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Shortage of coal continues to hit power generation

Shortage of coal continues to hit power generation

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Lower prices of imported coal and renewable energy likely to help

KOLKATA: Coal India is slated to end the year with a mere 1.8 per cent production growth at 560-565 million tonnes against a target of 600 mt. Though the off-take increased by 7 per cent, it is barely sufficient to meet demand.

As on March 6, when the Central Electricity Authority (CEA) last published its coal position, power plants are left with just 10 days of stock on an average, and 20 out of the 113 power stations listed by CEA have critical stock (less than seven days). Out of the total, 14 have less than four days of stock.

The coal availability situation remains as bad for the last couple of months.

Non-power customers – fertiliser and cement companies – are also starving. They are getting less coal than last year and are dependent on imports.

Thankfully for them, the price of imported coal dropped and is expected to drop further.

Import price

“Coal prices are coming down as Chinese buying is slowing down.

Price of 4200 GCV (gross as received) Indonesian fuel, which touched $50 a tonne in early February, is now down to $40 a tonne,” says Deepak Kannan, Managing Editor, Asia Thermal Coal, at S&P Global Platts.

Prices fell as China went on a production spree to ensure availability of cheap fuel to power utilities. Coal prices at Quinhuangdao was down from yuan 750 to 600 (FOB) in a matter of days, said Kannan.

Indian importers, he said, were yet to start pre-monsoon stock building, as they are waiting for Indonesian prices to drop further.

Data available with the railways shows imported coal movement was up by nearly 22 per cent from 69 mt to 84 mt till February. This is not the total imports volume as coal moves by road to port-based users.

RE, a saviour

The coal crisis could have hit the power sector harder had not renewable energy (RE) generation, especially wind and solar power generation,increased significantly this year.

According to data available with CEA, renewable energy generation increased by nearly 49 per cent during April-December 2017 against the same period in the previous year. The share of RE in total generation increased from 5.42 per cent to 7.7 per cent.

Out of the total RE generation, 80 per cent came from solar and wind.

RE generation compensated the low 1.86 per cent growth in conventional (thermal, large hydro and nuclear) generation against a 4.4 per cent rise in total generation.

As of January, coal-based generation is a little below (99 per cent) the targeted levels, while large hydro (91 per cent) is way behind.

Nuclear generation increased significantly, but it contributes barely 2 per cent of demand.

Outlook

With off-take expected to reach somewhere near 585 mt, CIL is expected to end the year with approximately 50 mt of stock, down from 68 mt as on March 31, 2017.

It is to be seen to what extent the company is able to meet the additional demand for fuel in summer when electricity demand peaks, but coal production slows down (from the winter run rate of approximately 2 mt a day) due to restrictions imposed by producing States on outdoor work.

Company sources, however, feel the 18-km rail link between Tori and Bhalumath in Jharkhand, which was inaugurated earlier this year, would help evacuate 6-8 mt of fuel from the resource-rich Magadh and Amrapali mines in the next fiscal.

The scheduled opening of the 53 km Jharsuguda-Barapali rail link later this month, connecting the Ib Valley reserves in Odisha, will add another 6-8 mt of fuel.

Source: thehindubusinessline
Anand Gupta Editor - EQ Int'l Media Network

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