The international coal lobby seems to be jittery with India’s green energy ambition with coal experts like Gerard McCloskey, founder of Merlin Consultant, Rodrigo Echeverri of Nobel Resources, Gareth Carpenter of Platts International, Howard Glatiss of Coal Marketing Company, Colombia and even Partha S Bhattacharyya, former Coal India chairman, sharing a common opinion that India has to tune up its coal policy in the context of the global coal scenario as well as in the wake of its green energy initiative.
India, experts opined, was spending more on green energy at a time when it had the opportunity to mop up thermal production, making the best use of falling coal prices. “India’s thermal plants are running at a 62% plant load factor (PLF). If the PLF is taken up to 75%, which can produce 170 billion units of additional power, India will create an additional coal demand of 120 million tone (mt),” PS Bhattacharyya said at a two-day long 10th Indian Coal Markets Conference organised by mjunction. While the additional 170 billion units could come at a cost of Rs 1.75 per unit variable cost through thermal generation, India was spending Rs 4.34 a unit through solar generation for producing the same amount. “This has cost the country Rs 42,500 crore more,” Bhattacharyya said. While India has added 6000 MW of solar power in less than six years and has made a part of it available on the grid, large thermal power stations had to under utilise capacities because of low power demand effecting in lower PLF. At a production level of 860 billion units last year, India’s power market crashed and power prices at exchanges went below Rs 2.50 a unit.
Coal demand in India fell last year as plants operated at a lower PLF. Globally, coal demand went down because China withdrew from the market, the whole of Europe had no demand last year because of a lean winter and Turkey imposed a tax of $15 per tonne for imported coal. So India, instead of checking coal production, took a policy of ramping up coal production, which led it to end FY 16 with a 55-mt stock pile.
An importing nation suddenly started talking of exporting coal, which sent shock waves across the globe. With the Atlantic market squeezing, coal marketers started diverting coal to Asia Pacific markets. Everyone was looking at the Indian, Korean and Japanese coal markets but India, at that time, started facing a problem of plenty replacing the problem of shortages, Glatiss said. He said international coal prices reached its low in February-March this year and Colombia, which never exported a single tonne of coal to India in its history of exports, exported 2.5 mt in 2016 because it got cheaper to import Colombian coal to India. Carpenter of Platts International said though South Africa exported 23.6 mt to India between January and July this year registering a 11% y-o-y jump, there are concerns over India’s squeezing demand. Overall, there has been significant reduction in India’s stem coal imports in FY16. But a Coal India official on the condition of anonymity said in no way are present situations favour-able to ramp up output in India.