Coal Power Output Falls in India first time in 10 Years

India’s annual electricity generation from coal-fired utilities fell in 2019 for the first time in a decade, government data showed, amid a broader economic slowdown and increased use of renewable energy.

India is the second largest consumer, importer and producer of coal behind China. The world’s third largest greenhouse gas emitter consumed nearly 1 billion tonnes of the fuel in 2018/19, with utilities accounting for over three-quarters of the total demand.

While greater adoption of renewable energy contributed to lower output from coal-fired utilities, weak economic growth added to a slowdown in overall demand for electricity, economists say.

Analysts and power sector executives say the fall in annual coal-fired generation was a blip and largely due to a broader economic slowdown.

“It is very much an aberration now, but it’s a portent to what is inevitably going to happen in 5-10 years,” Tim Buckley, director of Energy Finance Studies, at the Institute of Energy Economics and Financial Analysis, in Australia, told Reuters on the sidelines of Coaltrans India conference.

Electricity generation from coal-fired utilities fell about 2.5% to 965.53 billion units in 2019, an analysis of fuel-wise electricity generation data by the Central Electricity Authority (CEA) showed.

Seeking to expedite clean energy as some coal-fired power plants face closure, Asia’s third-largest economy has set a target to raise renewable energy capacity to 175 gigawatts by 2022.

Solar energy output rose by over a quarter while wind energy generation rose 5%, the data showed. The contribution of solar and wind energy to India’s overall energy generation rose to 8.8%, more than double their share of 3.6% in 2015.

India’s electricity requirement grew at the slowest pace in six years in 2019, according to government data.

Power sector executives say while electricity demand could recover in coming months, it is not expected to grow consistently at mid-single digits.

“Slower growth in power demand, lower cost of renewable energy and the state of electricity distribution companies will drive an organic transition to solar and wind energy,” an industry executive told Reuters.

Prime Minister Narendra Modi wants to increase adoption of green energy sources to fight climate change and increase the share of renewable energy to 40% of installed capacity by 2030, from 23.3% now.

India’s renewable capacity rose 16% to 85.9 GW in 2019, while coal-fired capacity rose 3.9% to 198.5 GW.

Electricity generation from gas-based power plants fell for the first time in five years to 47.98 billion units in 2019, down 4.5% from 50.26 billion units the previous year, CEA data showed.

Output from power plants using polluting fuels such as lignite and diesel also fell, while electricity generated by renewable energy sources such as solar and wind rose.

Generation from non-conventional sources such as biomass and bagasse fell during the year, while nuclear energy generation rose 6.3% to 43.57 billion units.