Yearender 2024: India’s coal dependence for its energy needs is here to stay

Coal accounts for about three-quarters of India’s power generation and its demand is seen to be rising despite the country’s renewables plans. India has seen spikes in peak demand for electricity in the last two years, even as it has struggled to add renewable energy capacity in line with its goal of 500 gigawatts (GW) of non-fossil fuel capacity by 2030.

“It is estimated that by 2032, the required coal and lignite based installed capacity would be 283 GW against the present installed capacity of 217.5 GW as on November 30. Considering this, the Government of India has envisaged to set up an additional minimum 80 GW coal based capacity by 2031- 32,” Union minister for power Manohar Lal Khattar told the Parliament on December 19.

“Against the 80 GW target, 29,200 MW of thermal capacity (coal & lignite based) is under construction and contracts for 19,200 MW thermal capacity have been awarded in FY 2024-25. Further, 36,320 MW of coal and lignite based candidate capacity has been identified which is at various stages of planning in the country,” Khattar said.

Globally as well, the demand for coal is expected to hit a new high in 2024 and will stay near these levels till 2027, according to a report by International Energy Agency (IEA) released on December 18. It added that India and China will continue to drive global coal demand, and that India's strong demand has meant that imports have stayed at levels seen last year despite a production push led by Coal India Limited.

Increase in coal production 

In this calendar year (till December 15), the country produced about 988.32 Million Tonne (MT) of coal as compared to about 918.02 MT coal during the same period last year with a growth of about 7.66 percent, as per provisional data shared by the Ministry of Coal.

During the same period, the country supplied about 963.11 MT coal compared to 904.61 MT last year - an increase of 6.4 percent. From this, the power sector was supplied 792.958 MT this year, as against 755.029 MT last year. The non-regulated sector was supplied 171.236 MT against 149.573 a year ago, which is a growth of 14.48 percent.

For the financial year 2025-26, the Union government has set a coal production target of 1,193.39 MT, up 10.5 percent from the FY25 target of producing 1,080 MT of the fossil fuel in India, as per Coal Ministry data.

For the current fiscal (2024-25), coal production in India has been set at 1,080 MT, with state-run miner Coal India's target set at 838 MT. However, India may end the current financial year with some production shortfall due to heavy rainfall in key coal producing states in August and September. For example, CIL is likely to have a production shortfall of around 15 MT, according to two coal ministry officials.

To reduce import of coal and to promote domestic production, the Union government opened coal mining to the private sector through auctions. As of now, total 113 coal mines have successfully been auctioned under commercial mining having Peak Rated Capacity (PRC) of 257.60 MTPA. In 2024, vesting orders have been issued for 17 coal mines, and Coal Mining Development and Production Agreement (CMDPAs) have been signed for 20 coal mines.