Regional areas of India are withdrawing incentives for renewable energy projects and instead signing long-term contracts to buy more coal-fired power generation. Government officials in Uttar Pradesh, the state that is home to much of the country’s population, along with authorities in Assam state have made bids to acquire as much as 7 GW of coal-fired power output that would be delivered in the coming years, according to a research group.
India Ratings & Research, an agency that offers credit rating and research services in that country, said the latest bids come after more than 17 GW of coal-fired generation capacity has been contracted over the past year-plus through July of this year. The group said it’s the largest amount of coal generation contracted in the past few years, or at least since the Covid pandemic depressed activity earlier this decade.
Energy analysts have said India’s increased need for electricity, driven by a growing economy, higher demand for air conditioning, and more electrification of industry—along with more people gaining access to electricity— means coal will continue to play a major role in the country’s power generation. Analysts have said that’s also due in part to a slower buildout of cleaner technologies such as battery energy storage, and the need for baseload power to balance the increased use of renewable energy.
Major Increase in Coal-Fired Capacity
Government forecasts have said India plans to increase its coal power capacity by 46% over the next decade, from 210 GW currently operating to 307 GW by 2035. That includes a target of at least 80 GW of new coal-fired generation by 2032. The country also has a goal of producing at least 500 GW of power from renewables and other non-fossil fuel sources by 2030, which is about twice the current level of 251.4 GW.
The Indian state of Madhya Pradesh in August of this year announced $3.7 billion in contracts for new coal-fired generation related to two projects. Torrent Power, one of the largest fully integrated power companies in India with both thermal and renewable generation resources, plans to build a 1.6-GW two-unit ultra-supercritical coal-fired plant, while Adani Power is set to build an 800-MW coal-fired facility.
The Torrent project—valued at $2.5 billion—was awarded by MP Power Management Co. Ltd. and includes a 25-year power purchase agreement, with Torrent selling the plant’s output exclusively to MP Power at a fixed rate of 5.829 rupees per kilowatt hour (0.066 U.S.), according to the companies. The companies said the contract calls for the next plant to be operational within 72 months.
The Adani Power facility reportedly represents an investment of $1.2 billion. The company also is developing a new 2.4-GW ultra-supercritical coal-fired power plant in Pirpainti, Bihar, India. That $3-billion, three-unit facility is expected to bring its first unit online in 2029, and be fully operational the following year.
—Darrell Proctor is a senior editor for POWER.
