Coal Insights, March 2018 by mjunction services ltd

Contents

6 | COVER STORY

24 ‘Wind, solar tariffs should not go below `4/kwh 28 India’s wind energy is heading offshore

Is there a lull in India’s wind?

30 Thermal coal offers slide in March

Wind energy is maintaining a low profile and 8-10 percent growth over 3-5 years would be quite good.

31 Coking coal offers ease in March 34 India’s Jan coal imports up 13% y-o-y 35 Singareni Collieries’ production up 6.75% in Feb y-o-y 36 Coal India production almost flat in February y-o-y 37 India’s cement production in Jan up 21% y-o-y

20 | COVER STORY ‘FY19 wind auctions likely to be in range of 8-10 GW’ There is a need to shift to ‘close bidding’ as against ‘reverse bidding’ in auctions, says Tulsi Tanti, Founder, CMD, Suzlon Group.

38 | feature

39 Centre allocates 11 mines to CIL 40 Installed renewable energy at 64.3 GW

India’s fly ash utilisation at 63%

41 CBI filed 55 FIRs on irregularities in coal block allocation 42 US coal production estimated to decline 5% in 2018 46 NCL achieves annual coal offtake target ahead of year end 48 CESC trims T&D losses to 10.6% 49 Corporate update 52 Traffic handled by major ports up 5% in Apr-Feb

India’s fly ash utilisation increased by around 8 percent during the last couple of years.

43 | safety

Safety-minded employers’ efforts lead to improved safety stats Injuries and fatalities have dropped significantly since the introduction of early 20th century regulatory standards’.

54 Indian Railways’ February coal handling up 5% y-o-y

45 | Corporate

MCL to take legal route over Odisha penalty demand

58 E-auction data

The MMDR Act refers to ‘ore’ leases while coal is a ‘mineral’ and SC judgment cannot be applicable, says MCL.

60 Port data

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: Kolkata

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: Rajarshi Chattopadhyay : Yes

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: Rajarshi Chattopadhyay : Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

5. Editor’s Name

: Rakesh Dubey

Dated: March 2018

4 Coal Insights, March 2018

: Yes : Tata Centre, 43 J L Nehru Road, Kolkata 700071

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I, Rajarshi Chattopadhyay, hereby declare that the particulars given above are true to the best of my knowledge and belief. Sd/Rajarshi Chattopadhyay Publisher

Cover Story

Is there a lull in India’s wind? Madhumita Mookerji & Kingshuk Banerjee

‘Wind has reached a stage where it is no longer really an “alternative.” It is becoming a “conventional” energy source-still relatively small and facing its own constraints and challenges, but increasingly visible on the landscape of electric power and surely still on a fast track to growth,’ says Daniel Yergin in The Quest

6 Coal Insights, March 2018

Cover Story

t would be unfair to make a comparison between wind and solar energy developments in India. This is essentially because the targets for solar are perhaps tenfold more compared to its lesser cousin wind. In the 175 gigawatt renewable energy target set by the government for 2022, the share of wind will be 60 GW, out of which around 35 GW of installed capacity has already been achieved. Thus, a moderate 10 percent growth in wind energy over the next four years should enable wind to achieve its 60GW target. On the other hand, solar’s growth will have to be 40 percent to reach the 100 GW target by 2022. With the present capacity at 20,000 MW, solar energy has to achieve 20,000 MW per annum over the next 4 years to hit the target. Solar, in any case, will grow faster because of the National Solar Mission, whereas there is no national wind mission in place. “So, in the 3-5 years, if there is a growth of 8-10 percent in wind energy generation, I would say, it is good,” Prof (Dr) S P Gon Chowdhuri, Member, Tripura State Planning Board, tells Coal Insights. Explaining why wind energy is currently maintaining a low profile, Gon Chowdhuri says that earlier, from 2000-2010, the cost of wind power was much lesser than that of solar power. For instance, around 7 years back, solar tariffs were at `17 per kwh whereas wind power tariffs were at `6/kwh. As a result, solar power maintained a low profile, with its installed capacity at that period being merely 30 megawatts (MW). But 2011 onwards till 2017, solar tariffs plummeted, from `17 per kwh to `3 per kwh. However, the price of wind power did not come down significantly within this period. Wind power tariffs had already decreased to `4 per kwh and to come down to `2.43/ kwh was not a spectacular drop, whereas solar tariffs witnessed a sharp drop from `17/kwh to lower than `3/kwh, he says. In fact, wind energy has been hogging national headlines for quite some time and that too for pretty good reasons. In the recent auction conducted by state-run Solar Energy Corporation of India (SECI), bidders were said to be quoting as low as `2.44 per unit for 2 GW of wind power contracts in the nation’s largest wind capacity auction. In an auction conducted by another state-run entity, Gujarat Urja Vikas Nigam, in December

2017, the tariff fell to `2.43 per kwh. As per experts, low wind tariffs are a fallout of multiple factors of existing policies, market regulations, technological and financial aspects, along with the bidding structure in the auction. And this kind of low biddings sent ripples through the energy companies, to say the least. At present, there is a huge inventory pile-up in wind power. When this happens, a wind generator feels, since his money is getting blocked for the long term with his turbine lying idle for months, he should sell it off cheap. At such a juncture, during an inventory pile-up, the cost of wind power, inevitably, comes down. Later, when the inventory level lessens, there will inevitably be a spurt in wind power tariffs, says Gon Chowdhuri. Tulsi Tanti, Founder, Chairman and Managing Director, Suzlon Group, tells Coal Insights that low tariffs discovered in the irrational biddings are unsustainable for any industry. “We have witnessed the increase in subsequent tariffs – both in wind and solar. There are concerns about the viability and quality of the projects as well. In future, we need to focus on sustainable development, keeping a balance between pricing as well as volumes. This will not only enable achieving our set RE targets but will also result in a holistic development of communities – by providing direct and indirect employment,” he says. One global study has predicted that by 2030, 22 percent of power generation would come from wind turbines. It is also being predicted that by 2040, 30 percent of energy demand would come from India, making it the primary driver of global energy. Now the trillion dollar question would be how far can wind energy take advantage of this changing scenario in the energy basket. The government has plans to award 23 GW of wind power projects by March 2020. As per a 2017 report of The Global Wind Energy Council (GWEC), the international trade association for the wind power industry, India had 32,848 MW of installed capacity. As per industry data, India ranks fourth amongst the wind-energy-producing countries of the world after China, the US and Germany. The estimated potential is around 49,130 MW at 50 metres above ground level and

102,788 MW at 80 metres above ground level. Exhaustive wind resource assessment has been carried out in 826 stations spread across various parts of the country. As on date 244 wind monitoring stations have indicated wind power density of 200 W/m² or more at 50 metres above ground level. A micro survey of wind resources for 97 wind monitoring stations have been completed for exploring the zone of influence and wind power potential around the stations to meet the requirement of wind energy developers in the country. Wind farms have been installed in Andhra Pradesh, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and West Bengal. Majority of the installed capacity, however, belongs to private sector players in these seven states. A good number of wind turbine manufacturers are active in India and producing wind electric generators (WEGs) ranging in capacities from 225 kW to 2,800 kW. A large number of agencies have come up to supply components/spares/accessories and to provide services like erection, O&M, civil and electrical construction, consultancy etc. Several water pumping windmills and small aero-generators have been installed in the country as well. Wind solar and wind diesel hybrid systems have also been installed at a few places. Further, the waiver of inter-state power transmission charges and losses for the solar and wind power projects commissioned was extended till March 31, 2022, with a view to giving a boost to clean energy sources. Earlier, the waiver was available to solar and wind power projects commissioned till December 31, 2019, and March 31, 2019, respectively. The waiver was available for a period of 25 years from the date of commissioning of the project. But the real push could come from offshore wind power projects, in tandem with the global trend, according to Dr K Balaraman, Director General of Chennaibased National Institute of Wind Energy, a premier research and development organisation under the Ministry of New and Renewable Energy. The nation has made a beginning now and 10 years down the line one could see the outcome.

Coal Insights, March 2018

Cover Story

‘FY19 wind auctions likely to be in range of 8-10 GW’

he lowest tariff discovered in last year’s auctions was `2.43 per unit but this cannot be seen as a benchmark. There was a rush for volumes in the transition year, hence, the low prices. In the recently-concluded auction by MSEDCL, tariffs firmed up to `2.85 / unit. The wind energy industry needs to focus on sustainable development, keeping a balance between pricing and volumes. There also needs to be a shift to ‘close bidding’ as against ‘reverse bidding’. Renewable energy needs large-scale funding and thus banks and financial institutions should earmark a certain percentage of finance for such projects and funding should be available for a longer term of 20 years. Importantly, looking ahead, Tulsi Tanti, Founder, Chairman and Managing Director, Suzlon Group, tells Madhumita Mookerji that the wind industry will deliver 7-8 GW in FY19. With an export potential of ~3-5 GW per annum, India can become the manufacturing hub for wind globally. Excerpts from an interview:

What is the current installed wind energy capacity in India? The target for wind energy by 2022 is 60 GW in the 175 GW renewables basket. Will India be able to achieve that target? With cumulative wind additions reaching over 32 GW, installations are much ahead of the 30 GW target set by the government till FY17. There are several untapped opportunities which needs to be unlocked to further boost renewable energy. As far as targets are concerned, it is a must to achieve 10-12 GW per annum, and it is certainly possible to achieve these targets. There would be challenges. However,

20 Coal Insights, March 2018

Safety

Safety-minded employers’ efforts lead to improved safety stats Bill Shukla

afety professionals in plants and mines around the world will tell you that a disproportionate number of injuries on the site are either directly or indirectly related to conveyor systems. Many injuries found in statistics presented by the Indian Ministry of Coal’s Annual Report[1] occur from workers coming in direct contact with a moving conveyor, which should never happen. The good news is that the number of injuries and fatalities have dropped significantly since the introduction of early 20th century regulatory standards. [Fig. 1] Regulations provide standards that can reduce health and safety incidents, but it’s the efforts of safety-minded employers that lead to improved statistics. To say 100 percent

of injuries can be avoided is unreasonable, but experts are of the opinion that many injuries could have been eliminated decades ago with the wider adoption of safer modern equipment designs. The challenge for the companies is to get Production Done Safely™. With the financial benefits of safety demonstrated in reductions in downtime and the cost of operation, many companies are coming around naturally. But profit pressures that favour the lowest bid over the best solution often hamstring safety efforts. Danger zones of belt conveyors

Conveying hundreds of pounds of bulk material per hour at high speeds under 24hour schedules inevitably leads to an incident unless the right equipment, training and monitoring procedures are implemented. Awareness is the key component to identifying gaps in safety. Commonly running between 0.5 and 10 metres per second [≈100 to 1968 fpm],

Figure 1 – Fatality and Injury Rate, India, Coal Mining 1975 - 2016 (source: National Informatics Centre, Coal India Limited, Safety in Coal Mines Annual Report, 2017)

Figure 2 - Proper signage should be displayed wherever a hazard presents itself.

the conveyor belt often runs faster than the average person can react to danger, even when simply letting go of a tool. Performing cleaning and maintenance duties around a moving belt made out of gripping rubber without performing the proper lockout/ tagout procedures can be very dangerous. Even with incidental contact, a worker or tool can be captured and pulled into the mainframe, rollers, gears or pulleys. Nip, pinch and shear points are common areas on the conveyor system where employees can be pulled in suddenly and either injured or killed. Nip points are between the belt and roller or pulley. Pinch points are smaller spaces between mechanical gears and rollers. [Fig. 2] Shear points are between moving and non-moving parts, such as a worker getting caught by the belt and pulled to the mainframe. Fugitive material such as spillage, carryback and dust pose serious dangers, making it one of the most scrutinised topics of workplace safety. In mining and other dust emitting operations, respirable crystalline silica (RCS) and PM10 (particulate matter >10 micrometers in diameter) dust emissions are highly regulated, due to historical worker diagnoses of silicosis and pneumoconiosis (black lung) from both indoor and outdoor applications. Spillage can make walkways dangerous, and carryback of dust and fines beneath conveyors can accumulate material on work areas, as well as spread particulate emissions along the entire belt path. Additionally, spillage and dust can also be a factor in creating fire hazards by getting into the bearings and gears of rolling components, causing them to seize. Friction

Coal Insights, March 2018

Corporate

MCL to take legal route over Odisha penalty demand

Coal Insights Bureau

eacting to the Odisha government’s demand notice for `8,297 crore slapped on Coal India subsidiary Mahanadi Coalfields Limited (MCL), for unlawful production of coal in violation of environmental clearance (EC), a Coal India source told Coal Insights that MCL will be “taking a legal course of action”. This demand notice follows the Odisha government’s decision to extend the scope of the Supreme Court order on illegal iron ore and manganese mining in the state, in which the SC had interpreted Section 21 (5) of the Mines and Mineral Development and Regulation (MMDR) Act differently. Another well-placed coal industry source said: “It (demand notice) will be fought in the court of law. The amount takes into account different mines. The MMDR Act refers to ‘ore’ leases whereas coal is a ‘mineral’ and hence the Supreme Court judgment cannot be applicable to MCL. Coal does not fall within the clause under which that payment has been sought by the Odisha government. Moreover, the company (MCL) had been paying whatever royalty amount was needed

to be paid to the state government for mining our coal.” The source added that earlier the Odisha government had sought `20,169 crore-penalty from MCL for production of coal in violation of the mining plan, the Environmental Protection Act, 1986, Water (Prevention & Control of Pollution) Act, 1974 and Air (Prevention & Control of Pollution) Act, 1981. However, after MCL’s legal rejoinder, the amount has been reduced to `8,297 crore, the source said, adding that MCL feels it should not be paying even this decreased amount. It may be mentioned that the Odisha government has slapped a demand notice of `8,297 crore on MCL for unlawful production of coal in violation of the EC and is also in the process of sending demand notices of `4,500 crore to some large chrome ore miners, including Tata Steel, Jindal Stainless, IMFA and the state governmentowned Odisha Mining Corporation (OMC) for similar violations. The decision follows the Odisha government’s move to extend the scope of the apex court’s order on illegal iron ore and

manganese ore mining in the state, in which SC had interpreted Section 21 (5) of the MMDR Act differently. Illegal mining under the relevant Section of the Act was earlier perceived to be mining outside the leasehold area, but the August 2, 2017 order of the court had said that raising of ore without the requisite support of environment and forest clearances (FC) would also be considered as illegal mining. Co breaks 6 lakh ton daily coal production barrier

Setting a new record in daily coal production, Mahanadi Coalfields Limited (MCL) produced 6.36 lakh ton dry fuel on March 21, 2018, which is the highest ever by any coal company in the country. Congratulating the Team MCL for surpassing the 6 lakh ton production figure in a day, Chairman & Managing Director A K Jha said the synergy of efforts from top to the lowest ranks working in the mine projects have made the company produce 6.36 lakh ton in a day. “I am proud of my team and confident that we can achieve even higher targets,” said the CMD.

Coal Insights, March 2018

62 Coal Insights, March 2018

Tear along the dotted line