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India May Have Already Passed Peak Coal

Coal in India may be past its days of growth as the share of solar and wind energy projects continues to rise.

According to a recent report by a think tank, India may have passed peak coal share in its electricity mix in 2018. Energy think tank Ember reports that the share of coal-based electricity has been on the decline since 2018. In 2020, the share of coal power declined by 5 percent, taking the total decline in its share since 2018 to 8 percent.

The decline in 2020 was due to a mix of a slowdown in economic activity due to the COVID lockdown and a rise in solar and wind energy generation. With the decline in generation at coal-based power plants, their plant load factor also fell to a record low of 53 percent.

Electricity demand in India over the last few years has grown at a much slower pace than what had been anticipated by the government. As a result, several thermal power plants set up by private companies remain unfinished. According to Ember, electricity demand in India is expected to grow approximately 4–5 percent per year till 2030.

In such a scenario, if India manages to achieve its ambitious renewable energy targets — 175 gigawatts capacity by 2022 — then coal has little chance to stage a comeback.

This possibility is also echoed in a report issued by the International Energy Agency (IEA) that stated that the share of solar power could equal that of coal in India’s electricity mix by 2040.

At present, coal accounts for 70 percent of electricity generated in India, while solar contributes just 4 percent. However, the country is expected to see an aggressive deployment of renewable energy capacity, led by solar, over the next two decades driven by its goal to achieve 450 gigawatts renewable energy capacity by 2030. A sharp and continued decline in solar power prices have been making it increasingly attractive over coal-based power plants.

The rise of solar in India’s electricity mix is something large generators in the country already account for in their future plans. Tata Power, India’s largest privately-owned power generation company, has announced that it will not set up any new coal-based power plants. NTPC, India’s largest power generation company, with assets of around 60 gigawatts, has set a target of 25 percent renewable energy in its generation mix by 2032.

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