India nears 50% domestic coal use in import-based power plants, sources say

NEW DELHI: India is increasing the use of domestic fuel to more than 50% at power plants designed to run on imported coal, as the world's second-largest thermal coal importer seeks to curb costly overseas purchases, government and industry officials said.

The South Asian nation is already using domestic coal for operating 5.7 gigawatts capacity so far this year of the total ‌18.7 GW capacity ⁠at imported ⁠coal-based power plants, they said.

Trials are underway to expand the switch to another 4.3 GW of capacity.


Import-based coal plants have previously relied on coal from Indonesia, South Africa and Russia, among others. Imports from Indonesia and South Africa fell about 21% and 68%, respectively, in January through April from a year earlier, data from Indian coal trader iEnergy Natural Resources shows.

Higher power generation from renewable sources is freeing up domestic fuel supplies, allowing ⁠more local ‌coal to be diverted to coastal plants that were built to run on imports.

India has for years tried to reduce coal imports for power generation, ⁠but efforts were constrained because imported coal-based plants were designed for higher-grade fuel and struggled to process lower-quality domestic supplies.

Operators have gradually modified units to handle greater volumes of local coal, which has higher ash content, one government official said.

The companies are using a mix of imported and domestic supplies to optimise operations, with some facilities now using as much as 70% local coal, the sources said.

"The coal ministry has offered doorstep supply to imported-coal plants, which could take ‌care of the quality and quantity needed without any issues," another official said.

Imported coal-based plants have already booked 16 million metric tons of domestic coal for their needs, a third official ⁠said.

The officials could not be named as they are not authorised to speak to the media.

India's coal-fired generation rose 10% in May from a year earlier, the highest growth since May 2024, as utilities increased generation to meet electricity demand, Grid-India data showed.

India's thermal coal imports fell to a four-year low of 65 million metric tons in January to May due to higher local output and rising renewable energy generation, commodities consultancy BigMint said last week.

India's power ministry and the coal ministry did not respond to Reuters' inquiries.