India’s Energy Crisis Has Power Giant Rushing Back to Coal

(Bloomberg) -- India's state-run electricity giant NTPC Ltd. plans to expand its coal-fired power fleet with a first new project in six years, a policy shift that reflects alarm over the nation's worsening power crisis.

New Delhi-based NTPC will this month award a contract to construct a 1,320-megawatt plant in Odisha, according to a company official with knowledge of the plans.

The company will also consider awarding contracts for two previously stalled expansion projects at its Lara and Singrauli sites in central India, the official said, requesting anonymity as the plans are still private.

NTPC didn't immediately respond to an emailed request for comment Tuesday, which is a public holiday in India.

Several states across India are suffering prolonged blackouts as scorching heat waves boost energy demand at a time when coal stockpiles are dwindling and nations globally are contending with tight fuel markets. Disruptions to electricity supply are lasting as long as eight hours a day in some areas.

NTPC previously slowed plans to advance the Lara and Singrauli projects as electricity demand faltered during the pandemic. The producer has also been focusing on proposals to increase renewable energy capacity, rather than coal.

Despite a near-term addition to its coal fleet, the company will stick to a target to rapidly expand clean power capacity, the official said. NTPC is aiming to cut the share of fossil fuels in its energy mix to about half by 2032 from 83% currently.

NTPC's plans for the Odisha plant show how India, which still relies on coal for about 70% of electricity generation, can use the fossil fuel more efficiently, according to R. Srikanth, a professor of energy and climate at National Institute of Advanced Studies in Bengaluru.

“One way to do that is phase out all old power plants and replace them with modern plants that consume less coal to produce the same amount of energy,” Srikanth said. “We need to stop defaming coal.”

NTPC's new facility will replace a smaller plant at the same site that was phased out last year after more than five decades.

The producer is also taking steps to address the coal shortages that are prompting India energy crunch. Imports will be increased to 20 million tons during the fiscal year to March, while NTPC will aim to boost annual output at its own mines by about 86% to 26 million tons.