Fuels for Generation
Overview of Coal Sector In India
Coal plays a critical role in the Indian power sector. As on 31st January, 2013, more than 55% of the total installed capacity and more than 70% of the power generation in India is based on coal. India is the third largest producer of coal. In FY 2011-12, the supply of coal to Power sector was 404 MT from indigenous sources against a demand of 500 MT2. As per the Press Information Bureau, there has been a loss of generation to the order of 9, 000 MU due to shortage of coal3, after considering import of coal.
India has a coal reserve of close to 294 Billion Tons as on 1st April, 2012. Almost all of this reserve (87%) falls in the non-coking coal category. Of this reserve, about 40% falls in the proved category, 48% in the indicated category and the remaining 11% in the inferred category.
Coal India Limited (CIL) is consistently missing the annual production target. In FY 2011-12, CIL produced 436 MT of coal against a target of 447 MT. On the other hand, SCCL has been exceeding its targets. In FY 2011-12, SCCL produced 52 MT against a target of 51 MT. The demand for coal has always outmatched the supply of coal from indigenous sources. From FY 2006-07 to FY 2011-12, the demand for coal has increased at a rate of 8% whereas supply increased at a rate of only 5%. In the FY 2012, the demand of coal was around 696 MT, with power sector contributing to close to 73% of the total demand, whereas the supply was only 540 MT thereby creating a gap of 156 MT. The demand-supply gap in FY 2006-07 was around 43 MT, which increased to 156 MT in FY 2011-12.
To meet the demand of coal, India has imported coal from other countries such as Indonesia, Australia etc. The imports have grown at a rate of 18% from 43 MT in FY 2006-07 to 99 MT in FY 2011-122
The Coal Mines (Nationalization) Act (CMN), 1973 was amended in June 1993, allowing participation of private sector in coal mining operations. The guidelines for coal block allocation was also amended with a condition that the coal so mined from the block allocated would be used only for captive consumption of the end user company(ies).
Till the end of March 2012, the Government of India (GoI) allocated 218 captive mining blocks and sub-blocks that has a geological reserves of 51 BT. These blocks were allocated to private players (other than CIL and SCCL). Of these 218 blocks, 25 blocks were de-allocated and 2 were re-allocated. There were 195 net allocated coal blocks with reserves of 44.2 BT. Out of these, 80 blocks that have reserves of about 24.2 BT were allocated to the power sector, which includes 12 blocks with reserves of 4.85 BT allocated for Ultra Mega Power Projects (UMPPs).
Production of Coal
The progress of development of these mines has been sluggish. As of end-March 2012, 36 mt of coal was produced from 29 coal blocks. Production of coal increased from 0.71 mt in FY 1997-98 to 35.5 mt in FY 2009-10 after which there has been meager growth in production. The Government de-allocated 15 coal blocks in FY 2010-11 after reviewing the development of these mines. In addition, three blocks were surrendered by the companies due to geo-mining difficulties and other reasons4. The story in the power sector is not very different, where out of 93 blocks initially allocated only 15 are producing coal ( 2011-12), 14 have been de-allocated and rest are still non-producing.
Development of an allocated mine takes 3 to 7 years, depending on the mine type to reach the level of production. The allotted company is responsible for the development of allotted coal block. In condition of any will full delay in production from a particular block govt. may take action such as the de-allocation of the allotted block. The monitoring of the development of the coal blocks is done by the coal controller. Periodic reviews are also done at ministry level by a committee headed by Additional Secretary (Coal).
Outlook of Coal Sector
During the Standing Linkage Committee (SLC) meeting held on 2nd May, 2012 for allocation of coal to various power plants, CIL mentioned that it would be able to supply only 50% of the normative requirement from indigenous sources and the remaining 50% through imports. However, CIL has not signed coal supply agreements in this regard.> In view of the above and given the poor production from coal blocks allocated by GoI, India would face acute shortage of coal in the 12th five year plan. The demand of coal for power sector at the end of 12th Plan is expected to be around 738 MT whereas the supply is projected to be around 540 MT. This means either one of the following:
- Due of shortage of coal, there would be lesser generation thus increasing the demand-supply gap of power.
- The shortage of coal from indigenous coal can be met through imports. Since the price of imported coal is much higher than the indigenous coal, the price of electricity would increase.
Norms for coal consumption in TPPs issued on 15.01.2015
Annual coal consumption at 85% PLF (Tones per MW per Annum)
|Sub Critical Technology|
|100 MW to
less than 200
|200 MW to
250 MW *
|Unit Heat Rate (kcal/kWh)|
|Annual coal consumption at 85% PLF
(Tonnes per MW per Annum)
Note : In case of power projects where approved heat rate by Regulator is higher than above considered value, the Heat Rate approved by regulator would be considered for the purpose of working out normative coal consumption requirement.
* In case of main stem pressure is 150 ata or above the Unit Heat Rate shall be reduced by 100 kcal/kWh
$ In case of units having Motor Driven Boiler Feed Pump (MDBFP) of 500 MW and above size units including Super Critical units the unit heat rate shall be reduced by 50 kcal/kWh.
Following formula may be used for conversion of coal consumption to MTPA per 1000 MW: MTPA per 1000 MW = Tonnes per MW per Annum / 1000.
These norms will be applicable for Captive Power Plants (CPP) also.
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