Plummeting Coal-Powered Electricity Raises Questions Over Power Demand and Generation

The decline in generation may see India record its slowest growth in CO2 emissions since 2001.

New Delhi: Recently an analysis published by Carbon Brief – a web portal that keeps tabs on emissions trends – showed that India’s carbon dioxide (CO2) emissions growth rate has seen on a downward trend in the past few months.

The data sourced from the ministries of coal, electricity, gas, oil and foreign trade showed that India’s CO2 emissions grew by only 2% (year on year) from January to August 2019.

If the trend continues for the rest of the year, it would be the slowest growth in India’s CO2 emissions since 2001. A growth rate of 2% is significantly lower than the average growth rate of 5% that India has registered this decade.

India’s economy has been in a slowdown for the past several months. Gross domestic product (GDP) growth slipped to 5% – the lowest in over five years – for the first quarter of the 2019-20 financial year. For the July-September quarter, the growth could likely fall below 5% for the first time since 2012-13. In bad news for manufacturing, the output of eight core industries contracted by 5.2% in September.

Now it appears that the slowdown has had a positive externality – albeit, not desirous from the economic growth point of view – in the form of reduction in India’s CO2 emission growth. India’s CO2 emissions growth rate has swung quite a bit over the past two decades, reaching the lowest level of growth, at 3%, in 2016. Now, according to the Carbon Brief analysis, 2019 is likely to see a growth rate lower than that.

Also Read: Has Growth in Electricity from Coal Stopped in Its Tracks?

The main reason for this decline in growth was “a slowdown in the expansion of coal-fired electricity generation, the analysis shows, with renewable output surging and demand growth slowing,” as identified by the authors of the analysis Lauri Myllyvirta and Sunil Dahiya.

In October 2019, writing for The Wire, Australian energy researcher Charles Worringham was the first to point towards the trend of decline of electricity generation from coal. He pointed out that till July 2019 electricity generation from coal had been higher than 2018 by about 17,000 gigawatt hour (GWh).

However, from August 2019, the decline in electricity generation from coal started and dipped below the levels reached in August and September last year.

In September this year, for instance, coal-powered electricity was 10% lower than September 2018. Updated figures from the National Power Portal show that the decline has, at almost 20%, been even more substantial in October. In October 2018, more than 88,000 GWh was generated from coal. That figure dropped to 71,600 GWh in October 2019.

Overall, between April and October 2019, coal generated almost 18,000 GWh less electricity than in the same period last year.

In a recent note for the Institute for Energy Economics and Financial Analysis, Worringham wrote, “When economies stumble, slackening electricity demand is a very common symptom. In India’s case, the current decline is quite specific to coal. This is most readily seen by comparing how power generation from different sources has changed across the course of this year relative to last.”

The decline in coal-powered electricity has been dramatic. For the first four months of FY 20, generation of electricity from coal had been more than last year. For instance, in June 2019, almost 10% more electricity was generated from coal compared with June of 2018.

This trend continued till July and by the end of July 2019, India had produced 18,750 GWh more electricity from coal compared with the same period in the last financial year.

The decline over the next three months has been so large that if we compare the first seven months of FY 20 – till the end of October – with the first 7 months of FY 19, India has produced 12,440 GWh less electricity from coal in FY20.

So, the reduction in electricity generation from coal in the past three months has been so great that it has substantially offset the increase in coal-powered electricity that India had seen for the first 4 months of this financial year.

Source: IEEFA

The chart above shows that while the decline in electricity generated from coal has been dramatic, it hasn’t been compensated by an equally dramatic increase in electricity generation from other sources.

Hydroelectric generation has increased, particularly since September, but the increase is not enough to offset the decline in coal based power.

Solar has seen a steady rise throughout the year but also not enough to offset the decline in coal-powered electricity. Electricity from nuclear sources has shown an increase, particularly since August (when the decline of coal began) but again the increase is not close to being enough to offset the decline in coal.

Wind-powered electricity has, while remaining erratic, seen a decline since August. Other renewables have also seen a slight dip.

The implication, therefore, is that overall electricity generation has declined. This is borne out by the data.

In September, there was an almost 3% decline in power generation year on year. While in October the decline was much greater at almost 13%.

The demand for electricity has also seen a decline based on the Power System Operation Corporation (POSOCO) data. For August 2019, the all India energy requirement declined by 392 mega units compared with the same month a year ago. The decline was 931 mega units for September.

This decline in electricity generation and demand coincides with the decline in GDP growth rates and the contraction in the core sector growth. However, deeper analysis is required to be able to draw a causal relationship between the two.

Also Read: New Carbon Dioxide Emissions Data Shakes up Our Vision of Earth’s Future

On the carbon emissions front, the decline in CO2 emissions growth rate – led by a decline in electricity generation using coal – certainly bodes well in the fight against climate change (if the idea of climate justice is kept aside). But, again, it requires some more analysis to be able to say whether the decline is structural and more permanent, or a temporary function of the decline in economic activity.