Indian power generators are using more coal from inventories rather than buying new supply from Coal India amid a decline in demand for coal-powered generation.
The decline resulted from higher output from hydropower and wind and solar installations, Reuters reported today, leading to a decline in demand for coal generation even as demand for electricity also trended higher.
Last month, the report said, the level of coal inventories at power generators fell by 13% from their record high of 58.1 million tons in June. That compares to an average monthly decline of around 2% over the last ten years, according to Citi commodity analysts.
At the same time, hydropower generation surged by 22.14% in July, while wind and solar together generated 14.4% more during that month. Together, the three covered a demand increase of 1.8%, with coal’s share in the country’s energy mix falling to 64.3%. This was down from 68.3% a year earlier.
“Adequate inventories and no risk of a coal shortage have helped power plants reduce buying from Coal India,” the former chair of Coal India, Partha Sarathi Bhattacharya, said, as quoted by Reuters. However, “this is transient, and coal buying will increase once power demand starts growing faster,” the former Coal India executive also said.
India is one of the world’s top three coal consumers and a major producer as well. Demand for the hydrocarbon this year has been weaker, however, due to the abovementioned increase in other forms of electricity generation as well as a slowdown in economic growth, according to some commentators. Cooler weather with abundant rainfall also helped moderate electricity demand on the subcontinent, Reuters noted in its report.
Coal is still the dominant source of energy for electricity generation in India, however. Its share in the energy mix earlier in the year was above 70%. However, this share was still the lowest in three years, suggesting that while still high, coal’s share was beginning to be undermined by other sources of energy.
By Irina Slav for Oilprice.com
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