In a bid to meet the country’s surging electricity demand, the Indian government has asked power companies to order equipment worth $33 billion this year to fast-track the addition of new coal-fired power capacity over the next 5-6 years.
According to two government officials, this unprecedented move by the government would result in record tendering for equipment by major power firms such as state-run NTPC and SJVN, as well as private companies like Adani Power and Essar Power. The goal is to add 31 gigawatts (GW) of coal-fired power capacity during this period.
Normally, the government leaves the timing of equipment tendering to the companies themselves. However, the urgency to boost coal power output was discussed at a meeting held by Power Minister Manohar Lal, shortly after the formation of Prime Minister Narendra Modi’s federal cabinet last month.
The targets are ambitious, given that the country has ordered equipment for only about 2-3 GW of capacity annually in previous years, except for last year’s orders of 10 GW. India is rushing to add new coal-fired plants as it struggles to meet high power demand, especially during non-solar hours.
Post-pandemic, India’s power demand has reached new records, driven by the country’s rapid economic growth and increased instances of heatwaves. The country experienced its biggest power shortfall in 14 years in June, prompting emergency measures to avoid nighttime outages.
State-run Bharat Heavy Electricals Ltd (BHEL), which bagged all power equipment contracts in auctions last year, is likely to receive most of the new contracts. Larsen & Toubro, the only other power equipment producer in the market, had not participated in most of last year’s bids.
The move to boost coal power capacity comes despite India’s efforts to transition towards renewable energy sources. However, the government’s focus on meeting immediate power needs has led to a renewed emphasis on coal-fired power generation.