In a boon for India’s power sector, the recent nosedive in global coal prices has sparked a significant uptick in electricity generation from Indian power plants reliant on imported coal.
Data reveals that in the first three weeks of April, electricity generation from such plants nearly doubled compared to the same period last year, attributing the surge to a substantial drop of approximately 30% in global coal prices. The primary driver behind this remarkable shift is the oversupply of coal in China, the world’s largest producer, which has triggered a downward spiral in global coal prices. This fortuitous development has made imported coal more economically viable for Indian power plants, resulting in a surge in their operational capacity.
India’s power demand is expected to soar to unprecedented heights this year, potentially surpassing previous records. With estimates suggesting peak power demand could peak at 260 GW by September, the surge in electricity generation from imported coal-fired plants couldn’t have come at a better time. While thermal or coal-based power plants traditionally contribute over half of India’s total electricity output, plants relying on imported coal play a crucial role, especially in coastal regions distant from domestic coal mines. Despite accounting for only about 8% of India’s thermal power generation, these plants have seen a substantial uptick in their output, reflecting the impact of declining global coal prices.
Additionally, the government’s directive to operate such plants at full capacity to meet the surging electricity demand further underscores the significance of this development. Industry executives note that the recent decline in coal prices has enabled imported coal-dependent plants to operate at maximum capacity, mitigating the need for curtailment during periods of high prices. The drop in global coal prices is evident in the market, with prices of Australian and Indonesian coal grades witnessing significant declines year-on-year. As a result, thermal coal imports into India have seen a notable increase, further bolstering the country’s power generation capabilities. Overall, the convergence of favourable market conditions and government directives has positioned India’s power sector for robust growth, offering a glimmer of hope for uninterrupted electricity supply amidst surging demand.
