India’s federal government eased on Wednesday coal supply restrictions, allowing independent power producers to bid and procure coal supply at auctions for periods of between 1 and 25 years.
Under the new measure passed by the cabinet, producers can bid for coal for periods of up to 25 years at a premium above the notified price at auctions. The power plants will also have the flexibility to sell the electricity as per their choice.
The new provision is expected to incentivize domestic power generators to better plan new coal-fired capacity, according to India’s Ministry of Coal. The policy “caters to the dynamic coal requirement of the Power Sector,” the ministry noted.
India, just like China, is not giving up on coal to meet its surging power demand.
India’s annual installations of new coal-fired power capacity hit 4 gigawatts (GW) in 2024, flat on the five-year high of 2023 and the highest level since 2019, according to official government figures.
India plans to add as much as 90 GW of coal capacity by 2032 as it looks to meet its surging power demand with reliable baseload electricity.
India is the second-largest coal consumer of coal in the world and a sizeable producer as it seeks to satisfy more of its demand for the energy commodity with domestic production, as demand keeps growing at a healthy pace.
Despite booming renewable capacity additions, India continues to rely on coal to meet most of its power demand as authorities also look to avoid blackouts in cases of severe heat waves.
India and China will continue to drive global coal demand, the International Energy Agency (IEA) said at the end of 2024, expecting the world’s coal consumption to level off through 2027.
But last year, global coal demand surged to another record high, the IEA said in its Coal 2024 report with analysis and forecast to 2027.
By Tsvetana Paraskova for Oilprice.com
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