First in 50 years: Coal share in total installed power capacity dips below 50%

For the first time since 1966, coal’s share in total installed power capacity has gone below 50% in January–March quarter of financial year 2023-24 (Q4FY24), according to a report released Thursday.

The POWERup quarterly report from the Institute for Energy Economics and Financial Analysis (IEEFA), however, adds that India continues to depend on coal, as 70% of electricity is generated from it.

Renewable energy accounted for 71.5% of the record 13,669 megawatt (MW) power generation capacity added by India in the first quarter of FY24.

Large-scale renewable energy projects have been the focus of intense interest, as evidenced by tender issuances crossing a record 69 gigawatts (GW), according to the report, ‘Utility-scale renewable energy tendering trends in India’, released by IEEFA and JMK Research.

The tenders issued for utility-scale renewable energy projects in FY24 far surpassed the government’s seemingly ambitious target of 50 GW.

“After a slump from 2019 to 2022 due to supply-chain issues and global price spikes brought on by the Covid-19 pandemic and Russia’s invasion of Ukraine, the market has rebounded and gone power generation capacity, by source (MW), 1Q 2024 from strength to strength,” says the report’s contributing author, Vibhuti Garg, Director South Asia, IEEFA.

There is growing investor interest in the Indian utility-scale renewable energy market owing to the large-scale potential for market growth, central government support in terms of targets and regulatory frameworks, and higher operating margins.

India has rocketed to third in the world’s solar power generation rankings, behind only China and the US, according to Ember’s fifth annual Global Electricity Review of 80 countries, released last week. Ranked ninth in 2015, India has now surpassed Japan, which, along with fellow G7 member Germany, has a stubbornly high demand for coal.

India had the world’s fourth-largest increase in solar generation in 2023 (+18 terawatt hours/TWh), behind China (+156 TWh), the US (+33 TWh), and Brazil (+22 TWh). The top four countries accounted for three-quarters of solar growth in 2023.

“A renewables-powered future is now becoming a reality,” said Aditya Lolla, Ember’s Asia programme director. “Solar power, in particular, is growing at an unprecedented pace. Our report concludes that the rapid growth in solar and wind has brought the world to a crucial turning point—likely this year—where fossil generation starts to decline at a global level.”

India, on the other hand, has been unable to shed its dependence on coal. Adverse weather conditions and surging power demand mean the country continues to rely on coal for over 70% of its electricity generation. The situation is unlikely to change this year, with the Central Electricity Authority expecting a shortfall in hydropower, leading to power shortages, especially during the night when solar is offline.

On a more positive note, India’s push towards renewable energy has attracted a host of new players at state, national, and international levels. Of the record 69 GW of tenders awarded in FY2024, only a quarter were from the Solar Energy Corporation of India (SECI), highlighting the important role that state-level authorities will play in the country’s utility-scale renewable energy landscape.

“Gujarat-based Gujarat Urja Vikas Nigam Limited (GUVNL) has already firmly established itself as one of the leading tendering entities in India. Similarly, the rising prominence of other state-level entities, such as Rajasthan-based Rajasthan Urja Vikas Nigam Limited (RUVNL), underlines the vibrancy of the renewable energy tendering ecosystem,” says the report’s co-author Prabhakar Sharma, senior consultant, JMK Research.

India generated 5.8% of its electricity from solar in 2023, in line with the global average, which hit an all-time high of 5.5% in 2023. This year (CY2024), India has already posted a record solar power capacity installation of 8.5 GW during the first quarter, driven by many projects coming online, including Adani’s 1.6 GW solar project at Khavda in Gujarat.

The future looks bright for India’s renewable energy sector as innovative tender types emerge to meet the market’s needs. There has been an exponential rise in tender issuance for energy storage systems (ESS) projects, which will form a crucial part of India’s renewable energy infrastructure.