In a bold move aimed at reshaping India's energy landscape, the coal ministry is charting a course towards self-sufficiency by planning to establish massive power plants in proximity to its coalfields nationwide. These ambitious coal-based power ventures, each boasting a formidable 5,000-megawatt capacity (totaling a staggering 30 GW capacity), are slated for development in the coal-rich regions of Chhattisgarh, Odisha, and Jharkhand.
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Set to be realized through collaborative joint ventures (JVs) involving government entities, private power firms, and state-owned electricity generators, these projects signify a strategic alliance toward energy independence. Underpinning these partnerships are agreements that grant state-owned coal companies a vested interest in the power plants, with the Coal Ministry reciprocating by offering essential resources such as land, coal, and financial support.
As preparations unfold, the ministry is diligently assembling land banks in the vicinity of coalfields, paving the way for project commencement after the upcoming general election.
Planning Regarding Power Plants
"We are already in talks with power companies to set up these plants right next to the coal mines. Acquiring land near the mines now will also speed things up once the elections are over," revealed an official familiar with the plans.
With a total generation capacity of 30 GW, these forthcoming power plants are strategically positioned across key coal-rich regions. In Chhattisgarh, two plants are earmarked for the Mand-Raigarh and Korba Coalfields. Odisha will host two plants in the IB Valley and Sardega areas, while the northern states will see two plants each in the North Karanpura and Rajmahal Coalfields of Jharkhand. The government aims to replicate the success of the Shaktinagar coalfield region, renowned for producing 10% of India's coal output and hosting the Singrauli Super Thermal Power Station (SSTPS), which caters to 10% of the country's electricity needs.
“Transporting electricity is inherently cheaper than transporting coal and then generating electricity. Therefore, the government is keen to start these power projects as soon as possible,” said the official.
Cost of Coal Production
According to industry estimates, the average cost of coal production stands at around R2,000 per tonne, inclusive of all levies. However, the substantial transportation costs and losses result in a landed cost of coal at power plants soaring to R4,300-4,600 per tonne. This stark increase underscores the necessity behind the government's ambitious project plans. Furthermore, India's pressing need to augment its power capacity to keep pace with burgeoning demand and facilitate economic growth is paramount.
As outlined in the National Electricity Plan, the country aims to achieve a total installed capacity of 900,422 MW by 2031-32, encompassing both fossil and non-fossil-based capacities, along with significant allocations for Battery Energy Storage Systems. To fulfill this vision, the Central Electricity Authority has outlined plans to increase coal-based capacity to 283,000 MW by FY 2032, a significant surge from the current 214,000 MW.
Coal Resurgence: India's Ambitious Push for Energy Expansion
In 2023, India witnessed a remarkable surge in coal proposals, totaling 11.4 GW, marking the highest figure since 2016. This resurgence in coal projects was not confined to the public sector alone but also embraced by private entities. Government-owned enterprises, both at the central and state levels, accounted for a significant 75% (8.6 GW) of the new capacity, indicating a robust commitment to bolstering energy infrastructure. Private players like Essar and Adani Power contributed to this momentum with proposals for projects like the 1.2 GW Kajurda power station and the 1.6 GW Raikheda expansion. Additionally, 2.2 GW of shelved capacity, predominantly privately owned, was reactivated into the permitting process in 2023, signifying renewed confidence in the coal sector's prospects.
This expansion in coal capacity aligns with a global trend observed in 2023, where the coal fleet expanded by 48.4 GW (2%) worldwide, reaching a total of 2,130 GW. Notably, China led this growth, accounting for two-thirds of the additions. However, this upsurge in coal investments occurs amidst a backdrop of global commitments to transition away from fossil fuels, as emphasized at COP28 held in December of the previous year. Despite such calls for decarbonization and a push to triple renewables capacity by 2030, the resurgence in coal projects underscores the ongoing reliance on coal as a crucial component of energy strategies across the globe.
LOW COAL PLANT RETIREMENTS IN THE US, EUROPE
India's commitment to principles of equity and climate justice remains steadfast as it emphasizes the need for developed countries to lead the charge in global climate action. Recent data sheds light on the dynamics driving the upsurge in coal capacity, notably the lower retirements observed in the US and Europe. While European Union member states and the UK accounted for a quarter of retirements last year, the US experienced a slowdown, retiring only 9.7 GW of coal capacity compared to 14.7 GW in 2022.
Despite this, the US maintains a formidable 200.1 GW of operating coal capacity, making it the third-largest coal fleet globally, trailing behind China and India. However, experts stress the urgency for the US to accelerate retirements to align with climate commitments.
Within the influential G7 economies, including the US, Japan, and the UK, coal continues to play a significant role, representing 15% (310 GW) of the world's operating coal capacity. Moreover, the Global Coal Plant Tracker data reveals a concerning trend, with 69.5 GW of coal power capacity coming online worldwide, while only 21.1 GW was retired in 2023, marking the highest net increase in operating coal capacity since 2016.
Amidst these challenges, India faces the complex task of balancing its energy needs for its vast population while transitioning towards cleaner alternatives. While efforts to scale up clean energy are underway, the sheer scale of energy demand necessitates a gradual transition. However, the onus lies on developed nations, historically the largest contributors to emissions, to accelerate their climate action. As Srestha Banerjee, director of Just Transition at Delhi-based organization iForest, emphasizes, developed countries must step up their action to meet the urgency of the climate crisis.
MOST OPERATING COAL CAPACITY IN CHHATTISGARH
Chhattisgarh currently holds the mantle for the most operating coal capacity, boasting 26.7 GW. However, Uttar Pradesh is poised to challenge this status quo, with the potential to surpass Chhattisgarh if all proposed and under-construction capacities come to fruition in both states.
Adding to this narrative is a recent report commissioned by the principal scientific adviser (PSA) to the government, projecting coal to remain the cornerstone of India's energy system for the next two decades.
Stalled Projects Are Being Revived
Eight states across India took significant steps in 2023 by either starting, reactivating, or permitting newly proposed coal projects. Additionally, the Central Electricity Authority flagged several stalled or stranded projects, anticipating their revival between 2023 and 2031.
A report highlights the critical need for an orderly transition towards clean energy to address the climate crisis and enhance economic productivity. However, it cautions against simultaneous investments in both coal and renewables, warning that such a strategy could lead to a "messier energy transition for India."
“If India achieves its renewable energy targets by 2030, and simultaneously activates its advanced-stage construction capacity, it will possess ample power generation capability to satisfy escalating demand. Any further investment in coal capacity could potentially initiate a subsequent wave of stranded asset formation within the power sector, and divert resources and funding from the trajectory of renewable energy expansion, effectively entrenching India’s dependency on coal,” said Sunil Dahiya, South Asia Analyst at the Centre for Research on Energy and Clean Air (CREA).
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