Coal-As Fuel Option

Synopsis

• Power sector scenario

• Fuel Options
• Coal as viable fuel
• Issues and way forward
Power Infrastructure In India
As on Dec .’05
 PRESENT CAPACITY MIX FUELWISE

60.00% 55.60%

50.00%

40.00%
25.90%
30.00%

20.00%
9.90%
5.00%
10.00%
0.90% 2.70%

0.00%
 INDIAN POWER SECTOR
By the year 2012, India’s peak demand would be 157,107 MW with
energy requirement of 97500 MU

Peak
157107
Requirement
115705 (MW)

78037 81492 Energy

Requirement
97500
71900 (MU)
50700 54500

Mar '01 Mar '03 Mar '07 Mar ''12

Capacity to increase to 2,12,000 MW by the year 2012 to meet the peak

demand of 1,57,107 MW
11th Plan : Capacity Addition Plan
Tentative/- type wise
Type Total (MW)
Hydro 12,000
Thermal 46905
Indigenous Coal 28155
Imported Coal 10000
Lignite 1750
Gas/ LNG 7000
Nuclear 3160
Total 62065
 Factors Affecting Choice of Fuels

• Fuel Options determinants:

– Availability
– Affordability
– Reliability
– Environment friendliness
 Major Options Available
• Coal
– Domestic
– Imported
– Blended
• Lignite
• Gas
– Domestic
– LNG
– Transnational piped gas
• Hydro
• Nuclear
 COAL RESERVES IN INDIA (Billion Tes)
STATUS AS ON 1.1.05

100%
90%
80%
92.5 117 37.4
70%
60% Total
50% Non Coking
40% Coking
30% 76 103.5 35.5
20%
10%
16.5 13.5 2.1
0%
Proved Indicated Inferred

At the present rate of extraction, coal and lignite resources in India are
expected to last for about 140 years
 EXTRACTABLE COAL RESERVES IN INDIA
FIG IN BILLION TONNES

100%
22.21 52.24
30.03
80%

60% Extractable Reserves

40% 156.15 247.84 Total Reserves
91.69
20%

0%
CIL Others Total
 LIGNITE

Reserves
Around 30,300 million tes

Location
About 88% of reserves located in state of Tamil Nadu
Balance (about 12%) located in Rajasthan, Gujarat,
J&K & Kerala
Limitation – Suitable only for pit head generation
 Coal Demand Scenario In India

Coal Demand (Mill Tes) Coal Demand (Mill Tes)

1400 1267.01
1078.54
1200
1000 828.16
800 629.63
600 473.18

400
200
0
06-07 11-12 16-17 21-22 24-25
 Likely Coal Supply Scenario

900 840
800 756
700
600 537 554
500
400 365
300
200
100
0

2021-22

2024-25
2006-07

2011-12

2016-17

Coal Supply Million Tes)

Supply only from CIL sources

 COAL SHORTAGE SCENARIO IN THE POWER SECTOR

800
690
700
603
600
50 5
484
500
10th Plan
400
332
11th Plan
300
301
12 Th Plan

200

87
100
31 21

0
Demand Availability Shortage

Shortage to be addressed through import

 COAL AVAILABILITY vis-à-vis SHORTAGE
Coal shortage envisaged due to:

•Long term linkage accorded on normative PLF

of 68.5% and 80% for stations coming after
1996, whereas the national average is +70%
PLF. (some of the stations like those of NTPC
operating at +90% PLF)

•Delay in development of linked mines

RESULT - NEED TO AUGMENT COAL AVAILABILITY

INDIGENOUS FUEL RESOURCES: GAS

LOCATION BALANCE RECOVERABLE

RESERVE (As of 1st April 2005)
•ONSHORE 340 BCM
•OFFSHORE 761 BCM
GRAND TOTAL 1101 BCM
(MOP&NG Basic statistics)

GAS RESERVES ARE ADEQUATE ONLY FOR ABOUT 34

YEARS AT PRESENT LEVEL OF GAS CONSUMPTION.
 Future Gas Demand projection
(Source: Hydrocarbon Vision 2025)
D e m a n d (M M S C M D )
400
350
300
250
200
150
100

Against the current demand of about 150 MMSCMD, supply is about

92 MMSCMD only. Gas/RLNG availability and prices of available
Gas/RLNG/imported piped natural gas are two major constraints for
gas based power generation
 Price Benchmark - Coal - the Competing Fuel contd…

Fixed cost of Generation (Levelized) Variable (Fuel) cost of Generation

0.89
Figs in Rs/kwh
Gas ($/MMBTU)
140 3.6
0.875
120
Washed 3.1
100
Raw 2.6

Fuel cost (paise/ kwh)

80 2.1
Coal Proj. Gas Proj. 60
1.6
40
1.1
Assumptions: Coal Proj Gas 20
0.5
Proj 0
0.0
Capital Cost 42 32 0 100 500 1000 1500
Distance from mine (Kms)
(Rs Million /MW)
Life (Years) 25 15

•Fixed cost of Generation for coal based & Gas Based Plants are comparable.
•Thus,for Gas/R LNG to compete – it has to be on fuel cost component basis
 OTHER INDIGENOUS FUEL
RESOURCES:LIMITATIONS

 Other resources like crude oil, coal bed methane,

renewable energy sources etc. are meagre and not
capable of catering to our energy requirements in the
long run.
 Gas and crude oil prices are volatile in the international
market and coal import is a much cheaper option than
import of oil and gas especially at coastal locations.

Conclusion - Coal is likely to remain our mainstay

fuel for energy generation till 2031-32. However,
current shortage is a cause of concern.
 Coal Shortage – The Way Forward
• Stepping up domestic coal production by allotting blocks
to central and state public sector units and for captive
mines to notified end users

• Coal Import – needs creation of necessary infrastructure.

Will also put pressure on domestic coal industry to be
efficient. NTPC has imported about 3 million tes of
coal in 2005-06.

• Amendment in Coal Mines Act to facilitate (a) private

participation in coal mining for purposes other than those
specified and (b) offering of future coal blocks to
potential entrepreneurs.

• Technology for economic exploitation of coal lying at

greater depths
 Issues of concern with the coal sector

• Pricing

– 70% of the domestic coal is dedicated to power

generation.
– Fuel cost constitutes about 65% of the total cost
of generation
– Since the dismantling of APM, coal prices have
been taken for arbitrary escalation with no
transparency
– The opening of the sector to private players will
bring in competition and prices will be determined
by market dynamics
– Till such time, a regulatory mechanism needs to
be put in place to put a check on arbitrary price
hike.
 Issues of concern with the coal sector: Contd

• Infrastructural Limitations- Burdened transportation

network - calls for following measures:

• Transportation capacity to be increased.

• Rationalization of linkages to cut down on
transportation distance and better utilization of
existing infrastructure
• Cut down on criss-cross rail movement
• Coastal stations to be run on imported coal
 Issues of concern with the coal sector: Contd

• Environmental Issues :

– More emphasis on use of washed coal

– Use of clean coal technology like IGCC

– Strict implementation of MOEF stipulations

– Proper restoration of degraded land due to open cast

mining.
 Conclusion & Way Forward
• Coal shall remain mainstay for power generation in India.
• Allocation of captive blocks to end users.
• Allowing private participation
• This will also create a competitive environment and which will
enable market driven pricing structure.
• Till such time, regulator to be put in place to ensure fair pricing
of coal, proper development of infrastructure & efficient
utilisation of resources in the coal sector.
• Keeping in view the longer gestation period of coal mines, faster
clearances of coal projects needs to be undertaken so as to be
commensurate with the commissioning of power plants.
• Coal washing and use of clean coal technology to be promoted.
• Transportation network bottlenecks to be reduced by judicious
rationalization of linkages.
THANK YOU