India is expected to commission 10 thermal power units of an aggregate 7,010 MW capacity in fiscal year 2022-23 (April-March), the largest such addition since 2017-18, according to a status report by the federal power ministry released June 3.
Market participants believe the capacity addition may bode well for coal consumption in the coming years.
Of the 7,010 MW capacity, 3,580 MW will be under the union government and 3,430 MW will be under various states. Most of the upcoming generation units already have fuel supply agreements with various subsidiaries of state-run Coal India Ltd., according to Central Electricity Authority, or CEA.
As much as 3,300 MW of upcoming capacity is expected to source coal from captive coal blocks allocated to these units, while the 1,600 MW Telangana plant will procure coal from state-run Singareni Collieries Company Ltd.
The upcoming 800 MW North Chennai unit has an memorandum of understanding with state-run MMTC Ltd. for supply of 2.51 million mt per annum imported coal. The federal coal ministry has also recommended for long term coal linkage for 1.97 million mt per annum domestic coal to this unit.
The report, which highlighted the status of power plants in India in April, said cumulatively 39 thermal power plants with capacity of 27,550 MW are under construction and will likely take another four years to complete.
The report said that expenditures incurred in all the under construction thermal projects during the fiscal 2020-21 and 2021-22 was Rupees 244.3 billion ($3.14 billion) and Rupees 264.6 billion, respectively.
India added eight thermal power plants with a capacity of 4,485 MW in 2021-22.
S&P Global Commodity Insights reported May 31 that the power ministry plans to reduce power output from 81 thermal coal power plants in the next four years. According to the plan, power generation from those 81 plants would fall by 58 billion kWh with an equivalent of around 30,000 MW of renewable energy will be required for this transition.
Coal crisis
India currently is struggling with a coal shortage crisis with stockpiles at power plants sufficient for coal burn of less than nine days.
According to CEA, India had a stockpile of 23.55 million mt as on June 1 as against 29 million mt on the same day in 2021. However, the power requirements then were lower which meant that the stockpile was sufficient for 16 days.
Out of India’s 173 power plants presently, 100 plants have critical level of coal stockpile.
India currently generates over 75% of its power through thermal coal.
India has repeatedly iterated plans to achieve domestic coal production of over 1 billion mt by 2023-24 with coal blocks being auctioned to private companies to boost domestic production. In 2021-22, India produced 777 million mt coal, the highest ever.
“In the long-term, we cannot be sure how the requirement will change for any new addition of power plants. Maybe more Russian coal will start flowing even if we assume that Coal India production does not go there,” an Indonesia-based trader said.
“If Russian coal suffices then Indonesian coal demand would be reduced that extent or even if Coal India is able to boost its production,” the trader added.
Source: Spglobal.com
