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India’s energy sector will be needing an additional 28GW coal-fired power generation capacity by 2032, advisory body Central Electricity Authority (CEA) stated.
These additions will be needed on top of the 25GW in thermal coal projects currently under construction. In its ‘Draft National Electricity Plan (Vol-1 Generation) CEA gives these recommendations for ‘feedback’ to stakeholders. CEA is publishing a National Electricity Plan every five years, putting it in front of licensees, generation companies, and the general public. The institution also stated that the BESS (Battery Energy Storage System) requirement in 2031-32 is varying from 51GW to 84GW. In a warning to the industry, the CEA indicated that in case of a delay in the construction of hydro-plants, there will be another 4GW of coal-fired power generation needed in 2026-2027. India’s energy industry is also looking at base load nuclear capacity, but in the meantime, cheap coal serves as an alternative. The CEA report further indicated that India’s peak electricity demand is set to be hitting 272GW, while electrical energy requirements are set at 1,874BU in 2026-2027, while for 2031-32 363GW and 2,538BU is needed.
To increase local coal production, the Indian Ministry of Coal is holding an e-auction for 10 commercial mines, as the technical evaluation of bids is completed. The peak rate capacity of these mines being put up for e-auction is 39.31 mtpa. An e-auction for 8 coal mines is done on September 13, while the remaining 2 are being held on September 14. Until now, the Indian Ministry of Coal has successfully auctioned 43 coal mines with a peak rate capacity of 85.54 mtpa. In statements last month, Indian coal minister Pralhad Joshi stated that around 107 coal blocks will be put up for auction in the future. India’s overall coal production increased by 8.27% (Y-o-Y) to 58.33 million tons in August 2022 compared to 53.88 mt in August 2021. By 2030, India’s coal demand is set to hit 1.5 billion tons.
India, and other Asian countries, have taken advantage of the Russian coal push into Asia. Due to the Russian invasion of Ukraine, Moscow has been eager to replace the loss of European share by increasing sales to Asian countries, mainly India and China. Still, the heydays seem to be over, as Russian seaborne exports of coal to Asia are in decline, dropping in August to 10.15 million tons, in comparison to 12.16 million tons in July or 12.42 million tons in June. Chinese imports of Russian coal are down, but India still imports more (1.8 million tons August vs 1.51 million tons in July). As is the case with Russian oil and gas exports, India has been Moscow’s main success story. Before the Ukraine war, India imported only between 300,000 – 700,000 tons of Russian coal. Russia’s coal exports are also no longer benefitting from steep discounts it offered in the early days of the war.
At present, the picture for global coal is still positive. Coal prices are trading near record levels, as the EU and others are scrambling for reliable sources of energy. In a recent report, the International Energy Agency (IEA) stated that it expects 2022 global coal consumption to reach levels last seen a decade ago. The effects of global warming or intense and long droughts in China, Europe and other places also have pushed up demand for coal. Especially China could be looking to increase coal consumption this winter to compensate for lower hydropower output. It is expected that in addition to India, China also will increase its coal mining activities substantially this decade.
