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Coal-As Fuel Option

R.L. Mattoo

GM (Fuel Management), NTPC

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Synopsis

Power sector scenario

Fuel Options

Coal as viable fuel Issues and way forward

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Power Infrastructure In IndiaAs on Dec .05

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5.00%

2.70%

9.90%

0.90%

55.60%

25.90%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Hydro

Coal O

ilGas

Nucle

ar

Renewabl

e

PRESENT CAPACITY MIX FUELWISE

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9750071900

5450050700

78037 81492

115705

157107

Mar '01 Mar '03 Mar '07 Mar ''12

Peak

Requirement

(MW)Energy

Requirement

(MU)

INDIAN POWER SECTOR

Capacity to increase to 2,12,000 MW by the year 2012 to meet the peakdemand of 1,57,107 MW

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

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11th Plan : Capacity Addition Plan

Tentative/- type wiseType Total (MW)

Hydro 12,000

Thermal 46905Indigenous Coal 28155

Imported Coal 10000

Lignite 1750

Gas/ LNG 7000

Nuclear 3160

Total 62065

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Factors Affecting Choice of Fuels

Fuel Options determinants:

Availability

Affordability

Reliability

Environment friendliness

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Major Options Available

Coal Domestic

Imported

Blended

Lignite Gas

Domestic

LNG

Transnational piped gas Hydro

Nuclear

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16.5 13.5 2.1

76 103.5 35.5

92.5 117 37.4

0%10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Proved Indicated Inferred

Total

Non Coking

Coking

COAL RESERVES IN INDIA (Billion Tes)

STATUS AS ON 1.1.05

At the present rate of extraction, coal and lignite resources in India are

expected to last for about 140 years

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91.69156.15 247.84

30.0322.21 52.24

0%

20%

40%

60%

80%

100%

CIL Others Total

Extractable Reserves

Total Reserves

EXTRACTABLE COAL RESERVES IN INDIA

FIG IN BILLION TONNES

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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

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Coal Demand Scenario In India

473.18

629.63

828.16

1078.54

1267.01

0200

400

600

800

1000

1200

1400

06-07 11-12 16-17 21-22 24-25

Coal Demand (Mill Tes) Coal Demand (Mill Tes)

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365

537 554

756840

0

100

200

300

400

500

600

700

800900

2

006-07

2

011-12

2

016-17

2

021-22

2

024-25

Coal Supply Million Tes)

Likely Coal Supply Scenario

Supply only from CIL sources

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3 3 2

3 0 1

3 1

50 54 8 4

2 1

6 9 0

6 0 3

8 7

0

100

200

300

400

500

600

700

800

Demand Availability Shortage

10th Plan

11th Plan

12 Th Plan

COAL SHORTAGE SCENARIO IN THE POWER SECTOR

Shortage to be addressed through import

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Coal shortage envisaged due to:

Long term linkage accorded on normative PLF

of 68.5% and 80% for stations coming after1996, 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

COAL AVAILABILITY vis--vis SHORTAGE

RESULT - NEED TO AUGMENT COAL AVAILABILITY

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INDIGENOUS FUEL RESOURCES: GAS

LOCATION BALANCE RECOVERABLERESERVE (As of 1st April 2005)

ONSHORE 340 BCM

OFFSHORE 761 BCM

GRAND TOTAL 1101 BCM(MOP&NG Basic statistics)

GAS RESERVES ARE ADEQUATE ONLY FOR ABOUT 34YEARS AT PRESENT LEVEL OF GAS CONSUMPTION.

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Future Gas Demand projection(Source: Hydrocarbon Vision 2025)

151

231

313

391

100

150

200

250

300

350

400

Demand

(MMSCMD)

2001

-02

2006

-07

2011

-12

2024

-25

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

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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

Price Benchmark - Coal - the Competing Fuel contd

Fixed cost of Generation (Levelized)

0.875

0.89

Coal Proj. Gas Proj.

Figs in Rs/kwh

Assumptions: Coal Proj Gas

ProjCapital Cost 42 32(Rs Million /MW)

Life (Years) 25 15

0

20

40

60

80

100

120

140

0 100 500 1000 1500

Distance from mine (Kms)

Fuelcost(p

aise/kwh)

Washed

Raw

0.5

1.1

1.6

2.1

0.0

2.6

3.6

3.1

Gas ($/MMBTU)

Variable (Fuel) cost of Generation

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OTHER INDIGENOUS FUELRESOURCES:LIMITATIONS

Other resources like crude oil, coal bed methane,renewable energy sources etc. are meagre and notcapable 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 thanimport of oil and gas especially at coastal locations.

Conclusion - Coal is likely to remain our mainstayfuel for energy generation till 2031-32. However,current shortage is a cause of concern.

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Coal Shortage The Way Forward

Stepping up domestic coal production by allotting blocks

to central and state public sector units and for captivemines 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 ofcoal in 2005-06.

Amendment in Coal Mines Act to facilitate (a) privateparticipation in coal mining for purposes other than those

specified and (b) offering of future coal blocks topotential entrepreneurs.

Technology for economic exploitation of coal lying atgreater depths

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Issues of concern with the coal sector

Pricing

70% of the domestic coal is dedicated to powergeneration.

Fuel cost constitutes about 65% of the total costof generation

Since the dismantling of APM, coal prices havebeen taken for arbitrary escalation with notransparency

The opening of the sector to private players willbring in competition and prices will be determinedby market dynamics

Till such time, a regulatory mechanism needs tobe put in place to put a check on arbitrary price

hike.

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Issues of concern with the coal sector: Contd

Infrastructural Limitations- Burdened transportationnetwork - 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

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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.

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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 pricingof 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 becommensurate 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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THANK YOU