Coal-As Fuel Option

R.L. Mattoo GM (Fuel Management), NTPC

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% 50.00% 40.00% 30.00% 20.00% 9.90% 10.00% 0.00%
oa l il uc le ar yd ro en ew R H ab le O G C as

55.60%

25.90%

5.00% 2.70%

0.90%

INDIAN POWER SECTOR

By the year 2012, Indias peak demand would be 157,107 MW with energy requirement of 97500 MU

157107 115705 78037 81492

Peak Requirement (MW) Energy Requirement (MU)

50700 Mar '01

54500

71900

97500

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 Hydro
Thermal Indigenous Coal Imported Coal Lignite Gas/ LNG Nuclear

Total (MW) 12,000

46905 28155 10000 1750 7000 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% 70% 60% 50% 40% 30% 20% 10% 0%

92.5

117

37.4 Total Non Coking Coking

76

103.5

35.5

16.5 Proved

13.5 Indicated

2.1 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% 80% 60% 40% 20% 0% CIL 91.69 30.03

22.21

52.24

Extractable Reserves 156.15 247.84 Total Reserves

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 1200 1000 800 600 400 200 0 06-07 11-12 16-17 21-22 473.18 629.63 828.16 1078.54

1267.01

24-25

Likely Coal Supply Scenario

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

2006-07

2011-12

2016-17

2021-22

Coal Supply Million Tes)

Supply only from CIL sources

2024-25

COAL SHORTAGE SCENARIO IN THE POWER SECTOR

800 700 600
50 5 690 603

500 400 300 200 100

484

10th Plan 11th Plan 12 Th Plan

332 301

87 31 21

0 Demand Availability Shortage

Shortage to be addressed through import

COAL AVAILABILITY vis--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 ONSHORE OFFSHORE GRAND TOTAL

BALANCE RECOVERABLE RESERVE (As of 1st April 2005) 340 BCM 761 BCM 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)

Demand (MMSCMD)

350 300

200

100

20 01 -0 2

15 1

150

20 06 -0 7

23 1

250

20 11 -1 2

31 3

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

20 24 -2 5

39 1

400

Price Benchmark - Coal - the Competing Fuel

Fixed cost of Generation (Levelized)
0.89

contd

Variable (Fuel) cost of Generation

Gas ($/MMBTU)

Figs in Rs/kwh
0.875
Fuel cost (paise/ kwh)

140 120 100 80 60 40 20 0 0

3.6 Washed Raw 3.1 2.6 2.1 1.6 1.1 0.5 0.0

Coal Proj.

Gas Proj.

Assumptions: Proj
Capital Cost (Rs Million /MW) Life (Years)

Coal Proj
42 25

Gas
32 15

Distance from mine (Kms)

100

500

1000

1500

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 greater depths coal lying at

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.

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