Daily Brief 465 India Solar Grid And Coal Mine Methane

TITLE: India’s grid must match its solar ambitions | The coal mines that leak gas | The Daily Brief #465 CHANNEL: Markets by Zerodha DATE: 2026-05-14 ---TRANSCRIPT--- In today’s episode, we’ll break down two important stories. First, we’ll talk about how a green transition needs more than just clean energy, and then we’ll talk about the milliondoll gas leak under India’s coal mines. Welcome back to the daily brief by Zeroda, where we cut through the noise to help you understand what’s actually happening in the most important stories from business and markets. I’m your host, Axara, and today is Thursday, 14th May. Coming to the first story. So at 3:38 p.m. on April 25th, India demanded more power than it ever had in history. The grid handled 256 gawatt in a single instant. Impressively, we had enough power to meet all that demand, about a fifth of which came from solar plants. The system had worked. But the very same evening, once peak demand had already subsided, the system failed. 7 hours after setting its record, India’s power system came 4.2 gawatt short. The same thing happened the night before as well when at 10:34 p.m. the grid fell 5.4 gawatt short. We couldn’t find the power to feed the equivalent of 27 lakh rural homes. In the second half of April, there were power shortages on 13 out of 15 nights. But curiously, those shortages didn’t happen when demand was at its highest. That was earlier in the day. The shortages came later at night. You could see this play out in electricity markets as well. So earlier in April, realtime prices on the Indian energy exchange collapsed to near zero on some afternoons. There were times when you could buy a unit of electricity for just one to three pis on multiple evenings in the same month. Meanwhile, prices regularly hit the government’s rupees 20 per unit ceiling. Now our electricity markets are entering weird territory. We’re seeing shortages night after night, but when daylight rolls around, we can no longer handle the amount of electricity that floods in. This points to one fact. Our green transition is entering a new phase. So, until recently, the big question was whether India could build solar and wind energy fast enough to meet our targets. And we succeeded. By midway last year, less than half of our installed power generation capacity was from fossil fuels. In the last financial year alone, we added a record 55 gawatt of non fossil fuel capacity. Sadly, there’s no time to rest. The work ahead is harder still. We need to learn how to absorb all that new energy into our grid. Now, the government has flagged this as its next big priority. As Santo Sarungi, the secretary to the ministry of new and renewable energy recently said, India needs China super grid planning to handle the biblical surge of energy ahead. After all, NITIO projects of roughly 1,800 gawatt of solar and wind energy will come online by 2050. He then rattled off a long list of missing pieces that India will have to put together. Batteries, grid forming inverters, synchronous condensers and more. This new phase is already underway. India recently flagged off its first synchronous condenser and this is a machine that protects the grid from volatile renewable supply. The Central Electricity Authority or CA opened its first public consultation on grid forming inverter standards this January. Midway through last year, the government signed off on 7.5 gawatt of battery and pumped storage. Although the CA’s planning document says we’ll need 10 times that by 2032. So how does electricity reach your home from a power plant? There are of course many hundreds of kilometers of wire which carry that electricity, but it isn’t only wires. There’s an entire live machine, the grid, which has to balance the electricity entering and exiting the system for every second of every day. Now, this grid has three jobs. One, it has to match supply to demand by nudging power plants up and down. Two, it has to carry power across regions. And three, it has to ensure that the electricity reaching the system doesn’t flicker second by second. India’s grid was designed around a paradigm of coal, hydro, and nuclear plants. And these shared a few characteristics. One, they could ramp their output up and down as desired. And two, they used big fast spinning turbines with their own momentum, which physically resisted any sudden changes. As renewables come online, all three of a grid’s jobs become more difficult. They create electricity when the sun shines or the wind blows without regard for the schedules of people. Power plants are set up where it’s easy to generate power which need not be anywhere near a population center and they connect to the grid through simple electronics and not turbines which faithfully transmit every little fluctuation to the grid. So a great built for our era of renewables will have to solve all three problems. Now India’s solar and wind power comes from a handful of states. Rajasthan, Gujarat, Karnataka and Andra together account for the bulk of our solar generation. Coastal Gujarat and Tamil Nadu account for most of our wind. Now the biggest load meanwhile is elsewhere on our coasts, in the industries towards the south, in the population centers of the north. The grid therefore must move large blocks of power from a handful of generating zones to a much larger number of demand zones. And India has been preparing for this alongside its renewables buildout. Back in 2022, the Ministry of Power had already planned for 51,000 circuit kilometers of new interstate transmission. This included high voltage direct current corridors running for over 8,000 circuit kilometers at a cost of roughly rupees 2.44 lakh cr. Now, we’re ramping up our ability to carry surplus electricity between entire regions with our inter regional transfer capacity set to rise from 120 gawatt today to 168 gawatt by 2032. Sadly, this isn’t enough. The desert state of Rajasthan, for instance, simply can’t push a lot of its solar power out. And the central transmission utility recently cited major challenges in connecting as much as 60 gawatt of renewable energy from Rajasthan to the grid. And connection doesn’t guarantee offtake either. Every day between 11:00 a.m. to 2 p.m. when the sun shines, the brightest roughly 4 gawatt of commissioned renewable energy is switched off because the grid can’t handle it. So we need to build our grid faster. So globally, China leads the way in building its grid. And the state grid corporation of China, which is the world’s largest utility, announced this January that it would spend R&B4 trillion or roughly $574 billion on its grid over the next 5 years. That’s about $115 billion a year. A number higher than the $18 billion that we plan to spend in total in the decade between 2022 and 2032. This would include 45 ultra high voltage lines spanning more than 50,000 kilm. And yet even China can’t build fast enough. In the first half of 2025, it curtained 5.7% of its solar energy, up from 3.2% just a year ago. And in Tibet, where renewable generation is concentrated, more than a quarter of all electricity was shut out. That’s when China doesn’t have the political economy issues India does. Indian projects are seeing serious issues with land acquisition and clearances with delays pulling down 25 different interstate transmission projects. We’ll eventually have to match China’s scale of planning while also working through peoplecentric concerns that are alien to China. So the daily mismatch we saw this April. Power gluts in the day, shortages at night is simply a feature of using solar energy. The supply of solar energy usually peaks at midday. Demand usually peaks later in the day and the two are necessarily out of phase with one another. Ideally, the grid should take the midday solar abundance and use it to meet evening scarcity. But for that to be possible, we need a way to store that electricity. Now we’re getting there, albeit slowly. At the moment, India has little over 7 gawatt of pumped storage projects in operation and just over 1 gawatt of grids scale battery storage. The government hopes to get roughly 10 times as much storage by 2032 in order to serve roughly 411 gat of energy demand. But that isn’t easy. Pumped storage projects for instance take 5 to 7 years to bid. 2032 is too close for us to increase our storage capacity by an entire order of magnitude. Now to be fair, storage is becoming easier to build with each passing year. The costs for one are falling steadily. So in 2025, it took rupees 1.48 lakh per megawatt per month to rent a standard battery. Just 1 year ago, the same thing would take rupees 2.26 lakh. That is prices fell 35% in a single year. But even so, it isn’t clear that we’ll get enough storage up and running in time. So what options do we have? If you can’t change when electricity is generated, one possibility is to change the time at which people use the electricity. And you can nudge people to do so by charging them different rates for electricity depending on how much supply there is at the time. And we are exploring this option as well. India introduced time of day electricity tariffs in 2023 mandatory for commercial and industrial consumers above 10 kowatt from April 2024 and most non-aggricultural consumers from April 2025. But sadly, enforcement currently remains patchy. Now, one of the least visible sides to our green transition is the sheer volatility renewables add. These simply lack the inertia older sources of energy with their giant turbines came with. Every flicker in the electricity they generate is passed faithfully to the grid. Now this was a small problem when our renewables penetration was low but around 40% of the energy connected to our grid now comes from these simple inertia free systems across India. There was 68 different times between January 2022 and July 2025 in which more than 1 gawatt of renewable energy was suddenly lost because too much entered the grid at once. As the Central Electricity Regulatory Commission or CERC recently found, renewable plants routinely over inject more power than their scheduled output into the grid. Too much electricity can be a bad thing. It sends voltage and frequencies surging well above safe limits and that overloads the grid which can strain the system and trigger disconnections and outages all through. So to deal with surges like this, the grid needs to add inertia through systems like synchronous condensers or grid forming inverters. Now India’s currently setting up the policy framework to make this possible. In 2022, the CC notified rules around backup grid services which could help the grid restore balance when things flickered. And the CA is now working on standards for the next step, pushing large battery storage projects to support grid stability as well. But even as these fall into place, the bigger challenge is to bring the hardware in place. We only just commissioned our very first synchronous condenser, and it’ll be years before we can get enough online to stabilize the whole grid. Now, upgrading our grid is a monumental project. We probably won’t have anywhere near all the hardware we need by 2030, even by the most ambitious commissioning timelines. And until then, we’ll have to live with systemwide strain and weird supply demand mismatches. Now, there are some stop cap answers we can attempt. We could, for instance, invest in making our coal plants more flexible. For instance, making them run at low capacity in the middle of the day. One proposal, for instance, is to run thermal plants at a minimum floor of 40% capacity rather than 55%, which will create 34 GW of extra headroom to absorb surging solar energy. But such solutions come with trade-offs. For instance, running thermal power plants below their capacity can damage them. In fact, NTPC recorded 692 boiler tube leakages between 2022 and 2025, partly because of adjustments like this. But more importantly, this will only buy us time. We don’t have the luxury of simply hoping things will work out eventually. We’ll have to transform our grid, ensuring that we can get clean electricity to arrive where it’s needed, when it’s needed, at a frequency the grid can manage. But without that, our impressive buildout will be for nothing. There’s a steep hill to climb ahead. But the good news is that the government is signaling its willingness to do just that. For all the sources mentioned in this video, don’t forget to check out our newsletter. The link is in the description. Coming to the second story, India can’t quit coal. Not yet. Anyway, the country just crossed over 1 billion tons of coal production in the fiscal year 202425. And the plan isn’t to slow down. The Ministry of Coal wants us to scale that to 1.5 billion tons by 2030. Coal still powers over 70% of India’s electricity generation and accounts for more than half of our primary energy needs. And even as renewables are expected to take a bigger share of India’s energy mix compared to coal, absolute coal consumption keeps rising. The most consequential part of this expansion is happening underground. So India plans to nearly triple underground coal mining output targeting over 100 million tons per year by FY29. So underground mines while accounting for about 40% of India’s coal mines produce just 3.5% of total output. They’re small, expensive to operate and require specialized equipment. But they also sit on top of some of the country’s richest coal beds or seams, including the cooking coal India badly needs for steel making. But there’s a problem with these ambitions. See, coal seams inherently contain a lot of methane, a greenhouse gas that contributes significantly to global warming. And mining cracks open those seams, naturally letting out the gas. Over a 20-year horizon, its warming impact is over 80 times that of carbon dioxide. And it’s estimated to be responsible for roughly 30% of the rise in the global temperature since the industrial revolution. Now by 2029, Ember estimates that the short-term warming impact of India’s coal mine methane could reach about 138 million tons of carbon dioxide equivalent. So to put that in perspective, that’s roughly equal to the carbon dioxide emissions from every truck and bus on Indian roads in 2021. And underground mining in particular is a bigger culprit of this than surface mines. Despite its low contribution to output, it makes up 15% of methane emissions. Now all of this runs in conflict with India’s goal to achieve net zero emissions by 2070. In fact, we have no dedicated policy framework to deal with coal mine methane or CMM. But this isn’t merely a story about emissions or even the technology required to dispose of CMM which is actually quite proven. The solution to this problem requires going into how coal production is governed by the Indian state as much as anything else. That’s what a new report by Ember, the energy think tank whose work we often cover, dives into. Let’s start with the scale. So, not all fossil fuel emissions come from combustion. A significant share comes from gases that simply escape into the atmosphere during mining, drilling or transport. These are known as fugitive emissions. Now, coal mines account for 68% of India’s fugitive methane emissions from the fossil fuel sector. And in 2019, the country reported 810 kilotons of CMM. Now, without any intervention, Ember projects that number could more than double by the end of the decade to over 1,600 kilot tons or 1.6 million tons annually as coal production, especially underground, ramps up. So what makes the continued existence of this issue so frustrating is that the technology to capture and use this methane productively already exists in the world and it’s been proven in India itself. So between 1996 and 2010 India undertook a pilot project at the Muniti underground mine in India’s largest coal field in Jara Jarkant. Three vertical wells were drilled to recover methane trapped in the coal seam. And the gas was captured and fed into generators producing over 10 lakh kilowatt hours of electricity for the local mine colony. Captured methane can also be injected into local gas grids or used to displace imported natural gas. Now the project proved that methane extraction and utilization from Indian underground mines was technically feasible. Several other such studies followed at other mines confirming that the approach could work more broadly, but none of them led to a commercial project. In over a decade since the pilot success, zero commercial scale coal mine methane mitigation projects have been implemented in India. So if the technology works, why hasn’t anything happened? The answer mostly lies in the governance structure of coal in India. In essence, CMM in India falls into an institutional no man’s land where multiple agencies touch the issue but nobody owns it. At the top, you have the Ministry of Coal which sets overall coal policy and production targets and directly controls three agencies. The first one is Coal India. Second is the Central Mine Planning and Design Institute or CMPDI which provides technical oversight and acts as a nodal agency for commercial methane feasibility. Third is the coal controllers organization or CCO which monitors production and coordinates mine closure approvals. This entire apparatus then leazons with four other agencies separately. First is the diretory general of mine safety or DGMS which handles mine safety. So it classifies underground mines into three degrees based on gassiness and mandates ventilation and drainage protocols for the more dangerous ones to prevent them from exploding. Second is the Ministry of Environment, Forest and Climate Change or MOEFC FCC. Its job is to estimate the methane emissions from projects and decide environmental clearances accordingly. The third, the director general of hydrocarbons or DGH overseas coal bed methane which is legally treated as an unconventional hydrocarbon which means it’s distinct from coal mine methane even though the gas comes from the same seams. And finally, NITIOG for general policy planning. That’s multiple agencies across ministries each touching a piece of the methane problem with no single body responsible for coordinating policy or setting standards. As a result, methane regulation in India is entirely safetydriven. There’s no standalone methane emission cap anywhere in the system. Now, many of the issues plaguing CMM and broadly coal management are downstream of this structure of India’s coal monitoring. Take for instance how we measure CMM data. India’s emissions reporting is built on emission factors derived from field measurements at 16 surface and 83 underground mines. Those factors are then weighted into national averages. But the actual underlying mind level data isn’t publicly available. It’s scattered across agencies with no integrated monitoring platform, no standardized reporting framework, and no mechanism for independent verification. You can’t design an abatement policy if you don’t know mine by mine how much methane you’re actually dealing with. Now the abandoned mine problem is the sharpest illustration of this vacuum. India doesn’t include abandoned mine methane or AMM in its reporting at all. Their reasoning was that there are very few abandoned mines which also had low production when they were active. But there are no publicly available ground level measurements to support that claim. The mine closure guidelines do require a 2-year postclosure monitoring period for air quality, but methane isn’t explicitly named, falling ambiguously under the general air quality umbrella. And the Ministry of Coal has identified 147 coal mines for closure by 2028. But as more mines shut down this decade, an entire category of emissions remains unmeasured and unreported. But it’s not like India hasn’t tried to solve this. For instance, in partnership with the US Environment Protection Agency, the Ministry of Coal launches the CMM clearing house to coordinate all of this, streamline approvals, facilitate information exchange, and support methane utilization projects. But in practice, it has no regulatory authority and no enforcement mechanism. It can convene but doesn’t have any power to compel India’s existing governance mechanisms. And the governance vacuum isn’t the only barrier. Even where operations might want to act, the economics are discouraging without policy support. Methane capture and drainage require significant upfront capital and the returns are uncertain when there’s no guaranteed buyer for the gas. Inseam drilling, which is the most effective technique for pre-mine methane drainage, is technically difficult given India’s coal geology. Many of our coal seams are thin, steeply dipping or geologically disturbed, making horizontal drilling expensive and unpredictable. Additionally, limited gas pipeline infrastructure near coal fields means that even where methane can be captured in meaningful quantities, getting it to market is a separate problem. Now, the economics of inaction are stark. India spent over 13.3 billion importing roughly 31 billion cubic meters of natural gas in FY202324. Coal mine methane, if captured at scale, could offset a meaningful portion of that. Now, Ember’s conservative scenario projects that over 1.6 million tons of coal mine methane could be captured cumulatively by 2030. If that gas were used for power generation to displace imported natural gas, it could, as per 2020 gas prices, save up to $980 million by the end of the decade. That’s the moderate estimate. If the higher figures from the IIA are realized and the methane is fully utilized, annual savings alone could exceed $1 billion by decade end. But beyond import savings, there’s the carbon market angle. If the coal sector is included in future iterations of India’s carbon credits trading scheme or CCTS, mines that reduce methane below their baselines could generate tradable credits, creating a new revenue stream that doesn’t exist today. And this already exists in some countries. Australia already does something like this through its safeguard mechanism where facilities that beat a baseline of 100 kiloton carbon dioxide emissions earn credits they can sell. The EU’s methane regulation goes even further, setting progressive emission thresholds for coal mines and banning methane venting from drainage stations outright. And then there are the core benefits that don’t show up on a balance sheet. Methane drainage before mining improves worker safety, which is ironically the entire reason DGMS monitors it in the first place. Reducing methane also cuts ground level ozone formation which worsens respiratory health and lowers crop yields in the communities surrounding India’s coal belts. So India’s coal expansion isn’t slowing down and we can’t afford to do so. But every ton of coal extracted underground releases methane that we know how to capture, know how to use and have already proven we can handle in Indian conditions. What’s missing is a governance framework that turns proven technology into standard practice. They say that a little effort goes a long way and in that sense as the ember report says solving how we deal with CMM may be the lowest hanging fruit on our way to becoming more green. Now coming to the tidbits, Adani ports and SEZ APS is planning a rupees 13,000 cr investment to scale up its marine services business which includes dredging, harbor tugs and offshore support vessels. The company is also entering the European subca cable laying market as global demand for undersea cable infrastructure surges. Coming to the next tidbit, India has set up a 1.5 billion dollar bat maritime insurance pool to provide guarantees to Indian vessels operating in the Red Sea and other high-risk waters, reducing dependence on expensive foreign insurers amid the ongoing West Asia crisis. The pool backed by domestic insurers aims to keep Indian shipping competitive at a time when war risk premiums from London and international PNI clubs have spiked sharply. Coming to the final tidbit, China has moved the WTO to settle a dispute they filed against India’s domestic content requirements and industrial policy for solar cells and modules, arguing they unfairly shut out foreign suppliers. In January as well, China raised complaints to the WTO on India’s incentives for EVs and battery components. That’s all the news I have for you. Thank you so much for watching and see you in the next one.

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