Coal to remain dominant fuel for India’s power sector

New Delhi: Coal will remain the dominant fuel for India’s power sector over 10-year forecast period to 2025 despite growth in alternative sources, including renewables, BMI Research, Fitch Group company, has said. “The sizeable coal power project pipeline and the widespread availability of coal from low cost Asia seaborne imports and growing domestic production will ensure that coal will remain the dominant fuel choice for India’s power sector, despite growth in alternative sources, such as nuclear and renewable,” it said.

“We forecast coal to contribute 66 per cent to India’s power generation mix in 2025,” it added. India is facing growing pressure to reduce its emissions profile and diversify its coal-heavy power mix to incorporate cleaner sources.

“The ongoing government support for coal power has resulted in the project pipeline for coal-fired power facilities strengthening notably,” it said. “The gradual realisation of these projects over the coming decade will support our bullish forecasts for coal-fired power generation in the country; we expect coal generation to increase by an annual average of 5.8 per cent between 2016 and 2025,” it added.

Although coal production has picked up in India, power producers will still turn to coal imports to meet rising domestic demand, particularly from power plants along the coast as transport infrastructure deficits limit domestic coal usage in these areas.

“Imported coal remains an attractive option given the low cost of Asian seaborne coal and we expect this trend to remain in place,” it said.