Energy mix: Renewables are rising in India while thermal power expansion plans are on a slow track

As recently as 2024, the International Energy Agency (IEA) predicted Chinese coal demand would keep breaking records for the next three years. It now reckons it’s heading into decline, and will lose 180 million tonnes through 2030—which is like closing all the coal power stations and blast furnaces in Japan.

There’s one remaining bright spot—India. But even there, coal’s defences are crumbling. Indian consumption will rise by about 200 million tonnes through 2030, according to the IEA, offsetting all the decline from China, much as China once offset the decline from rich countries.

The government in New Delhi is promising to build 97 gigawatts (GW) of additional coal power by 2035, nearly 50% more than is currently in place. Expansions might keep going as late as 2047 under proposals currently being discussed.

There’s just one problem with all this. One of the strongest arguments for coal’s continued relevance in India in the face of cheaper, cleaner renewables—the relative ease with which it can be built—is looking badly out of date.

Take that proposed 97GW to be built over the next nine years. Just 35.5GW of the total has received financial sign-off so far, and of that only 16.3GW has actually broken ground. The remainder is stuck in regulatory, political or financing red tape. Some 22GW has been abandoned.

It’s a similar picture with non-power uses, such as producing chemicals—a sector the government is trying to support with nearly $10 billion in subsidies. Talcher in the eastern state of Odisha was expected to be the country’s first coal-gasification plant when completed in 2024. Instead, 11 years after it was announced, it’s still only about two-thirds built.

How long does it take to construct a coal power plant in India? Based on the 24 facilities that have broken ground and have scheduled connection dates, it’s about seven years between financial closure and first electron to the grid. To hit the government’s 97GW target, that means another 60 gigawatts must get signed off in the next two years—equivalent to approving one new plant every 10 days.

That seems a stretch. Private capital has been wary of investing in an Indian economy that’s heavily dependent on stimulus from a debt-laden state sector. Some 80% of coal plants under construction are government-owned.

It’s unlikely that India’s government will hit its targets on new coal, SBI Capital Markets wrote this month. Solar, by contrast, should easily install 50GW this year, SBI noted. That should put the country on track to meet Prime Minister Narendra Modi’s promise that 500GW of clean power will be operating by 2030.

An India generating that much renewable energy won’t even need additional coal plants. Current rates of clean power build-out on their own should be sufficient to cover about 97% of demand growth between now and 2030. Anything else can be met by increasing the operating rates of existing fossil generators, which are underutilized and unprofitable as a result.

We are already seeing what this will look like. Coal power fell by about 3% in India last year, according to the Centre for Research on Energy and Clean Air, a pro-energy transition group. Some 44% of this decline was caused by growing clean generation, with 36% attributed to unusually cool and wet weather and 20% from an economic slowdown. Last year represents the first time in half a century that coal-fired power generation in both China and India dropped simultaneously.

It’s too early to get out the champagne. When you’re trying to hit a peak in fossil-fuel consumption, each year is a fresh race. Power consumption in emerging economies is growing at a headlong pace, so renewables have to move at breakneck speed just to keep up. Eating into the market share of fossil fuels is even harder. Still, renewables are proving to be more nimble than the fossil-fired incumbents at actually getting new electrons flowing.

Almost all of the increase in global emissions over the past decade came from the electricity grids of Asia’s two biggest economies.

Look past the cavalcade of headlines coming out of Washington and you can glimpse that mega-trend heading into reverse right now. ©Bloomberg

The author is a Bloomberg Opinion columnist covering climate change and energy.