India's Ambitious Power Expansion: A Coal-Centric Strategy for Economic Growth

Indian Power Minister Raj Kumar Singh stated last week, "India needs 24x7 availability of power for its economic growth, and we are not going to compromise on availability of power for our growth. This power cannot be achieved by renewable energy sources alone. Since nuclear capacity cannot be added at a rapid pace, we have to add coal-based thermal capacity for meeting our energy needs." As a result, the Indian government outlined a plan that will add at least 80GW of coal-fired power generation by 2032.

The ministry has also outlined plans to triple output from underground coal mines by 2028, preparing to auction new blocks, accelerate environmental clearance, and roll out incentives to promote foreign investment and domestic equipment manufacturing. India has plans to triple underground coal mining to 100mt by 2028 in an effort to meet demand, but it is unlikely that this will be sufficient to meet the incremental coal-fired power generation demand.

To put things into perspective, 80GW of coal-fired power generation is four times the existing installed hard coal power capacity in Germany. Assuming that 50% of the coal comes from the international market, this will roughly double what India is currently importing and represent a whopping 150mt/year of additional imports. This would equate to 15% of the total seaborne thermal coal market and would have very bullish implications for coal prices.

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