The entry of renewable energy sources should not be viewed as a threat to coal's standing at least in the immediate future as coal would continue to fuel India's electricity generation going by the current consumption pattern, Coal India's chairman and managing director Pramod Agrawal said in the company's latest annual report published July 30.
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It was expected that the renewable energy sources will contribute to the country's fast expanding energy basket. From an environmental perspective, this is a welcome move in view of the climate commitments made by India in COP26 at Glasgow, Agrawal said in the report. "But, till renewable energy starts contributing to the extent that it could take over coal's role, coal cannot be dethroned from its energy pedestal."
According to CIL's data, India's coal based generation accounted for 69.9% of the country's overall electricity generation of 1,490.277 billion units in fiscal year 2021-22 (April-March), a growth of 9.5% from a year ago. The country's electricity generation from renewable sources was 11.4%, or 169.396 billion units, while coal based generation was 1,041.459 billion units.
"This amply underscores the importance of the need for judicious energy transition from coal to renewables," Agrawal said in the annual report, adding that India is different from the rest of the world where the rallying cry is to move away from coal. "What makes coal a preferred energy fuel, in India, is its abundance, availability and affordability."
Coal, which holds a 55% share in the country's primary commercial energy, is the engine of growth for the energy sector, Agrawal said. Over 70% of India's power needs are met by coal, which has underpinned the expansion of electricity generation, and remains the largest single fuel in the energy mix.
Agrawal said that while international coal prices are much higher, CIL continues to supply coal to Indian consumers at highly competitive prices, with no price increases over the last four years.
Global thermal coal prices have remained elevated, hitting record highs, as the Russia-Ukraine conflict since February disrupted trade flows amid additional demand from Europe due to sanctions imposed on Russia.
According to S&P Global Commodity Insights data, Platts CIF ARA 6,000 kcal/kg NAR physical coal was assessed at $413.45/mt on July 29, from $209/mt on Feb. 23, a day before Ukraine was invaded, and not far from the all-time record high of $432.50/mt on June 23.
Platts last assessed FOB Baltimore 6,900 kcal/kg NAR coal for August loading at $283/mt, averaging $206.05/mt so far this year, S&P Global data showed. This is nearly three times the 2021 average of $73.80/mt. Platts FOB Nola 6,000 kcal/kg NAR was assessed at $276/mt, near record highs.
Platts FOB Richards Bay 5,500 kcal/kg NAR and FOB Kalimantan 4,200 kcal/kg GAR prices have eased after rising to record high levels in March and April. FOB Richards Bay 5,500 kcal/kg NAR was assessed at $238.35/mt on July 29, while the 7-45 day price of FOB Kalimantan 4,200 kcal/kg GAR coal was assessed at $80.25/mt, S&P Global data showed
Production uptake amid robust demand
CIL's production in FY 2021-22 rose to 622.63 million mt, highest ever since the company came into being, up 4.4 % on the year. As domestic demand shot up and prices of imports rose, India's total coal production rose to 777 million mt in FY 2021-22 from 716 million mt in FY 2020-21, the coal ministry data showed.
Meanwhile, total coal production in the first quarter ended June stood at 205.56 million mt, against 155.85 million mt in the previous fiscal year. CIL produced 159.8 million mt coal in April-June, up 28.9% on the year.
To increase production further, CIL and the boards of its subsidiaries have approved 16 mining projects in FY 2021-22, having sanctioned a capacity of 99.84 million mt/year, Agrawal said in the report, adding that five mining projects with an overall capacity of 12.60 million mt/year were completed in FY 2021-22.
Agrawal said CIL plans to operationalize 14 mines through engagement of Mine Developer cum Operators model, or MDO, having a proposed capacity of 165.58 million mt/year. Of these, 10 are opencast projects with total projected capacity of 161.50 million mt/year and four underground projects with total capacity of 4.08 million mt/year.
However, as many as 42 of its projects are running behind schedule due to delay in clearances and land possession issues, according to the annual report.