 million metric tons during the first four months of the fiscal year ending in March 2024. This reduction was achieved due to a 10.7% increase in coal production by the state-run Coal India. India's lower coal imports also played a role in keeping global thermal coal prices depressed in recent months.

Industry experts attributed the surge in power demand to multiple factors, including farmers utilizing more electricity for irrigation due to insufficient rainfall, the intermittent nature of renewable energy sources, and heightened cooling requirements due to warmer-than-average temperatures.

Record Peak Demand and Shortages

Grid India data for August revealed a record peak demand of 243.9 gigawatts, surpassing available capacity by 7.3 gigawatts. This resulted in a substantial electricity supply shortfall, totalling 780 million units, marking the highest shortage since April 2022, when India faced its worst power cuts in over six years.

Weather officials anticipate country-wide rainfall in September to align with the long-term average, offering a glimmer of hope to utility operators battling the electricity supply-demand gap.

Renewables Struggle to Keep Pace

The Grid India data further indicated that coal's share in power generation reached 74.2% during the first eight months of the year, compared to 72.9% during the same period the previous year. Meanwhile, the contribution of hydropower dwindled from 10.9% to 9.2%. Despite the growth in renewable energy, which added only 16 billion units compared to a staggering 108 billion units increase in overall power generation this year, India fell short of its target to install 175 GW in renewable energy by 2022.

Ambitious Non-Fossil Energy Target

To counter its reliance on fossil fuels, India has set an ambitious goal to increase non-fossil capacity, including solar, wind, nuclear, hydropower, and bio-power, to 500 GW by 2030. Achieving this target will necessitate an annual addition of over 43 GW in non-fossil capacity, nearly three times the average addition over the past two years to July.

India's increased coal usage to bridge the power supply-demand gap in the face of extreme weather challenges highlights the ongoing need for a balanced energy portfolio and rapid expansion of renewable energy sources to meet its ambitious non-fossil energy targets. The nation's commitment to transitioning to cleaner energy will play a pivotal role in mitigating the impact of climate change and ensuring a reliable electricity supply for its growing population.