News
15/01/26
India posts first coal power output fall in 5 years
Singapore, 15 January (Argus) — India's coal-fired generation dropped for the
first time in five years in 2025, underscoring a structural shift in the
country's electricity mix that is reverberating across global coal markets. The
country's coal-power generation declined by 3.4pc on the year to 1,247TWh in
2025, according to data from the Central Electricity Authority of India. This is
the first decline since 2020, when coal-power output fell by 5pc to 914.74TWh
from a year earlier, and is the second drop in at least half a century,
according to think tank CREA. The coal power data does not include lignite-fired
generation, which fell by 9.7pc to 31.32TWh in 2025. The decline comes as power
output from hydro, renewable and nuclear energy rose to cater for an increase in
power demand in 2025, highlighting the evolution of the country's generation mix
as India aims to provide round the clock electricity to all households and
industries and fuel its economic growth. The trend also underscores the weakness
in coal consumption at utilities, one of the largest consumers of domestic and
imported coal, impacting India's overall plans to boost local coal output. The
country, one of the world's largest coal producers and the second-largest
importer after China, produced 1.04bn t of coal in 2025, little changed from a
year earlier, while supplies to utilities fell by 1.8pc from a year earlier to
816.25mn t, according to data from India's coal ministry. India pegs coal demand
to rise to 1.5bn t/yr by 2030, although the drop in coal burn at power plants
could prompt a review of the estimates given that non-coal generation capacity
has dwarfed that of coal and overall coal supplies from the largest coal
producer state-owned Coal India has fallen steadily. Imports have also declined
largely been due to weak demand because the country is currently grappling with
high domestic coal inventories. India imported 160.32mn t of thermal coal in
2025, down by 2.2pc from a year earlier, data from analytics firm Kpler show,
marking the second straight year of declines. Seaborne coal suppliers are
recalibrating their sales strategies because domestic surplus has weighed on
demand from China and India, while Indonesia — the world's largest coal exporter
— is undertaking policy tweaks to tighten supplies . "Uncertainty over supply
and demand is dominating the market right now," said a Singapore-based coal
trader. "No one knows when balance will return." The weak fundamentals have
weighed on the market. Argus assessed the widely traded GAR 4,200 kcal/kg coal
for Supramax vessels at $44.99/t fob Kalimantan on 24 December 2025 — the last
assessment of the year. This was down by 71pc from its all-time high of
$154.21/t in October 2021. Prices hit a more than four-year low of $39.40/t in
June 2025 and have since hovered in a narrow range that some producers said
barely covers costs. The slowdown in demand is weighing on overall seaborne
market dynamics. India is sitting on a huge pile of domestic coal, partly
denting the demand fundamentals for the seaborne market. Sellers of Indonesian
coal, which accounts for bulk of Indian imports, also said competition is
heating up in growth centres of southeast Asia because suppliers from all
origins are exploring alternative markets. Indonesian supplies to southeast Asia
likely surpassed exports volume to India for the second straight year in 2025,
underscoring the changing trade flows. The restart of an imported coal-fired
power plant on India's west coast could support the recovery in India's demand
for seaborne coal, another trader said, but overall power sector demand remains
subdued and similar utilities that run on seaborne coal are exploring the
possibility of raising the share of domestic coal in their blend. Some suppliers
are focusing on tenders and enquiries from industrial coal consumers, expecting
demand from industries such as cement and steel to continue in line with
economic growth. Generation mix Generation from renewable energy sources such as
solar, wind and smaller hydroelectric projects rose in 2025, and output from
large hydropower projects as well as nuclear power plants also increased. The
prolonged monsoon period last year supported an increase in hydropower
generation and also capped power demand for cooling. Renewable energy generation
rose by 22pc from a year earlier to 270TWh in 2025, CREA said in its latest
report, while overall generation from all sources rose by 1pc on the year to
1,844TWh. The pace of growth in overall generation has moderated over the last
few years. Generation rose by 11pc and 6pc on the year in 2023 and 2024,
respectively. Coal-power has declined but it still accounts for about 70pc of
India's generation mix, and India would continue to be a dominant consumer of
domestic as well as imported coal, market participants said. "Coal will remain
an indispensable pillar of India's energy security, along with steady advances
in its clean energy transition," the coal ministry said. Coal provides reliable
baseload power and supports critical industries, and plays a vital role in
sustained economic growth, it added. But the country may not require excess
coal-fired capacity if it hits its target of more than doubling the renewable
power generation capacity to 500GW by 2030, CREA said. "India's power-sector
challenge is no longer one of capacity adequacy, but of system flexibility,"
Manoj Kumar, analyst at CREA, said, adding that an increase in generation from
non-coal sources could lead to lower utilisation of coal-power plants while also
raising the risk of stressing thermal assets. By Saurabh Chaturvedi India's
generation mix (TWh) Send comments and request more information at
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