India steps up coal use to stop outages

According to a Reuters report, India has stepped up the use of coal to generate electricity in a bid to stop outages caused by lower hydroelectricity output, and as an increase in renewables is struggling to keep pace with record power demand.

It is unusual for India's electricity use to spike in August, when temperatures are lower due to the annual monsoon that runs between June and September. Demand typically peaks in May, when Indians crank up air-conditioners to beat the heat, and industries operate without rain-related disruptions.

However, the driest August in more than a century has resulted in power generation surging to a record 162.7 billion kilowatt hours (units), a Reuters analysis of data from the federal grid operator Grid India showed.

Coal's share in power output rose to 66.7% in August - the highest for the month in six years, according to a Reuters analysis of government data. Lower rainfall lead to the share of hydro power in overall output plunging to 14.8%, compared with 18.1% in the same period last year.

The government has repeatedly defended the use of coal citing lower per capita emissions compared with richer nations, and rising renewable energy output.

Despite higher demand for coal, power plants have slashed imports by 24% to 17.85 million metric tons during the first four months of the fiscal year ending in March 2024, government data showed, due to a 10.7% increase in production by state-run Coal India.

Lower imports by the world's second largest importer of the polluting fuel behind China have kept global thermal coal prices depressed in recent months.

Analysts and industry officials attribute the higher power use to farmers using more electricity to irrigate fields due to insufficient rain, intermittency of renewables, and increased cooling demand with warmer-than-usual temperatures.

"Given the already stressed supply situation, as poor monsoon in August resulted in high agricultural demand, the sudden fall of wind generation ... has further aggravated the situation," power analytics firm EMA Solutions said in a LinkedIn post on Thursday.

India's peak demand - the maximum capacity required during any time of the day - rose to a record 243.9 gigawatts (GW) on August 31, the Grid India data showed, exceeding available capacity by 7.3 GW.

Electricity supply fell short of demand by 780 million units in August, the data showed, marking the highest shortage since April 2022, when India faced its worst power cuts in six and a half years.

Weather officials expect country-wide rainfall in September to be in line with the long-term average, possibly providing some respite to utility operators.

Coal's share in output rose to 74.2% in the eight months that ended in August, the Grid India data showed, compared with 72.9% in the same period last year and on track for a third consecutive annual increase. The share of hydro fell from 10.9% to 9.2%.

Overall power generation has risen by more than 108 billion units this year, dwarfing an increase of about 16 billion units in renewable generation.

India failed to achieve a target to install 175 GW in renewable energy by 2022, and has since stated that it would try to boost non-fossil capacity - solar and wind energy, nuclear and hydro power, and bio-power - to 500 GW by 2030.

Achieving that target would require over 43 GW more of non-fossil capacity every year, nearly three-times the average non-fossil capacity addition over the last two years to July.