1. –

Coal based power generation has been an important resource to meet country’s electricity demand. In past, coal-based power generation (both in terms of capacity and electricity generated) has had a dominant role in the power portfolio of the country. Even as at present, when India is galloping towards achieving 500 GW of renewable energy, the importance of coal-based power generation cannot be unnoticed. As at 31-3-22 coal power generation with an installed capacity of 210 GW contributes 73% of total electricity generation of 1484 BU. Renewable generation (solar, wind, biomass and small hydro) on other hand stands with meager contribution of 12% in 1484 BU considering installed capacity of 109 GW.

A comparative chart depicting the role of coal in power generation in past decade is shown above. It can be inferred from the chart that the role of coal hasn’t changed. It is still the majority electricity generation resource for India. Though the alarming fact here would be dropping PLF of thermal power generation.

Falling capacity utilization of thermal power plants have many factors which need to be addressed. Some of the factors have been identified as under

• Low demand growth – Demand growth has been estimated at an CAGR of 5% in Draft NEP which is quite low. This is mainly due to mismatch in EPS survey data in past which has led to overcapacity and low offtake

• Poor financial health of Discoms – Discoms have been reluctant to bring out new long term PPAs due to financial burden of legacy fixed cost. Discoms have now been driven towards spot market which has become quite liquid in last few years

• Issues with coal supply – Recently, we have seen that there has been shortage of coal supply which has led to backing down of power plants

• Must-Run Status of RE generation and RPO targets – Policy directives to treat RE as must-run have led Discoms consider to back-down conventional generation to avoid penalties

Key highlights and takeaway from Draft National Electricity Plan 2022 is as under:

2. Coal Power Generation – The future a. Scenario Analysis

India, as stated in the earlier section, has committed to achieve 50 % cumulative electric power installed capacity from nonfossil fuel-based energy resources by 2030. This includes power from large hydro power plants. To achieve the stated goal, Central Electricity has also developed scenarios for 2027 and 2032 respectively, forecasting India’s cumulative installed capacity and electricity generation in power portfolio.

Takeaways of CEA Draft NEP 2022

• Projected Electricity Demand estimated to be 272 GW in 2026-27 and 363 GW in 2031-32

• Electrical energy requirement on all-India basis including rooftop solar estimated to be 1874 BU in 2026-27 and 2538 BU in 2031-32

• Projected installed capacity estimated to be 622 GW in 2026-27 and 866 GW in 203132 o Installed capacity of Wind and solar to cumulatively hold 43% share in 2026-27 and 54% share in 2031-32 o Share of coal in installed capacity to reduce to 39% in 2026-27 and further reduce to 29% in 2031-32

• Electricity Generation estimated to be 1985 BU in 2026-27 and 2724 BU in 203132 (this excludes 92 BU electricity from BESS) o Share of coal in electricity generation to be 58% by 2026-27 and 49% by 2031-32 o Share of wind+solar in electricity generation to be 26% by 2026-27 and 34% in 2031-32

• Capacity addition plans between 20222032 for coal estimated 42 GW which is 9% of total capacity addition of 471 GW planned o Capacity addition plans between 2022-2032 for wind+solar estimated

372 GW which is 79% of total capacity addition of 471 GW planned

• Retirement of old thermal units planned between 2022-2032 is only 4629 MW

• Fund requirement of Rs. 28014 billion has been estimated for funding generation projects between 2022-2032 o Thermal generation projects have an estimated allocation of 10%. 72% has been allocated for wind+solar

The CEA Draft National Electricity Plan –Generation (Volume – 1) has been the latest update to the forecasts made by the central agency. To put in crux, the draft plan is in line with the earlier released Report on Optimal Generation Capacity Mix For 2029-30 (January 2020) by CEA. The Draft NEP 2022 also support the India’s vision of achieving 500 GW by 2030 if large hydro and pumped storage plants are considered, but the relevant answer to whether coal there is a ‘phase down’ of fossil fuel generation seems to be difficult. Considering the forecasts, an attempt to understand the impact on coal-based generation has been made in the following bullet points as under:

• Coal based electricity generation to still a major source of electricity in 2032 by supporting 50% of generation even when 372 GW of variable RE (solar+wind) is estimated to be installed within that period o Variable R]riable RE is supporting 50%

• As per plan, there will be a ‘phase up’ and not ‘phase down’ of fossil fuel generation by 2031-32 o Coal based capacity to increase from 210 GW as at 31-3-2022 to 248 GW by 2031-32

• Meagre retirement plan of 5 GW of thermal based generation projects, show the importance of fossil fuel generation in the power portfolio

Inference

I. Coal power generation will remain in relevance for the next decade starting from 2022 for India. It will continue to be the major source of electricity generation a. Though not considered in the Daft NEP, fund allocation is required for R&M activities for plants working in flexible mode as it leads to wear & tear of parts and equipment b. Thermal power generators must also consider 3-shift operations with accurate forecasting and scheduling techniques for a power plant. Lessons from international practice can be followed for reference c. Regulatory construct would be necessary to allow pass-through of costs associated with 3-shift operations, part-loading of power plants and utilization of AI and ML based forecasting tools d. Regularization of Operational processes and due compensations would also be required from Ancillary Services Market (especially Tertiary reserves) to provide financial signals to coal-based power plant operators on reliability and efficiency of the thermal plants.

II. Ingress of variable RE generation in the system, would mean that coal-based power plants must operate in flexible mode to support Discoms commitment to honor muststatus of RE generation.

III. Coal Based power plants must not follow with their legacy PPAs after expiry of the contracts even at the cost of forgoing a fixed cost compensation with Discoms and be open to wholesale market participation on an independent basis. Liquidity in wholesale market and accurate power sale strategy of coal-based power should allow appropriate recovery a. This will also allow equal opportunity for Discoms to freely procure power from market b. Coal-based power will also focus on efficiency-based production to achieve incentives with financial compensation.

IV.

About the author:

Mr SankarMukhopadhyay is an electrical engineer with an experience of three decades in power sector. He worked in thermal generation, distribution, planning and business development areas in a private sector large power utility. He also headed Training and Consultancy services for a long period. Presently he is a visiting professor of Energy Management and Sustainability in the JadavpurUniversity and attached to various chamber of commerce on advisory capacity. Mr Mukhopadhyay is a chartered engineer of the European Council and a Certified Energy Auditor.