India to add 12 GW of coal-fired capacity by March to meet rising power demand

Power Minister RK Singh said the government will soon bring in a penalty clause of forfeiting the fixed cost if a generating company does not operate to full capacity or does not offer its unsold power in the exchanges.

The central government has drawn a plan to add 12 GW or 12,000 MW of fresh coal-based electricity generation capacity by March next year to meet India's increasing power demand, which has grown by about 20 percent every month since August compared to last year.

Responding to Moneycontrol's question on the government's preparedness to meet the rapid growth in the country's power demand in 2024, Union Minister for Power and New and Renewable Energy RK Singh said the heavy reliance on coal will continue next year in the absence of storage units for providing round-the-clock power supply of renewable sources.

"By March we are commissioning 12,000 MW (12 GW) of thermal capacity to meet the growing power demand. Secondly, we have gas-based capacity on standby which is used during non-solar hours. GAIL is providing us with the required gas for the same," Singh said.

Talking to reporters on the sidelines of the first day of the annual State Power Ministers' meeting held here in Delhi, Secretary, Ministry of Power, Pankaj Agarwal said besides the thermal capacity, nearly 500 MW of wind power will also be added next year. He further said there was a deficit of 10 billion units in hydropower generation this year due to weather-related issues, including drought and floods.

The government is anticipating a peak power demand of 256.53 GW (256,530 MW) in 2024. This year (2023-24), it had projected a peak power demand of 230 GW, but in reality, the demand soared to an unprecedented 240 GW instead. The unusual surge in demand also resulted in an alarming spike in the country's power shortage, recorded at 10.745 GW (10,745 MW) on the same day (September 1).

Faced with a continuous surge in power demand, the Indian government has also revised its thermal capacity addition plan from 51 GW (51,000 MW) to 75-77 GW by 2031-32, Agarwal said.

The new thermal capacity will either be set up in coal-bearing areas or will be brownfield projects. The brownfield projects will be of two types - either replacement of existing thermal capacity at the same location with a new set up of higher capacity or upgrading an existing thermal power unit to add more capacity. Moneycontrol was the first to report this on May 8.

The Union minister also said that states have been directed to run all units of their power generation plants at 100 percent capacity. He said the government will soon bring in a penalty clause of forfeiting the fixed cost if a generating company does not operate to full capacity or does not offer its unsold power in the exchanges.

Singh said as demand continues to rise, states and generating companies will have to continue to import coal for blending. He said during the last three months, there was a shortfall of at least 2.5 lakh tonnes of coal every day. "States have to choose between load shedding or imported coal blending. As a country, we will not compromise on growth and availability of power," the Union minister said.