Move over, coal

The Indian coal sector is facing growing risks on the back of oversupply and shift towards cleaner options

Published 5 years ago on Sep 13, 2019 1 minute Read

The worsening climate change conditions have forced humans to look for cleaner ways to keep our factories running. And making our planet healthier means moving towards renewable fuels. But this transition is threatening India's once-booming coal-based plants. In May 2018, then-power secretary Ajay Kumar Bhalla said in an interview, "Nearly one-fourth of India's coal-based power capacity assessed by the government is seen as unviable.” A year later, a report by the Institute for Energy Economics and Financial Analysis (IEEFA) has pointed out why this is just the beginning of the ongoing problems facing India’s coal-fired generators. Called ‘Risks Growing For India’s Coal Sector’, the report lists three major risks. The first is over-building of coal-fired capacity, which is 20% higher than the country’s peak demand level and 50 gigawatt (GW) above average demand levels. This over-capacity has burdened the system as a whole, since plants needed capital cost even when the output was unnecessary. Secondly, coal is becoming increasingly uncompetitive in the Indian energy market because of competition from cheap renewable energy sources. Lastly, the grim water situation is taking its toll on the coal sector as well. Coal generation is a water-guzzling activity, needing large amounts for steam production and cooling as well. The report mentions: Water shortage problems forced 61 plant shutdowns from 2013-2017, resulting in roughly 17,000 gigawatt-hours (GWh) of lost generation (and revenue). As part of addressing climate change and meeting Paris Agreement commitments, the coal sector is all set to face tougher times.