India’s growing energy demands and the coal dependence paradox
India Prime Minister Narendra Modi was in the midst of a monthslong reelection campaign this April when he took to social media to trumpet a “remarkable feat!” and a “historic milestone” for his country: crossing 1 billion metric tons of coal and lignite production. It was proof, Modi said, of India’s “commitment to ensuring a vibrant coal sector.”
A month later, for the third year in a row, his government ordered some coal plants to run at full capacity to meet high electricity demand during the increasingly hot summer months.
Even though India has been significantly increasing its renewable energy capacity in recent years, when demand for electricity surges, it still goes back to its most trusted source of power: coal.
For the first six months of this year, India has responded to major energy demand from its growing population and greater cooling needs because of extreme heat, in part due to climate change, by relying on its coal-fired plants. The country also plans to add more coal plants.
India’s coal demand rose nearly 10% in 2023, or about 105 million metric tons, in the biggest jump by percentage for any country, according to the International Energy Agency. Demand in China rose 6%.
“We know the Indian government is serious about its climate commitments,” said Carlos Fernández Alvarez, the lead author of the IEA report. But he acknowledged the “huge need to ensure people have electricity” in India, and added: “We don’t believe that India will be a front runner in the coal transition.”
More than 70% of India’s electricity needs are still met by coal even though renewable energy such as wind and solar power is growing.
India last year became the world’s most populous nation with 1.4 billion people. Electricity demand is projected to grow by at least 6% annually for the next few years, according to the IEA.
India has millions of people mired in poverty, but millions more who are being lifted from poverty as the country’s economy develops. And many of those will be able to afford some relief.
“Even if someone gets a fan or an air cooler to make their life a little more comfortable, cumulatively you will see the need for a lot more electricity,” said Charith Konda, an energy analyst with the Institute for Energy Economics and Financial Analysis. He said 7% growth in annual demand “is the bare minimum” he expects.
While renewables are growing, India needs to add a lot of battery storage so that power can replace coal for nighttime needs, Konda said.
Electricity demand isn’t the only force guaranteeing coal’s durability in India. Konda pointed to millions of jobs in coal, including allied sectors such as the railways that control the trains used for transporting coal. One indicator of coal’s heft: At the height of summer in 2022, the government canceled nearly 2,000 passenger trains so coal freight trains could reach power plants faster.
Renewable energy advancements and the storage challenge
India grew its renewable energy capacity by 25 times over the past decade, and now has 195 gigawatts of wind and solar power installed. However, this progress in renewable energy development faces a critical challenge: energy storage. The intermittent nature of wind and solar power means that energy generated during sunny or windy periods often cannot be stored for use during times of high demand, particularly at night or on cloudy, still days.
To meet its increasing energy needs and reduce its reliance on coal, India must significantly enhance its energy storage capacity. Current storage infrastructure is grossly insufficient, with only about 4 gigawatts available. In response to this gap, the Indian government unveiled a 2 million initiative last year aimed at bolstering storage capacity by supporting companies specializing in energy storage technologies.
Experts assert that battery storage solutions are becoming more affordable, presenting a unique opportunity for India to invest in this technology. “Battery storage is becoming so cheap and is a growth sector globally,” said Ashish Fernandes of the think tank Climate Risk Horizons, emphasizing the critical need for timely investments while costs remain low.
Besides government initiatives, private sector participation is also crucial. Companies are being encouraged to enter the energy storage market through various incentives and subsidies. These efforts aim to accelerate the development and deployment of advanced storage technologies that can support a grid reliant on renewable energy.
However, achieving these ambitious targets is not without challenges. India needs to install at least 50 to 60 gigawatts of renewable power annually to keep up with growing demand. In the last two years, due to a mix of policy decisions, political shifts, and supply chain disruptions, less than 15 gigawatts of wind and solar power have been installed each year.
A comprehensive strategy integrating both renewable power generation and storage is essential. The Indian government is working on various policies to streamline the process. For example, setting up solar parks with integrated storage solutions and encouraging rooftop solar installations coupled with home battery storage are part of the broader plan.
The urgency to address these challenges cannot be overstated. According to a report by the India Energy and Climate Center at the University of California, Berkeley, peak electricity demand hit an all-time high of 250 gigawatts in May. Projections suggest this could soar past 300 gigawatts within the next three years, potentially leading to significant power shortages, especially during nighttime.
In this context, energy storage isn’t just a technical requirement; it is a linchpin for India’s renewable energy future, ensuring that the power generated from renewable sources can be effectively harnessed and utilized, thereby decreasing the dependence on coal.
Socioeconomic factors reinforcing India’s coal reliance
India’s coal sector is more than just an energy source; it is an economic lifeline for millions of people. The mining and associated industries provide substantial employment opportunities in regions where other avenues of livelihood are scarce. The coal industry supports a vast ecosystem including mining companies, transport sectors like railways, and service industries connected to coal extraction and distribution. According to a report by the Ministry of Coal, approximately 5 million people are directly or indirectly employed in the coal sector, which underscores its socio-economic significance.
In towns like Dipka, coal has woven itself into the fabric of daily life. The town has seen nearly a century of mining activities. “In this region, everything is connected to coal,” said Ramadhar Yadav, a 45-year-old resident. Yadav’s family sold their fertile land decades ago to coal mining companies, and he now finds himself among several hundred residents in a legal dispute pressing for jobs in the industry. The sentiment he expresses is echoed by many. “At least for the next 20 years our region and maybe India as a whole will depend on coal, I’m sure of it,” he insisted.
The railways, often the lifeblood of India’s logistics network, are also heavily reliant on coal transportation. At peak demand time in summer 2022, the government prioritized coal freight over passenger services, canceling nearly 2,000 passenger trains to expedite coal deliveries to power plants. This act itself highlights the critical importance of coal in maintaining India’s energy security and societal function.
Furthermore, the revenue generated from coal mining and its transport cannot be overlooked. State governments collect substantial royalties and taxes from coal mining operations, which fund various public welfare schemes. This financial dependency creates another layer of complexity; any transition away from coal would need to account for the significant reduction in revenue for state treasuries.
The social dynamics attached to coal are not just about immediate economic benefits. Migration patterns, community structures, and educational opportunities in coal-dominated regions are all swayed by the presence of the coal industry. Any shift to renewable energy, while beneficial in terms of sustainability, would need to consider a comprehensive strategy to retrain and rehabilitate communities so deeply entrenched in the coal economy.
Despite the Indian government’s push towards renewable energy, public sentiment and socio-economic dependencies on coal create substantial inertia. The current renewable energy frameworks must be redesigned to include social programs aimed at transitioning these workforces. Job creation in renewable energy sectors, investment in skill development, and sustainable community programs will be crucial in easing this transition.
Charith Konda, an energy analyst with the Institute for Energy Economics and Financial Analysis, noted the complexity of moving away from coal: “Electricity demand isn’t the only force guaranteeing coal’s durability in India. The entrenched socio-economic structures will take significant time and effort to shift.” This reality underscores that while India’s energy future might be green, its present remains deeply entrenched in black gold. An integrated approach that considers economic, social, and technological dimensions will be essential for any successful energy transition.