India File: War and a searing summer test coal readiness

March 24 - By Nidhi C Sai, Editor Online Production, with global Reuters staff

India is bracing for a torrid summer just as the Middle East conflict upends global fuel flows, forcing New Delhi to try every trick in the book to meet peak demand for electricity. That includes accelerating coal power generation, bringing wind power projects to the grid, and speeding up completion of battery energy storage projects.

But with coal producing as much as 75% of its electricity, how India manages the resource will largely determine whether blackouts will be the norm or the exception over the next few months. After cooking gas, will a paucity of power be the next big disrupting factor in the lives of millions of Indians? That’s our focus this week.

And, India's proposal to preload national ID app Aadhaar on smartphones faces pushback. Scroll down for more on that.

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LOVE AFFAIR WITH COAL REKINDLED

A hotter-than-normal summer beckons, with the Indian meteorological service predicting an above-average number of heatwave days in April-June this year. Power demand is expected to touch a record 270 gigawatts during the season, government estimates show.

While the summer months would even otherwise stretch the country’s power system during peak demand, what has made the situation acute this year is the Middle East conflict, which has squeezed gas supplies. While gas accounts for only around 2% of its total power generation, India uses about 8 GW of gas power during peak-demand periods or heat waves.

That has sent New Delhi and states scrambling to shore up coal-fired power, which the South Asian nation is trying to reduce over the longer term as it meets its decarbonisation commitments.

The western state of Gujarat set the ball rolling by approving last week a revised power supply pact with Tata Power TTPW.NS and clearing the way for the company to resume long-term supply from its 4 GW Mundra power plant. Built to run on imported coal, the plant has sat idle for months as government compensation rules expired.

The central government has now mandated the Mundra power plant to run at full capacity from April 1 to June 30 and could extend the directive to other plants running on imported coal depending on the demand.

India is the world's second-largest producer and consumer of coal. It has 210 million tons of coal stock, enough for 88 days of consumption, and the government has instructed coal-based utilities to avoid outages, bring units back from maintenance and be ready to run flat-out.

Prime Minister Narendra Modi said on Monday that India has adequate coal supplies to meet rising electricity demand despite energy disruptions triggered by the Middle East conflict.

Gas is the weak link. India has invoked emergency clauses to divert scarce gas to households and fertiliser plants.

Read our last India File edition which looks at the struggle by households and businesses to adapt to the cooking gas supply crunch.

Gas supplies from Qatar and Abu Dhabi have been hit by the U.S.-Israeli war on Iran, forcing suppliers to declare force majeure and freezing India's summer liquefied natural gas (LNG) tenders. And top utility NTPC NTPC.NS says it cannot offer gas-fired generation during April-June.

The Middle East conflict has forced Asian utilities from Bangladesh to Japan to switch back to coal as LNG prices double and shipments through the Strait of Hormuz stall.

OPTIMISM ON BATTERY POWER

Longer term, India's National Generation Adequacy Plan forecasts a quadrupling of solar and tripling of wind by 2035-36, pushing non-fossil capacity to 786 GW and reducing coal’s share of generation to below 50%.

That transition assumes sharp growth in storage, with pumped hydro expected to surge 13-fold and battery storage to hit 80 GW by 2035-36 from 0.27 GW currently.

The growth potential is already drawing heavyweight interest. Tesla TSLA.O has begun recruiting for its India energy-storage business, joining the Reliance and Adani groups in building utility-scale storage.

The government is also working on speeding up completion of battery energy-storage projects to meet demand in summer evenings, when solar generation fades but cooling demand from households remains high.

"About 2.5 gigawatt hours of battery storage is already under commissioning, and we hope that gets commissioned very fast," Power Secretary Pankaj Agarwal told Reuters.

India’s all-fuels-on-deck mobilisation - coal at maximum output, renewables eased into the grid, and storage accelerated - is its first stress test of what a power system looks like when hit by the double whammy of climate and geopolitical volatility.

What does a truly secure power system look like for India? Write to me at nidhi.csai@thomsonreuters.com

MARKET MATTERS

Foreign selling in Indian equities surged in early March, with financial stocks leading the heaviest fortnightly outflows in 17 months and dragging the Nifty 50 .NSEI to its worst two-week stretch since the COVID-19 market rout of March 2020.

Read this report by Reuters journalist Bharath Rajeswaran.

THIS WEEK'S MUST READ

India’s government privately proposed that smartphone makers such as Apple AAPL.O, Samsung 005930.KS and Google consider pre-installing the Aadhaar identification app on devices to expand access, but the move faced strong pushback from industry groups citing security, cost and production concerns.

Companies argued mandatory preloads would require separate manufacturing lines and offer limited public benefit, highlighting growing tensions between New Delhi and tech firms over government-backed apps on smartphones.

Read this exclusive report by Reuters journalists Aditya Kalra and Munsif Vengattil.