Discoms in Indian States Sign Long-term Coal Deals Amid Rising Electricity Demand, Decarbonisation at Risk

Indian state electricity distributors are signing long-term contracts with coal-fired power generators to meet a projected surge in evening demand, despite the country’s efforts to expand clean energy capacity.

Uttar Pradesh, and eastern Assam, which recently withdrew incentives for clean energy projects are looking to sign purchase deals in the next two months for at least 7 gigawatts of coal-fired power, collectively, to be delivered in 2030, reported Reuters.

Those bids come after more than 17 GW of coal-fired capacity has come under under various stages of contract in the 16 months through July, the largest such pipeline since the Covid pandemic, according to India Ratings & Research.

Analysts say that the procurement rush, fuelled by a projected rise in air-conditioning demand during non-solar hours and the slow build-out of battery storage, is driving new investment and is expected to slow decarbonisation efforts in the world’s third-largest greenhouse gas emitter.

Coal Expansion Challenges Decarbonisation

Indian is still growing and its people still consume far less energy than the global average. Electricity provision—a given in the developed world—is still a development imperative here.

Over the past two decades, India has made remarkable progress in electrification. With the help pf targeted government programmes, electricity access rose from just 60% in 2000 to near-universal coverage today and electricity shortfalls have fallen below 1%. However, coal has been a primary driving factor in this electrification, according to Earth.org.

Coal capacity increased dramatically in the preceding decades and is still increasing, albeit more slowly. Currently, more than half of India's emissions come from the electricity sector. According to reports, India is the third-largest emitter of greenhouse gases in the world, despite having low emissions per person.

Nevertheless, India has become a leader in climate change.  By 2030, 40% of its electricity capacity would originate from non-fossil sources, according to its 2015 Nationally Determined Contribution (NDC).  In 2022, it raised that target to 50% and set a net-zero goal for 2070.  India's renewable capacity has increased by almost 20% a year since 2015, reaching 200 GW in 2024, reported Earth.org.

However, as the "well below 2C" window in the world rapidly closes, focus is shifting to India.  India's emissions are still increasing even though global emissions are predicted to peak soon.  Through 2040, the nation is expected to contribute more than 25% of the growth in the world's energy demand.