India Pushes for $33 Billion Equipment Procurement to Boost Coal-Fired Power Capacity

India has urged power companies to procure equipment worth $33 billion this year to accelerate the expansion of coal-fired power capacity in the coming years, amidst the nation’s challenges in meeting the surging demand for electricity, according to two government officials.

This move, an unprecedented decision by the government, will involve major power entities like NTPC, SJVN, Adani Power, and Essar Power, resulting in a historical level of tendering for equipment.

The initiative aims to contribute an additional 31 gigawatts (GW) of capacity over the next 5-6 years, an ambitious target compared to previous yearly equipment orders of 2-3 GW, with an exception of 10 GW last year.

The urgency to secure equipment for new coal-fired plants was discussed in a meeting convened by Power Minister Manohar Lal shortly after the formation of Prime Minister Narendra Modi’s federal cabinet early last month.

India’s drive to ramp up coal-fired plants is driven by the strain to meet electricity demand, particularly during non-solar hours, exacerbated by soaring economic growth post-pandemic and escalating instances of heatwaves.

State-owned Bharat Heavy Electricals Ltd (BHEL) is anticipated to acquire the bulk of the contracts for the new equipment, with Larsen & Toubro being the other key player in the market.

Decisions in recent years and limited orders for coal-based plants led to the closure of manufacturing units for equipment suppliers like Thermax-Babcock, BGR-Hitachi, and South Korea’s Doosan.

The rush to enhance coal-fired power plants to address power demands risks undermining efforts to steer India away from carbon dependency. Despite this, private Indian firms have shown interest in establishing approximately 10 GW of coal-powered capacity over the next decade, breaking a six-year period of minimal private sector involvement in the segment.