Government Plans 50 Mn Ton Coal Stockpile at Power Plants to Meet Rising Energy Demand

As per reports, India’s power sector is gearing up to tackle rising electricity demands, driven by industrial expansion, climatic changes, and residential growth. With power consumption peaking year-on-year, the government has unveiled plans to increase coal stockpiles to 50 million tonnes (MT) by April 1, 2025. This move aligns with projections that peak demand will touch 270 gigawatts (GW) in FY26.

Projected Energy Demand: What Lies Ahead?

The Central Electricity Authority (CEA) predicts India’s peak power demand to rise to 270 GW in FY25-26, up from a record 250 GW in May 2024. By 2030, this figure is expected to hit 446 GW, reflecting a consistent 7% annual growth rate. Factors contributing to this surge include:

• Economic growth: Increased industrial production and infrastructure development.
• Weather anomalies: Rising temperatures intensify cooling needs.
• Urbanisation: Higher residential electricity consumption.

Coal: The Backbone of India’s Power Sector

Despite renewable energy developments, coal remains India’s primary energy source, powering over 70% of electricity generation. Plans are in place to add 80 GW of coal-based power capacity by 2032, reaffirming coal’s role as the baseload energy provider.

Current Coal Stock and Production Trends

• As of now, domestic thermal power plants hold 37.61 MT of coal.
• India’s coal production has grown from 731 MT in FY20 to nearly 998 MT in FY24, an 8.07% annual growth.
• Captive coal mines have significantly boosted output, producing 154 MT in FY24, up from 90.56 MT in FY22.

Coal India and Private Players Lead the Charge

Coal India Limited (CIL), the nation’s largest producer, aims to increase production from 600 MT in FY22 to 1 billion MT by FY26. The introduction of transparent coal auctions in 2015 has attracted private players, with 157 mines allocated to date, further driving production.

Managing Coal Stocks to Meet Demand

To ensure uninterrupted power supply, the coal ministry plans to stockpile sufficient reserves capable of sustaining thermal power plants for approximately 18 days. With daily coal consumption averaging 272,000 tonnes, the 50 MT reserve is seen as a strategic move to avoid shortages during peak demand periods.

Rising Coal Demand 

Coal consumption, including imports, has consistently risen:

• FY22: 1,027.84 MT
• FY23: 1,115.04 MT
• FY24: 1,233.86 MT

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.