India will continue to rely on coal to meet its rising electricity demand through 2026: IEA

Rapid economic growth and increased demand for space cooling contributed significantly to the rise in India’s electricity demand last year.

India’s electricity demand will outpace China’s and have the world’s fastest growth rate by 2026, the latest projections by the International Energy Agency (IEA) have indicated. Coal-fired generation is expected to meet 68 per cent of that demand by 2026.

Prime Minister Narendra Modi had announced the target to achieve net zero by 2070 in 2021. The IEA report titled Electricity 2024, though, noted that coal will continue to dominate the Indian power sector through 2026. This, despite an expected fall from 74 per cent of total electricity generation in 2023.

Renewable generation remained relatively stable, with a 21 per cent share of electricity generation in 2023. The rise in solar and wind was largely offset by reduced hydropower output, the report stated. Close to 21 gigawatts (GW) of renewable energy (RE) capacity was added during 2023, with RE accounting for nearly 44 per cent of total installed capacity in the third financial quarter of 2023.

Electricity demand in India rose by seven per cent in 2023, a drop from 8.6 per cent in 2022. Rapid economic growth and increased demand for space cooling contributed significantly to the rise in India’s electricity demand last year. However, India’s electricity demand will rise by an annual average of 6.5 per cent in the three years between 2024 and 2026.

Considering the robust expansion, the country’s coal-fired power generation is expected to rise by an average of 2.5 per cent annually in 2024-2026. Simultaneously, renewable generation will have an average annual growth rate of 13 per cent in the country.

Even though China holds the largest volume of the expected growth, India’s electricity demand in the three years might nearly be equivalent to the United Kingdom’s, the IEA estimated.

After advanced economies reported substantial reductions in manufacturing and industrial output, and high inflation, about 85 per cent of new electricity capacity is projected to come from emerging economies, particularly in south Asia, with China and India in the lead.

In India, changing weather patterns affected the availability of hydroelectric power, which led to a massive 15 per cent fall in hydropower generation in 2023 compared to the previous year. After experiencing the driest August in over a century, the power demand surpassed 240 GW on September 1 amid increased space cooling demand. To ensure uninterrupted power supply, the government mandated a blending of a minimum of six per cent of imported coal with domestic coal until March 2024.

Besides adding wind and solar power capacity, large hydro and nuclear power projects are being developed with a renewed interest in the country. Over 11.5 GW total capacity of hydro projects that were stalled without progress and were initially awarded to private sector companies 15 years ago, were transferred in August 2023 to central public sector entities under the Union Ministry of Power.

More than half of the nuclear power plants in the pipeline globally between 2024 and 2026 are in China and India. With France and Japan starting nuclear operations soon, the IEA forecasts global nuclear generation will be almost 10 per cent higher in 2026, compared to 2023.

“Momentum is also growing behind small modular reactor (SMR) technology. The technology’s development and deployment remains modest and is not without its difficulties, but R&D is starting to pick up,” the IEA said.

India announced plans in 2022 to triple its nuclear capacity by 2032, aiming to add 13 GW, with 6 GW currently under construction. India currently has 23 operable nuclear reactors providing about two per cent of the country’s electricity.

“In a milestone for India, its largest domestically built nuclear power plant, the 700 MWe Kakrapar Unit 3 reactor, commenced operations in Gujarat in June 2023 and reached full capacity in August. Based on the country’s project timeline, we expect nuclear power generation to increase rapidly during 2024-2026, with new plants totaling an estimated 4 GW of capacity entering commercial operation over the period,” the report said.

As of November 2023, 68 GW of nuclear capacity is under construction, 9 GW is currently planned and 353 GW is proposed, the World Nuclear Association estimates. Asia is expected to exceed North America’s nuclear power growth by 2026, with the region’s share of global nuclear generation forecast to reach 30 per cent.

Over the past decade, China added 37 GW of nuclear power, increasing its share in the global nuclear power scenario from five per cent in 2014 to about 16 per cent in 2023.

Further, China started the commercial operation of its first fourth-generation reactor in December 2023, underscoring the country’s nuclear power advances, the IEA noted.