El Niño Expected to Drive Increased Coal-Fired Power Generation in July-September Amid Low Rainfall and High Humidity
The anticipated deficiency in monsoon rainfall attributed to the El Niño phenomenon is expected to have significant implications for India’s energy sector, particularly with regard to coal-fired power generation. As the forecast suggests, peak electricity demand could rise to between 280 and 290 GW, a noticeable increase from earlier projections for FY29. This surge in demand anticipates a substantial contribution from coal, the backbone of India’s energy mix, which currently accounts for approximately 75% of electricity generation. The absence of adequate hydro and wind power generation is exacerbating the reliance on thermal power plants, which are nearing their capacity limits.
For the common citizen, this development signals an impending rise in energy consumption costs, as increased reliance on coal-fired power generation tends to correlate with higher electricity tariffs. The greater demand for cooling during the hotter months compounds the need for energy, thereby straining both household budgets and market dynamics. With electricity consumption projected to reach levels comparable to a quarter of Delhi’s annual electricity use, residential and commercial customers may face challenges in managing energy expenses, further impacting overall economic stability.
In terms of long-term outlook, the government and the RBI will need to formulate and implement policies aimed at bolstering energy resilience. Given the anticipated power demand growth of 6-7% year-on-year into FY27, which could reach 1,830 billion units, investment in renewable energy sources must accelerate to mitigate reliance on fossil fuels. Policymakers may also consider incentives to promote energy efficiency and demand-side management, aiming for a balanced approach to sustainable energy generation and consumption in the face of climate variability and changing demand patterns.
Source: The Hindu
(Expert Note: This report was independently prepared by the Wealthova Economy team.)