India’s coal-fired power generation capacity to increase even as black metal gets costlier

While India has looked for quite a few alternatives in the recent times, the country is on course to import quality coal from Australia with Adani Group’s Carmichael coal mine starting the production. 

According to the Indian federal power ministry’s chief engineer, the country’s coal-fired power generation capacity is projected to increase by 22.4 per cent over a span of three years. India is a big consumer of coal and the annual demand for the black metal had already risen to nearly 1 billion tonnes by the end of March, 2019.  

The stats revealed that the coal demand from utilities accounted for more than three quarters of total consumption. By the year 2022, the capacity is expected to be around 238 gigawatts in terms of coal based generation. India is likely to become the second largest consumer of coal by the next decade.  

On the other hand, the electricity demand in the country rose 36 per cent in the seven years to 2019. Similarly, the coal-fired generation capacity grew by 74 per cent to 194.44 GW during the same period.  

As a result, the demand for coal is increasing, making it important for the country to import the black metal, since the local production isn’t enough to meet the requirement. While India has looked for quite a few alternatives in the recent times, the country is on course to import quality coal from Australia with Adani Group’s Carmichael coal mine starting the production. 

India’s dependence on coal-based electricity is no secret even in the near future. The situation in other Asian countries is not different either. At this juncture, thermal coal prices are surging, making it one of the best-performing commodities of the year. Especially, the price of high energy coal has surged by 86 per cent to $150 a tonne.

The rejuvenated demand for thermal coal has benefited Australian coal industry, with the country flagging off new project like Adani Carmichael Mine, Olive’s Down coal mine, among others. The favorable policies from the government have helped and the industry has thrived, especially post the pandemic blues.  

By procuring high quality coal from Australia, India can meet its demand for coal-fired power. At this juncture, what remains to be seen is whether the country can bridge the demand and supply gap in the long run amidst the challenges of a pandemic and weak economic growth.