India will need 51,000 MW additional coal-based capacity by FY32 to meet growing power demand: National Electricity Plan

The government wants coal-fired power plants to act as a medium for energy transition to renewables till the time storage systems become affordable.

The National Electricity Plan (NEP) has projected that India would need about 51,060 megawatt (MW) or 51 gigawatt (GW) of coal-fired power capacity addition to meet the country's burgeoning power requirement, which is expected to touch 2,473.8 billion units by 2031-32 with the peak power demand likely to hit 366.4 gigawatt (GW).

It also indicated that even as thermal capacity addition will continue, the share of coal-based power will gradually decline in the country's energy mix as renewable energy sources would take over. "The likely share of coal capacity reduces to 39 per cent of the total installed capacity in 2026-27 from 52.8 per cent in 2021-22. The share of non-fossil based capacity is likely to increase to 57.4 percent by the end of 2026-27 and may further go up to 68.4 percent by the end of 2031-32 from around 42.5 percent as on April, 2023," the government document stated.

The NEP (Vol-I Generation) for the period of 2022-32 was notified by the Central Electricity Authority (CEA) on May 18 and brought in public domain on May 31. The NEP is an official document where the government reviews India's power sector over the past five years (2017-22) and offers a detailed plan for the period next five years (2022-27). Besides, this edition of the NEP also gives a perspective plan for the period of 2027-32.

On May 8, Moneycontrol was the first to report about the government's decision to continue adding coal-fired power plants even beyond the 27 GW capacity that is currently under construction. This is because the government wants coal-fired power plants to act as a medium for energy transition to renewables till the time storage systems become affordable. By 2030, the government has clear plans to add at least 41 GW of coal-fired capacity.

But the latest NEP suggests that India may need even more than 51 GW in case commissioning of renewable energy projects and battery energy storage systems are delayed. "Based on scenario analysis, it is seen that apart from the under construction coal-based capacity of 26.9GW, the additional coal based capacity required till 2031-32 may vary from 19.1 GW to around 27.1 GW across various scenarios," it stated.

Further, it gave a detailed break-up of the capacity addition required to meet the expected peak power demand. "The generation capacity addition of 211,819 MW (211.8 GW) comprising of 31,880 MW (31.8 GW) of conventional capacity addition (coal- 25,580 MW, nuclear-6,300 MW) and 179,939 MW (179.9 GW) of renewable based capacity addition (large hydro-10,462 MW, solar-131,570, wind- 32,537 MW, biomass-2,318 MW, small
hydro-352 MW, pumped storage-2700 MW) is required during 2022-27 to meet the peak electricity demand and energy requirement for the year 2026-27. Additionally, battery energy storage (BESS) capacity of 8,680MW/34,720MWh is required in 2026-27," read the document.

For the period from 2027 to 2032, it says that further capacity addition of 291,802 MW (291.8 GW) will be required to meet the peak electricity demand and energy requirement for the year 2031-32. This 291.8 GW will comprise of 32,080 MW (32 GW) of conventional capacity addition (coal-25,480 MW, nuclear-6,600 MW) and 259,722 MW of renewable based capacity addition (large hydro-9732 MW, solar-179,000, wind-49,000MW, biomass-2500 MW, small hydro - 250MW and pumped storage -19,240 MW.

The projection of total capacity addition is in line with the target of the country to achieve a non-fossil based installed capacity of around 500 GW by the year 2029-30, it said.

The domestic coal requirement has been estimated to be 866.4 million tonnes (MT) for the year 2026-27 and 1025.8 MT for the year 2031-32. An estimated requirement of 28.9 MT of coal imports for the plants designed to run on imported coal has also been stated in the NEP.

The 41 GW of coal-fired capacity planned by 2030 will primarily be ‘brownfield projects’, which means it will only entail capacity expansion at existing thermal power plants and not all-new fresh plants. India has identified existing thermal power plants under the central as well as state governments for the ramp up. This makes capacity addition easier because all these plants already have land and the requisite coal linkages.

Since renewable energy with storage and the upcoming coal-fired plants will take some time to come up, the government, hence, introduced the policy to pool power tariffs from coal-fired and gas-based power plants older than 25 years. This will come into effect from July.