Indian coal demand to peak soon

Source: IEEFA

An analysis from IEEFA:

 New research by the Institute for Energy Economics and Financial Analysis sees India within a decade of peak thermal coal demand.

In a report published today—“India’s Electricity Sector Transformation: Momentum Is Building; Peak Coal in Sight”—the institute projects a significant increase in renewable energy generation across India, a trend that will be pushed by sharply falling prices and major efficiency gains over the next 10 years.

Tim Buckley, lead author of the report and IEEFA’s director of energy finance studies, Australasia, said that—as a result—Indian demand for imported coal will most likely decline, undercutting what U.S. and Australian exporters had hoped would be a long-term growth market.

“IEEFA forecasts that India’s thermal coal use is likely to peak not more than 10 percent above current levels, a far lower peak than most other analysts are forecasting,” Buckley said. “India’s target to all but cease thermal coal imports by the end of this decade is now the logical economic outcome.”

The conclusion is in stark contrast to the International Energy Agency’s forecasts, which have Indian coal use doubling by 2040.

“IEEFA would challenge IEA’s coal-centric view of the world as entirely out of touch with energy developments in India under Prime Minister Modi,” Buckley said. “While IEEFA acknowledges that our forecasts are non-consensus, we believe strongly in them and note that we were ahead of the pack in predicting a similar transition in China.”

“India’s national decarbonisation policy is in line with global trends, which have seen renewable energy infrastructure investment running at two to three times the level of new fossil fuel capacity investment since 2011,” Buckley said. “India is on track to catalyze US$200-300 billion of new investment in renewable energy infrastructure over the coming decade, and IEEFA expects global capital inflows will play an increasingly important role.”

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Dunno about you, but the forecast rise after 2018/2019 looks so small as to be scarcely visible on the chart.  And it is very likely that after the mid 2020s that the operating cost of coal will exceed the total cost of renewables, so although new coal power stations will continue to be used, old ones will start to be closed.  So in fact coal demand may peak much sooner than 10 years.