Coal news and updates

India’s power demand to grow 5-6% annually; 50GW coal capacity to be added

The country plans to add 40GW-50GW of coal-based capacity during this period to meet increasing demand, with coal remaining a key source of electricity generation for at least the next 8-10 years.

New Delhi: India’s power demand is projected to grow by 5%-6% annually over the next five to six years, driven by economic growth and infrastructure development, according to Moody’s Ratings. The country plans to add 40GW-50GW of coal-based capacity during this period to meet increasing demand, with coal remaining a key source of electricity generation for at least the next 8-10 years.

Moody’s stable outlook for the Asia-Pacific (APAC) power sector reflects steady fuel costs and favorable regulatory frameworks that support credit quality. However, elevated debt levels from large capital spending on renewable energy expansion and transmission infrastructure will persist.

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Renewables to play key role

India, which increased the share of renewable energy in its fuel mix to about 43% in 2023-24, aims to achieve 500GW of renewable capacity by 2030. This target will require annual additions of 44GW and an investment of $190-$215 billion over the next seven years. An additional $150-$170 billion will be needed for electricity transmission, distribution, and energy storage to support the transition.

"Consistent government support, including priority dispatch for renewable energy and mandatory consumption targets, has driven investments by domestic and international players. This support is essential for India to meet its 2030 and 2070 climate goals," Moody’s noted.

Despite the renewable push, thermal generation—including coal, oil, and gas—will continue to dominate power supply in India. Utilization rates for coal-based capacity are expected to remain high at 65%-70%, even with the planned capacity additions.

"India’s reliance on coal is necessary to meet growing demand, especially as electrification and industrial development increase," the report said.

Sector challenges and stability

The stable outlook for the power sector incorporates risks such as high capital spending, geopolitical volatility, and carbon transition challenges. However, favorable tariff regulations by the Central Electricity Regulatory Commission (CERC) for 2024-29 will support returns for utilities and facilitate cleaner energy transitions.

India's Power Grid Corporation, a dominant transmission utility, is expected to manage additional spending on transmission infrastructure efficiently, given its solid financial profile, Moody’s stated.

The report highlighted that while renewable energy and infrastructure expansion will elevate debt levels, lower financing costs and declining equipment prices will help mitigate funding pressures. This balance, along with government policies, positions India as a key driver in the APAC region's energy transformation.