India's coal power expansion faces supplier shortages

India is struggling to expand its coal power fleet, which is crucial for meeting the country’s energy needs. The government had aimed to add 15 gigawatts of thermal power by March 2025. However, officials predict only about half of this target will be met. This follows missed targets in the previous two years. One major issue is the lack of companies willing to build new coal plants. The global shift away from coal has made it harder to find financing and suppliers for necessary equipment. Currently, only two companies, Bharat Heavy Electricals Ltd. (BHEL) and Larsen & Toubro Ltd. (L&T), are viable suppliers. L&T has been hesitant to invest in coal, leading the government to persuade them to continue bidding on projects. The rising costs of building new power plants are also a concern. Recent tenders show costs have surged to about 130 million rupees ($1.5 million) per megawatt, which is over 50% higher than estimates from 2023. This makes developers cautious about placing orders. For example, Madhya Pradesh Power Generating Co. is negotiating with BHEL to lower project costs, as BHEL's quotes are above what the company can afford. Historical factors have also contributed to the current situation. In the past, slow demand led many suppliers to leave the coal business. The COVID-19 pandemic worsened the issue, and a border clash with China in 2020 caused India to stop importing critical power equipment from there. Since then, India has sought parts from other countries, which can increase costs and delays in delivery. Moreover, infrastructure challenges persist due to the shortage of contractors for necessary components like water connectivity and pollution control systems. Some experts believe that these rising costs could drive India toward greener energy solutions. They predict that if coal projects continue to be expensive, it might lead to a shift in investment towards more sustainable alternatives, indicating a significant change in the energy landscape.