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3 Reasons Why India Relies on Coal to Address Peak Power Demand

WriteCanvas News


India’s solar power generation grew at the slowest pace in six years in the first half of 2024.

A review of daily load despatch data from Grid-India revealed that the country stepped up reliance on coal to address surging power demand.

As per the analysis, the amount of electricity generated from coal increased by 10.4% during the six months ended June 30, surpassing the growth of 9.7% in total power generation during that time.

Three reasons why India’s reliance on coal has increased:

• India has made coal a priority in order to meet the spike in power demand in recent years. Last year, coal-fired power output surpassed renewable energy output for the first time since the 2015 Paris Agreement, Grid-India said.

• The share of the fossil fuel in power output rose to 77.1 percent in the first half of 2024, compared with 76.6 percent in the same period last year, putting it on track to rise for the fourth straight year.

• Following the Covid-19 pandemic, India’s fuel consumption has largely followed regional trends, with countries like Bangladesh, Indonesia, the Philippines, and Vietnam burning coal for cheap power.

Back to solar?

India’s total electricity generation during the fiscal year ended March 2025 is forecast to be powered by an 8.9 percent growth in coal-fired power output, outpacing renewable energy growth of 8.2 percent

However, analysts expect renewable power generation to grow faster from the next fiscal year, as tendering and commissioning of green energy projects have started picking up steam.

In the first half of 2024, India, the third largest solar power producer, generated 63.6 billion kilowatt-hours, a 14.7% increase from the previous year and 18.5% from 2023.


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COP28, Climate action

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COP28: The Dilemma of Demand Vs Environment

Renjini Liza Varghese


A fortnight away. COP28 will be held in Dubai from November 30 to December 12, 2023. The expectations are already soaring. Reams of print and screen are flush with experts demanding more action, pledges, funding, and green taxes.

However, logical and practical decisions by countries may differ from the promises made at COP28. At least, that is what I believe from past experiences.

Globally, every human being is fighting the ugly impacts of climate change in varied forms. Changing climatic conditions and unpredictable weather patterns are the new norm. Therefore, COP28 gains significance. The expectation from COP28 is to strengthen action plans further to mitigate the climate effect. But the deeds must be practical. Take the instance of India.

Recently, the power minister, RK Singh announced that the country would add 30,000 MW of thermal capacity to meet the surging power demand. The country already has 50,000 MW of coal-based capacity addition underway. It saw a 20% surge in demand annually in August, September, and October. All those coal-based plants running at lower PLF were asked to run at full capacity. This also means the fuel (coal) supply has to be met. Coal India, the state-owned mining company that supplies 80% of the fuel, also has been asked to optimize capacity. The power generators import the rest of the fuel.

The rationale, as the Minister pointed out, is that the country cannot ignore the demand surge and slow down growth because of the non-availability of power. It is a fact that to support the growth rate of a country; the energy sector has to grow at double that rate. For example, if India is growing at 7.5%, the country’s energy sector should grow at 15%.

India has an installed capacity of 4,17,688 MW (as of 31 May 2023). Coal alone constitutes 49.4% of this, and renewable energy, including large hydro, forms just above 41%. Though India has decided to move away from fossil fuels, in all practicality, coal is set to remain a mainstay for the foreseeable future. This is because the country is on the cusp of economic growth that is accelerated by many factors. To give a sneak peek, India is the third-largest power producer in the world. The per capita electricity consumption is still below 1500 units, which is way lower than in developed countries. It indicates that power demand will continue to surge going forward.

India has set its target to be net zero by 2070. An efficient and well-thought-out goal, as it is a coal-rich country, and considering the economic capacity, coal will continue to dominate power generation. It successfully added 1,25,692 MW of grid-connected wind and solar, which is an achievement. The country plans to increase the percentage of renewable energy to 50% by 2030. With all capacity additions planned in renewables and the pace at which it is progressing, I believe the Minister when he says that ‘we remain committed to our mitigation targets.’

India may not be the lone example. Take the case of Britain. Prime Minister Rishi Sunak pushed the deadline to sell petrol and diesel cars from 2030 to 2035. According to the latest reports, countries are way off their emission targets globally. By 2030, they need to reduce emissions by 45% to the 2010 levels to be on track to arrest global warming at 1.5 degrees Celsius. Let us see what takes priority in COP28—demand or environment.


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Five challenges hindering ESG adoption in India

Renjini Liza Varghese


Environmental, Social, and Governance (ESG) criteria have gained significant importance in the global investment landscape in recent years. In India, investors, particularly institutional investors, are looking at funds that align with the ESG framework. However, ESG implementation is facing some bottlenecks in the country.

Listed below are some critical challenges:

Lack of knowledge about ESG and long-term benefits: There is a lack of understanding among Indian companies and investors about ESG  frameworks and the long-term benefits they offer. As a result, ESG is not a priority for many companies. And investors may not get ESG-compliant investments.

Inadequate frameworks: The current regulatory framework in India does not have effective ESG mandates or incentives to encourage companies to prioritize ESG practices. A lack of clear and enforceable regulations and standards makes it difficult for companies to justify the costs of implementing ESG practices.

Penalties: Penalties for non-compliance vary across different countries. While ESG non-compliance is a criminal offence in some countries, it is still evolving in India. 

The Securities and Exchange Board of India (SEBI) has introduced several measures to promote ESG compliance among listed companies. SEBI mandated the top 1,000 listed companies to disclose their ESG performance in their annual reports. Failure to disclose ESG performance may result in penalties and other regulatory actions by SEBI. Additionally, SEBI has also proposed the introduction of ESG scores for listed companies, which will be used to determine their eligibility for inclusion in certain indices. While there is still a long way to go, these measures are a step in the right direction towards promoting ESG compliance in India.

Globally, some countries have even gone as far as making ESG non-compliance a criminal offence. For instance, France has introduced a law that criminalizes misleading information about ESG performance and imposes heavy fines and imprisonment for non-compliance.

India’s dependency on fossil fuels: India heavily dependent on fossil fuels for its energy needs. The country is the world’s third-largest consumer of oil and the fourth-largest consumer of coal. This dependency on fossil fuels is the biggest challenge for Indian companies wanting to align with ESG—particularly in the environment and climate change.

Energy transition a long way: While India has set ambitious targets to transition to renewable energy sources, the transition will likely take several years. Until then, companies in energy-intensive sectors may struggle to meet ESG standards, and investors may struggle to find ESG-compliant investments.

To overcome these challenges, there must be a concerted effort by the government, companies, and investors to prioritize ESG. This can be achieved by introducing strong regulatory frameworks and incentives to encourage compliance. These efforts must be backed with greater awareness and education about the benefits of ESG practices and their long-term impact on businesses and society.

By taking these steps, India can become an attractive destination for ESG investments and contribute to a more sustainable future.

 

 

 


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