(Bloomberg) — Follow Bloomberg India on WhatsApp for exclusive content and analysis on what billionaires, businesses and markets are doing. Sign up here.
Most Read from Bloomberg
India’s plan to expand one of the world’s largest coal power fleets in order to meet its growing energy needs is being undone by a shortage of companies able and willing to help build new plants.
Out of the 15 gigawatts of thermal power the government aimed to add in the year to March 2025, the country is likely to bring online only about half, according to officials interviewed by Bloomberg News. India also missed its target in the previous two years.
In part, trouble stems from the global pushback against coal over the past decade, a movement that dried up financing and investor enthusiasm, and left India with only a couple of suppliers for plant machinery. That’s resulted in a shortage of vital equipment, the officials said. At risk is New Delhi’s effort to meet the power needs of industries and households, especially in the hottest months when demand surges and blackouts are rampant.
India has seen a dramatic boom in renewable energy installations — but that’s not been enough to supply increasing power needs, prompting the government to also double down on coal power. A 2023 plan sought to add nearly 90 gigawatts of capacity over the next decade.
Today, there are currently only two viable suppliers of key equipment like boilers, turbines and generators: state-run Bharat Heavy Electricals Ltd., known as BHEL, and engineering giant Larsen & Toubro Ltd. Having already begun to distance itself from coal, L&T had to be persuaded by the government to keep bidding for projects, according to officials aware of the matter.
Major overseas providers, like General Electric Co. and Toshiba Corp., have also stopped taking new orders on coal plants.
L&T’s president for energy, Subramanian Sarma, said the company could help India meet its goals. “If there is a sound forward-looking plan and good visibility on how the market is going to evolve, then we can always match the required demand,” he said.
BHEL and the power ministry didn’t respond to a request for comment.
Still, the lack of competition has already pushed up costs. The going rate for a new power plant has risen to about 130 million rupees ($1.5 million) per megawatt in recent tenders by India’s largest power firm NTPC Ltd., the officials said — more than 50% higher than estimates in 2023.
Story Continues