India will undoubtedly continue to rely heavily on coal in the near future. In the medium term. To mitigate the severity of the coal scarcity, which affects electricity generation and thus the Indian economy, a three-pronged approach is required. Better planning, infrastructural expansion, and increased domestic supplies were central to the concept.
Coal has been making headlines in recent months. Not for no cause. The recent electricity crisis in various Indian regions has pushed coal to the forefront. India's energy sector is primarily reliant on coal as a fuel source for thermal power plants. 

With an installed capacity of 399 gigawatts (GW) and an annual generation of 1,490 billion units, India is the world's third largest producer of electricity. Coal currently accounts for over 70% of total generation and dominates India's energy mix. As a result, any disruption in demand and supply patterns that results in a coal shortage will have a cascading effect on India's energy markets and economy.

What caused the power outage?

The following causes may have contributed to India's recent power crisis:

• Rapid growth in electricity demand: As the economy recovered from the COVID-19-induced shock, industrial power demand increased. Record-breaking summer temperatures, reopening of the recent surge in power demand was caused by commercial complexes and offices, as well as higher consumption.

• Inadequate demand forecasting: Despite the fact that domestic coal production increased by 8.55% year on year in FY22 to 777 million tonnes (MT), there is still a coal shortfall at power plants. As of 1 June 2022, 92 of the 165 active coal-fired power plants were at critical coal stock. When compared to April 2021, thermal power plant generation climbed by 7.60%, when the expected increase was just 2.15%. Inadequate planning and demand forecasts have aggravated the coal scarcity. 

• Transportation issues: The coal evacuation infrastructure across the country has been inadequate. As on 1 June 2022, there was an average actual coal stock of 82% of the normative requirement for 17 pithead coal based plants. This figure is usually 28% on an average basis for 156 non-pithead power plants, which require transportation of coal over large distances. While coal production in April 2022 increased by 29% compared to last year, the rake movement from Coal India Limited (CIL) mines remained constant, at around 275 rakes per day. Railways, being the most efficient and economic mode of coal transportation, are expected to increase capacity to 450 rakes per day by 2030 to improve coal supplies to the non-pithead power plants.

• Increase in global coal costs: Global coal prices have risen dramatically since September 2020. This is due to a combination of causes, including increased demand in China and droughts in Brazil, China, Turkey, and the United States, which reduced hydel generation and increased reliance on fossil fuel-based generation. Flooding in portions of China and Indonesia hampered supply, causing a downward spiral. The Ukraine crisis and the sanctions imposed on Russia resulted in a severe drop in world supplies of natural gas, which increased demand for an alternative fuel, namely coal. As a result, worldwide coal demand is expected to rise by 9% to approximately 8 billion tonnes in 2021. Coal prices reached an all-time high in March 2022 as a result of rising demand for coal as a natural gas substitute in electricity generation.
According to the World Bank's commodity prediction for April 2022, international coal prices are expected to be more than 80% higher in 2022 than in 2021.

Production and imports of domestic coal (in million tonnes)

• Delays in the operationalization of coal mines: The Supreme Court of India's 2014 decision to reallocate 204 coal blocks slowed the increase of coal supplies from captive/other coal mines, which needed another five years to meet 2014-15 output levels. Although the Government of India has taken the necessary steps by establishing commercial coal mine auctions in 2020 to increase domestic supply and improve Atmanirbharta (self-reliance) in coal security, the operationalization of these mines may take some time. Only 24 coal mines have been able to commence production out of the 104 coal blocks allocated/auctioned since 2015 under the Coal Mines (Special Provisions Act), 2015 and Mines and Mineral (Development and Regulation) Act, 1957.

• Delayed payments: In the past, delayed payments by some generation firms (gencos) resulted in CIL restricting the amount of coal supplied to them. Delayed payments by gencos are caused by delays in payments by distribution firms (discoms), which are caused by inadequate tariff revisions that do not result in cost recovery for the power supplied by the discoms and cause delays in receipt of government subsidies. The discoms' strained financials result in a buildup of receivables for the gencos (INR 1,23,000 crores as of April 2022), causing a rippling effect throughout their supply chain.

 

Factors influencing near-medium-term decarbonization

The electricity crisis in some Indian states has refocused attention on coal-based thermal assets. This may appear to be an opportune time to transition away from coal and accelerate economic decarbonization. However, due to India's high reliance on coal, it is anticipated to remain the country's principal source of energy in the near to medium term. Coal is India's major source of energy security for various reasons:

• Meeting rising electricity demand: India's combination of being one of the world's fastest expanding economies and the world's second most populated country (accounting for around 18% of the world's population) is likely to drive future energy growth. With current per capita electricity usage at roughly one-third of the global average and considerable urbanisation plans, power demand is predicted to more than quadruple in the coming decade. Due to a variety of factors, including commercial competition from solar power generation, coal-based thermal power plant utilisation (PLF) gradually declined from 64% in FY 2015 to 55% in FY 2021. It improved greatly last year to 59% as industry demand recovered; however, it remains significantly lower than historical levels, suggesting the need to optimise and improve the utilisation of already installed coal-based power plants. Improving the availability of coal supplies is one strategy to enhance utilisation.

• Problems with sporadic use of non-coal sources of energy: With a significant push thanks to several government of India programmes, subsidies, and Power generation from renewable sources, particularly solar, is now more affordable than coal-based power generating because to advancements in technology. The rates for solar and wind power are actually as low as INR 1.99/kWh and INR 2.43/kWh, respectively, thanks to the growing use of renewable energy (RE) and the introduction of numerous cost-effective technology solutions. Even though the capacity mix's percentage of thermal-based sources has decreased from around 72% to about 60% in FY22, they still make up over 75% of the total power produced.16 Given this situation, coal is anticipated to remain India's main energy source, with its use in the electricity sector leading the way. This is primarily due to the intermittent nature of renewable energy sources and the lower penetration of 24/7/storage-connected RE facilities, which make it challenging for RE plants to replace coal for supplying the base load.

• Coal use: India is the second-largest producer of coal in the world and ranks fifth globally in terms of coal reserves. Coking coal suitable for steel production is scarce, whereas thermal coal suitable for power generation is abundant. Because of its abundance, coal is the preferred energy source for supplying the rising demand for energy. Coal-based power is crucial to India's energy ecology and economy with more than 200 GW of coal-based generation capacity that offers base load electricity and energy security. Additionally, around 20% of the thermal coal needed is imported. As thermal coal imports cost more than INR 70,000 crore, this affects not only the foreign exchange reserves but also raises the price per unit of power generation. This may have been resolved by encouraging the auction, allocation, and operationalization of new greenfield coal mines in the nation, together with strict oversight of Environmental, Social, and Governance (ESG) factors. According to an NITI Aayog research, as India moves closer to its net zero targets, coal-based capacity in the country would peak at roughly 250 GW by 2030, while coal-based utility energy output will slow down and probably peak in 2040.

 

1. Techniques to prevent another power outage and coal shortage

 

• Improved demand forecasting and management: Over time, the complexity of the electricity demand has grown. Planning institutions are required to estimate demand profiles while taking a variety of factors into account. To operate the electricity sector successfully, a number of stakeholders must collaborate, beginning with careful planning of the power system. Strong planning, scheduling, and monitoring procedures must be created, and coal resource utilisation must be optimised.

• Use of data analytics for precise forecasting: Accurate peak and energy demand forecasts can be aided by advanced data analytics.23 It is crucial to have precise forecasts for the coming days as well as for the short, medium, and long term. It is necessary to include important factors affecting that region in these projections at a more detailed level. Climate and weather patterns, GDP growth, urbanisation and industrialization, water tables and crop patterns, festivals and sporting events, and GDP growth are only a few of them. It's also crucial to use econometric models built from the ground up for peak and energy demand forecasts.

• Aligning energy generation and consumption: More important than managing average demand is managing peak demand during particular time periods. Adoption of time-of-use rates can also encourage good consumer behaviour, allowing the needs of particular user groups to be coordinated with the production of renewable energy. To match energy demand with renewable generation, dedicated feeders could be employed for particular user groups.

• Better Planning: Better demand forecasting will enable better planning, which will include locating imported coal, having the railroads make necessary logistics arrangements, increasing coal output, and having access to transmission and distribution corridors. The import strategy for coal must also be based on a variety of source options so that unexpected geopolitical developments or climate changes can be taken into account. For its part, the government has advised all gencos to import 10% of the necessary coal for blending.

• Improving coal evacuation infrastructure: Pithead-based plants account for just around 20% of the installed capacity in India's coal-based capacity, which is biassed towards non-pithead based plants. As a result, the logistical infrastructure is heavily reliant. The Government of India had announced an INR 50,000 crore plan for the infrastructure's augmentation in May 2020, acknowledging the importance of it. Development of common rail corridors, dedicated freight corridors, promotion of coal washery at mine[1]end and conveyor systems can alleviate the current evacuation and transportation difficulties. Large amounts of coal are carried by road using inefficient, more expensive, and environmentally unfriendly diesel-operated vehicles, which results in unnecessary diesel consumption and foreign exchange costs.

2. Environmental pollution containment techniques

It's critical to implement containment measures that lessen the damaging effects of coal combustion on the environment if we want to continue using coal-based energy sources. The following are some of the projects and focus areas used to accomplish this goal:

• Pruning of inefficient thermal capabilities, as well as plant life extension and rehabilitation and modernization (R&M): The Ministry of Power is implementing the retirement of outdated and ineffective thermal units as part of the National Mission on Enhanced Energy Efficiency (NMEEE). Usually, they will include factories that have been operational for more than 25 years.

In order to increase the main operational indicators, such as plant availability factor, station heat rate, and auxiliary usage, there are continuing projects for R&M and capacity life extension. These actions will make plants more effective, which will lessen their negative environmental effects.

• Flexible coal-based capacity operation to meet peak power needs: Due to the significant capacity expansion anticipated in the renewable energy sector, coal-based capacity must operate as a safety net to handle fluctuations that inevitably occur in RE generation, necessitating the need for flexible operations of coal-based capabilities. Coal-fired power facilities are typically built for base load operations. Trials are currently being conducted on around 4 GW of coal-based capacity over 36 units to examine the viability of flexible plant operation.

• Carbon capture, utilisation, and storage (CCUS): CCUS prevents the atmospheric entry of captured carbon dioxide (CO2), hence reducing carbon emissions. It is a crucial step in India's quest for net zero since it can make the switch from fossil fuels to renewable energy sources more gradual. Twenty concepts have been chosen for support in the Department of Science and Technology's Mission Innovation challenge. Additionally, there are other CCUS programmes in progress in India that use a variety of approaches and aim to achieve a variety of goals, including flue gas carbon capture, CO2 conversion to methanol, and increased oil recovery using CO2. The broad adoption of CCUS technology would depend on a strong carbon pricing mechanism that would put a price on carbon emissions because they are now quite expensive.

Current requirements must be optimised while increasing sustainable energy security.

The recent push by India towards renewable energy is consistent with the global shift away from energy derived from fossil fuels. The proportion of thermal capacity, and notably coal-based capacity, has been falling over the past ten years or so, while RE-based capacity has been rapidly expanding.

India has promised to develop 50% of its installed generation capacity based on non-fossil fuel sources by 2030, reduce its projected carbon emissions by 1 billion tonnes, reduce the carbon intensity of the economy by 45%, and have 500 GW of non-fossil fuelbased energy capacity in place as part of its COP 26 goals, as was already mentioned at the outset. These are a part of India's "Panchamrit," a five-point action plan that was unveiled at the Glasgow summit in 2021 and has a long-term goal of having net zero carbon emissions by the year 2070. The mix of capacities now being implemented will need to be skewed in favour of RE projects.

 

On the other hand, coal is the primary source of our structural dependence on energy. India has one of the greatest coal deposits in the world, making coal more than just an economic growth driver for the country because it's essential to guaranteeing energy security. But it is essential to optimise coal-based energy and make it more effective and clean in order to serve the greater good and create a sustainable ecosystem. Additionally, it is important to keep in mind that coal can only support us in the short term; vital steps must be taken to balance our reliance on coal and guarantee a smooth transition to a green economy.

To meet India's evolving demand profile, an adequate combination of generation technologies is required. The rise of non-fossil fuel based sources of generation is highlighted by the economy's decarbonization. In addition, it is necessary to modify partially utilised thermal power facilities to provide more flexibility (ramp-up/ramp-down), which will enable the integration of variable RE sources without compromising grid stability. Our reliance on coal will steadily decline as we move towards an ESG-driven clean energy future. To fulfil the country's energy demands in the interim, we also need to maximise the use of this vast resource.