The Ministry of Coal has directed all subsidiaries of Coal India Limited (CIL) to identify de-coaled land for establishing new pithead thermal power plants in order to diversify the operations of its companies.
The decision to diversify the operations of CIL and its subsidiaries from just the mining of coal to building thermal power plants has been taken by the ministry due to the country’s increasing shift toward renewable energy (RE), which is likely to have a capacity of 500 gigawatt (GW) by 2030. In such a scenario, as more RE capacity gets added even beyond 2030, the use of coal is likely to decline, resulting in a coal surplus.
“The use of coal for electricity generation will continue in India, but there will be a gradual decline. We have to look beyond 2030 and plan accordingly, which is why diversifying into fields such as thermal power generation, renewable energy, coal gasification, etc., need to be taken up. The ministry has asked CIL to identify de-coaled land parcels across its subsidiaries for potential creation of new pithead thermal power plants,” said a senior ministry official requesting anonymity.
Lands from which coal has been mined out are called de-coaled mines. A coal pithead, usually located near a mine, is where the mined coal is kept before being transported to power plants. Setting up power plants at the pithead is more cost-effective, with a tentative fixed cost of approximately Rs. 2.5 and a variable cost of about Rs. 1.25 per unit, making it possible to generate power at less than Rs. 4 per unit, as per an assessment by the coal ministry.
Only sections of such land may be de-coaled, with adequate coal elsewhere in the land, which will enable such pithead plants to function effectively. The overall cost of power generation from such plants will be lower mostly because it does not require fresh land acquisition and cost of coal transportation will also be negligible.
At present, approximately 70.6 percent of India’s power is thermal power, which consumes 84 percent of the country’s coal production. CIL is the largest supplier of thermal coal to the power sector. Thermal coal is a grade of coal used in power plants.
Currently, NLC India Ltd. (NLCIL) is the only company under the ministry of coal that runs thermal power plants. NLCIL, which primarily is into lignite mining, has a thermal power capacity of 3,640 MW, and is also in expansion mode through brownfield as well as greenfield projects.
As for CIL, it has signed two MoUs to foray into the thermal power business. The first is for a joint venture between South Eastern Coalfields Limited (SECL), a subsidiary of CIL, and Madhya Pradesh Power Generating Company Limited (MPPGCL) to implement a 660 MW supercritical thermal power station, replacing the retired generating units situated at the existing premises of MPPGCL’s Amarkantak thermal power station in Madhya Pradesh. `Supercritical’ refers to the operating conditions, which are above a critical pressure and temperature.
The second MoU is for setting up a 16,00 MW (2 x 800 MW) supercritical thermal power plant in Odisha, through Mahanadi Basin Power Ltd. (MBPL), a 100 percent subsidiary of Mahanadi Coalfields Ltd. (MCL). A separate MoU has already been signed between CIL and Assam Power Distribution Company Limited (APDCL) for the purchase of 1,200 MW from the proposed MBPL power plant.
Traditional thermal power generating companies under India’s ministry of power have plans to build at least 41 GW of coal-fired capacity by 2030, but their target for renewable energy capacity addition is even higher — about 328 GW. As of March 31, 2023, India’s installed RE capacity stood at 172 GW.
NTPC Ltd., for example, plans to build 7 GW of thermal power capacity by 2030, but it has set a target of adding 60 GW of RE capacity during the same period.
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