Coal Ministry PSUs are diversifying revenue streams by adding coal-based power capacity of 6,640 megawatts (MW), for which an investment of more than ₹60,300 crore has been planned. These capacities are expected to be commissioned by FY29.

The rationale is to encourage coal mining PSUs to diversify revenue streams to be future ready with strategies for not only thermal power plants (TPPs), but also installing solar and wind power.

A senior Coal Ministry official explained that with India’s power demand growing at over 6 per cent annually, coupled with a target of having a 500 GW non-fossil fuel capacity, TPPs would be required (in absence of cost-effective battery storage) to maintain integrity of the power grid.

Ministry advised Coal India (CIL) to find suitable de-coaled land for establishing pit-head TPPs. Setting up units at pithead is more cost-effective, with a tentatively fixed cost of around ₹2.5 a unit and a variable cost of about ₹1.25 per unit. Coal is likely to be surplus in the future and plan is to ensure sustainability in operations for CIL and NLC India (NLCIL) by setting up these TPPs, he added.

Coal-based capacities

CIL, which accounts for almost 80 per cent of India’s coal production, is in the process of setting up two TPPs. First one is located near Amarkantak as a joint venture with the Madhya Pradesh government. The planned capacity is 660 MW with an estimated cost of ₹5,600 crore.

It will be executed through a joint venture between CIL subsidiary, SECL, and Madhya Pradesh Power Generating Company. The work is expected to commence by the end of this financial year, with completion targeted for 2028.

Besides, Mahanadi Coal Fields (MCL), another CIL subsidiary, has set up Mahanadi Basin Power, as a fully owned subsidiary. MCL plans to establish a 1,600 MW TPP near its Basundhara Mines.

This pithead plant, with an estimated cost of ₹15,947 crore, has received interest from different States for 4,000 MW worth power purchase agreements (PPAs). Work is expected to begin around the middle of FY25 and targeted completion date is set for 2028.

Lignite miner NLCIL is setting up a 1,980 MW capacity TPP at Ghatampur, near Kanpur, at a cost of ₹19,406 crore. A joint venture with Uttar Pradesh, the project will supply 1478.28 MW to Uttar Pradesh and 492.72 MW to Assam. The first phase is expected to be commissioned by the end of this year.

Also, NLCIL has formulated plans to construct a 2,400 MW pit-head TPP at Talabira in Odisha. The project cost is estimated at ₹19,422 crore and it will supply 1,450 MW power to Tamil Nadu, 100 MW to Puducherry and 400 MW to Kerala. It is expected to begin by the end of this year and likely to be completed by FY29.

Rising power demand

India’s total installed power capacity stands at around 424 gigawatts (GW), of which coal and lignite-based capacity is around 212 GW.

To meet rising electricity demand, likely to grow at a CAGR of 6.67 per cent till FY27, the Central Electricity Authority (CEA) has projected a coal-based power capacity requirement of 35,014 MW till 2032.

As of June 2023, coal-based thermal power projects having total capacity of 25,440 MW (18 units) and one gas based unit of 370 MW capacity are under construction. Furthermore, 22,840 MW additional capacity has been planned by 2030, out of which 15,300 MW will be under Central and 7,540 MW under State sector.

In January 2023, the CEA suggested not retiring any coal-based units before 2030. TPPs have also been advised to implement renovations and modernisation (R&M) and life extension (LE) for running up to 2030 and beyond or operating in two shift modes to facilitate solar and wind energy integration into the grid, wherever feasible.

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