In fact, most growth in new-build capacity is seen coming from new renewable installations. Regulatory safeguard duties on solar PV modules will come to an end in July 2020, spurring greater investment in new solar and hybrid gas and solar projects.
Nuclear power is also on the rise, as India’s atomic power plant operator NPCIL is expanding capacity at the pressurized heavy water reactor (PHWR) in Kakrapar Gujarat, India. The operator is building four 700-MW PHWRs, two at Kakrapar nuclear power station in Gujarat and two at a similar facility in Rajasthan.
Gas upstream efforts show results
Licensing reforms in India may soon translate into successful bidding rounds, analysts say. Hence, natural gas production is expected to rise by 9 percent, underpinned by deepwater projects operated by Reliance (KG-D6) and ONGC (KG-DW-98/2).
Both projects are on track for a 2020 start-up, according to Wood Mackenzie projections, although only one well is likely to be onstream in ONGC’s field.
LNG demand hinges on infrastructure build-out
India’s coal-to-gas switching drive is reflected in its LNG imports. Demand for regasified LNG grew 2 percent year-on-year last year largely due to a slowdown in Q1-2019, according to Wood Mackenzie figure. Overall, the use of RLNG was driven by the fertiliser (+9%) and city gas (+7%) sectors, which offset decreased consumption in the industrial sector (-8%).
Total gas demand growth is expected rebound over the course of this year, supported by the fertiliser and city gas sectors.
In 2020, additional regas capacity is seen vital for India to fully benefit from the low spot LNG prices. The commissioning of two new terminals, Mundra and Jaigarh, slipped into 2020. The other main addition to capacity will be the expansion of Dahej by 2.5 mmtpa, which should be completed this year.
Coal production falls
Domestic production of coal as well as the use of thermal coal for power generation keeps falling in India, not least due to weather issues. “Higher rainfalls not only resulted in lower coal generation but also hindered domestic coal production. We expect domestic production to improve in 2020,” said WoodMac principal analyst Pralabh Bhargava.
Stocks of domestic coals are piling up across India, amid slowing use of the fuel for power generation and cement and steel production. “If the economy doesn't pick up in early 2020, and power, cement and steel demand remain slow, we see a downside risk to our coal imports forecast,” he said. “Currently, we are forecasting 181 million tons of thermal coal and 65 Mt of coking coal imports in 2020.”