India's coal and power supply stretched to limit amid rapid growth in economic activities

The country’s power consumption jumped by 12 percent to 13.5 billion kilowatt-hours (kWh) in January 2023 against January 2022, according to Grid-India's National Load Despatch Centre, said the report.

Peak consumption, considered a more effective metric of load on the transmission system soared by 10 percent to 211 gigawatts compared with the same month last year, said the report.

To compensate for reduced production from costly gas-fired units, the generation of coal units was boosted by nearly 16 billion kWh (a rise of approximately 18%) compared to the previous year.

The significant surge in demand is structural rather than weather-driven: total consumption increased by more than 6% in 2022 and has risen at a compound annual rate of more than 4% for the last decade, the report said.

While the temperature in the national capital Delhi remained below the long-term average for 26 out of 31 days, the mercury shot up to above-normal levels in February, signalling an early onset of a heatwave.

India's economy is experiencing significant growth, as evident from the purchasing managers' surveys indicating widespread increases in business activity in both manufacturing (55.4) and services (57.2) sectors in January, which persisted through February, said the Reuters report.

The high demand for fuel from power producers is outstripping the capacity of domestic mines and the rail network. Although mine production and coal trains dispatched to power plants grew by an impressive 12% last year, it still fell short of meeting generators' needs, the report said.

In order to extend the availability of coal supplies, the government has instructed power generators to increase their imports of coal to be mixed with domestic production. Additionally, the government has mandated privately-owned generators that depend on costly imported coal to increase their output to alleviate power scarcities.

Renewable energy deployment prevented severe shortages, but it's still insufficient to ease pressure on coal. Coal supplied 76% of power to the transmission network in Feb, despite a 15% rise in renewable capacity in Jan 2023 compared to last year. However, there were significant gains in actual generation from wind (+50%) and solar (+37%).