India has received no bids for 70 percent of the coal mines it recently auctioned off to private companies, reflecting investor concerns about coal’s long-term profitability, Reuters reported.
While India boasts ample reserves of coal, it continues to rely on imports to meet demand from its power sector. Domestic production has largely been limited to government-controlled Coal India Ltd and another, smaller state-run company, according to Reuters. In an effort to make India a net coal exporter, Prime Minister Narendra Modi has offered incentives for private-sector coal production. But in the latest auction, only 19 of 67 mines saw interest from investors, with just eight receiving more than one bid, Reuters reported.
While coal currently accounts for more than 70 percent of power production in India, recent trends put its future in doubt. India is continuing to build new coal plants — it ranks second behind China for planned coal capacity — but the rate of growth is slowing down, owing in large part to falling costs for renewables, CarbonBrief reported.
Renewables are already cheaper than new coal plants in India, and also cheaper than between one quarter and one half of the existing coal fleet, according to a 2019 report from The Energy and Resources Institute in New Delhi.
A recent analysis from the International Energy Agency projects that, “Once the coal-fired power plants currently under construction [in India] are completed over the next few years, there is no net growth at all in India’s coal fleet.” The report further said that Modi’s goal of ramping up domestic coal production is “difficult to reconcile with India’s evolving energy needs and environmental priorities.”