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Coal-fired power generation outpaces coal demand

A contrasting situation has emerged in India’s power sector wherein the growth in generation of coal-fired electricity has far outpaced the growth in coal consumption during the first 10 months of 2015-16.

Interestingly, while the growth in coal-fired electricity generation during April-January of 2015-16 stood at 6.4%, the growth in actual coal consumption by power plants stood at mere 1.9%, according to data available with ICMW.

Experts feel, the disparity in the growth in power generation and coal consumption is largely on account of low power generation by domestic coal-based plants, particularly those in northern India, as compared to the coastal plants that operate on imported coal.

“There is no doubt that electricity generation in the country has increased but the increase has come mainly from plants that operate on imported coal. In fact, most of the domestic coal-based plants had operated at much lower PLF of 40-50% during the period, while the imported coal-based plants had operated at a high PLF of above 90-95% and in some cases at 100% PLF,” an official from the power ministry informed.

According to Central Electricity Authority (CEA) data, the PLF of coal-based plants in India during the first 11 months of 2015-16 fell to 61.56% from a high of 64.18% during the same period of 2014-15.

In fact, coal-based electricity generation stood at 710.69 billion units (BU) between April 2015 and July 2016, up 6.4% compared to 667.88 BU generated during the same period of 2014-15.

Explaining the scenario, an expert said: “It makes sense for distribution companies (discoms) not to purchase high cost electricity from domestic coal-based plants as they can get the same from imported coal-based plants at a much lower price.”

Further elaborating, the expert said the average cost of electricity comes to around Rs 6.50 per unit if purchased through domestic coal-based plants, but the same comes down to around Rs 4.50 per unit if purchased through imported coal-based plants.

In view of the sharp difference in cost, discoms, which are already facing a financial crunch, prefer buying low-cost electricity from independent power plants (IPPs) located on the coasts, instead of buying through domestic coal-based plants in some areas.

As a result, domestic coal-based plants in those areas, particularly in Punjab, Rajasthan, Haryana etc are operating at a much lower PLF as compared to coastal plants like Adani, Mundra etc, he said.

“This (low growth in coal consumption compared to the growth in electricity generation) means that imported coal-based plants have continued operating because they are getting coal with higher GCV and are in a position to produce more at a lower cost,” a government official said.

In support, the official said, the specific coal consumption of power plants that are monitored by the CEA has come down to 0.659 Kg/KWH between April-January, 2016 from 0.685 Kg/KWH during the same period of 2015.

“When you say my specific coal consumption has improved or we have produced more power with lesser quantity of coal, it only means that imported coal has been used in higher volumes,” the official said.

In fact, total coal imports by the CEA-monitored plants during the first 10 months (April-January of 2015-16 declined by 11% to 68.66 million tons (mt) from 77.24 mt imported during the same period of 2014-15, largely due to a 24% decline in imports to 31.68 mt from a high of 41.55 mt last year by plants that use imported coal for blending with domestic coal.

However, the imports by coastal plants, or plants that are designed to run only on imported coal, rose 6% to 36.97 mt in April-January, 2016 from 35.69 mt in the same period of 2014-15.