India's Energy Demand To Explode: IEA
Coal Insights|February 2021
“To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now.” IEA

As India recovers from a Covid-induced slump, the country is re-entering a very dynamic period in its energy development as it would add over 270 million people to urban population, who, over the coming years, are set to buy new appliances, air conditioning units and vehicles triggering an explosion in energy needs, says International Energy Agency in its India Energy Outlook 2021 report.

India will soon become the world’s most populous country, adding the equivalent of a city the size of Los Angeles to its urban population each year.

“To meet growth in electricity demand over the next twenty years, India will need to add a power system the size of the European Union to what it has now,” the report said.

India’s sheer size means that 270 million people are still set to be added to India’s urban population over the next two decades.

This leads to rapid growth in the building stock and other infrastructure. The resulting surge in demand for a range of construction materials, notably steel and cement, highlights the pivot in global manufacturing towards India.

As India develops and modernises, its rate of energy demand growth is three times the global average, the report said. India is the world’s third-largest energy-consuming country, thanks to rising incomes and improving standards of living.

Energy use has doubled since 2000, with 80 percent of demand still being met by coal, oil and solid biomass. On a per capita basis, India’s energy use and emissions are less than half the world average, as are other key indicators such as vehicle ownership, steel and cement output. India’s electricity demand is set to increase much more rapidly than its overall energy demand.

But a defining feature of the outlook is a sharp rise in variability – both in electricity output, from solar Photo Voltaic and wind, and in daily consumption.

On the supply side, output from renewables in some Indian states is set to exceed demand on a regular basis (typically around the middle of the day) before 2030, the report predicts.

On the demand side, the key contributor to variability comes from rapid growth in ownership of air-conditioning units. Energy efficiency measures targeting both cooling appliances and buildings avoid around a quarter of the potential growth in consumption.

Electricity demand for cooling will increase six-fold by 2040, creating a major early evening peak in electricity use, the report predicts.

Success in electrification

“Focusing on India’s energy system in particular, I would like to highlight two extremely positive developments that stand out to me. The first is India’s success in bringing electricity connections to hundreds of millions of its citizens in recent years. This is a monumental achievement that has improved the material well-being of a huge number of people, and I heartily congratulate the Government of India for it. The second greatly encouraging development is the way in which India has grasped the transformative potential of renewables, and solar in particular. As this report shows, the growth of India’s renewable energy sector has been highly impressive – and India is set to lead the world in areas like solar power and batteries in the coming decades,” Fatih Birol, Executive Director, International Energy Agency, said in the report.

The report points out several challenges for India in areas like energy security, access, affordability, emissions and more.

But India’s decision-makers have shown on many occasions the value of well-designed policies. A compelling example is the rollout of efficient LED lighting to millions of households all across the country, making electricity more affordable and sustainable at the same time, he added.

Coal remains relevant

The share of coal in the energy mix has not really changed since 2015. The tremendous growth in renewables has tempered growth in coal capacity, but not prevented it.

The rise in installed coal-fired capacity was in fact higher than that of solar and wind over the 2015-19 period (58 gigawatts [GW] coal thermal capacity installed versus 49 GW solar and wind), although renewables have outpaced coal-fired capacity additions since 2017, and there have also been a number of cancellations in the pipeline of approved coal projects.

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