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Cover Story | June 2016

Clouds around coal

Coal plays a critical role in providing affordable power to teeming millions. However, adoption of supercritical technologies will add to its own sustainability.
Coal plays an essential role in our global energy mix, particularly in India and the developing world through electricity generation. This fossil fuel has gained prominence due to its availability in abundance in the bowels of earth, lack of disastrous impact like nuclear plants do, and favourable economics it continues to enjoy in power generation. Coal is able to ensure energy security and economic competitiveness of several economies. However, there are environmental challenges that this primary source of feedstock of the electricity generation poses globally, as such, we need to use it efficiently and reduce its environmental footprint. Despite new capacity from natural gas and renewable energy sources (RES), coal currently supplies nearly 30 per cent of global energy consumption - its highest share since 1970 - and provides 40 per cent of the world´s electricity.

Coal accounts for 55 per cent of India´s energy need. The country´s industrial heritage was built upon indigenous coal. Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise. Considering the limited reserve potentiality of petroleum and natural gas, eco-conservation restriction on hydel projects and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India´s energy scenario, the Ministry of Coal predicts.

Hard coal deposit spread over 27 major coalfields, are mainly confined to eastern and south central parts of the country (see Coal Reserves table).The lignite reserves stand at a level of around 36 billion tonnes, of which 90 per cent occur in the southern State of Tamil Nadu.

Coal India limited and its subsidiaries accounted for 494.23 million tonnes during 2014-15 as against a production of 462.41 million tonnes in 2013-14, showing a growth of 6.9 per cent. Singareni Collieries Company Limited (SCCL) is the main source for supply of coal to the southern region. The company produced 52.54 million tonnes of coal during 2014-15 as against 50.47 million tonnes during the corresponding period last year. Small quantities of coal are also produced by TISCO, IISCO, DVC and others.

Power Generation
Coal accounts for 61.3 per cent of the power generation capacity in the country, with 185.17 gigawatt (GW) out of the total capacity of 302.088 GW, as on March 31, 2016. Thus it is by far the biggest contributor to the electricity generation in the county. The second comes renewable energy sources (RES) category as a whole at 14.18 per cent with the capacity of 42.85 GW, almost closely followed by at Hydro at 14.16 per cent with the capacity of 42.78 GW. Other fuels/forces that power electricity generation include gas, diesel and nuclear sources. RES includes wind, biomass and cogeneration, waste to energy and solar.

Before the advent of gas-based power plants in the middle of the previous decade and boost to RES during the current decade, coal enjoyed over 70 per cent of share in power generation.

The overall power generation in the country has increased from 1048.673 billion units (BU, where billion equals one hundred crore) during 2014-15 to 1107.386 BU during 2015-16. The category-wise generation performance is as follows:-

Changing winds
This cosy situation enjoyed by coal is being threatened by the changing winds in India, which shifts focus on to renewable energy sources, particularly solar, in line with its commitment made at the 21st meeting of the Conference of the Parties (CoP21) held at Paris in December 2015. At CoP21, India has pledged to reduce its GHG emissions intensity - the ratio between a country´s gross emissions to its gross domestic product at a particular point - by 33-35 per cent by 2030, compared to 2005 levels. For this, India announced that it will ensure about 40 per cent of its electricity comes from non-fossil fuel sources, among others.

Widely known as Paris summit, it ended on a positive note with nearly 200 countries arriving at an agreement on the collective steps to cap the planet´s temperature rise below 2oC from the climate level seen at the beginning of the industrial revolution (about 1750), by 2030. A resolution on limiting the use of coal across countries, for this purpose, was one of the proposals of the summit.

In the run up to the summit and in line with the proposed commitments, the government had unveiled an ambitious programme of installing 175 GW of renewable capacity, including 100 GW of solar and 60 GW of wind, by 2022. ´The new laws on emissions have drawn distinctions between plants commissioned before 2003, those that came up between 2003 and 2016 and the ones going to be commissioned in 2017. The emission standards have been made progressively stringent for newer plants, thus elevating the cost for them,´ said Raghvendra Upadhya, Chief Knowledge Officer, Independent Power Producers Association of India (IPPAI).

In the wake of global consensus on restricting use of coal, several global financial institutions and banks have pledged to stop or scale-back support for coal projects. In India the situation is different, with the banks already saddled with over Rs.5.5 lakh crore of gross loans, with a large part of it being categorised as bad loans, to the sector are cautious in dispensing any more loans.

US Bankruptcies
However, with the coal prices reaching their nadir in the recent years many coal mines across the world have become unviable to operate. The world´s largest private sector coal company, Peabody Energy, filing for bankruptcy a couple of months back has stirred up the global coal markets. This is the 50th coal company to have done so in the US over the last few years. Peabody Energy was a $20-billion company five years ago and was a fierce advocate of virtues of coal as a fuel for power generation. India´s CIL has a joint venture collaboration in Australia with Peabody with a 15 per cent stake.

American coal companies saw their stock prices crash in the recent years in response to entry of shale gas, environmentalist movements and slowdown in China. As recently as in January 2016, when the market was at its ebb at 12 points, the Dow Jones US Coal Index had lost around 92 per cent of its market value since mid-2014 peak of 150 points, more than 97 percent of its value since 2011 peak of 500, and more than 98 percent of its value since its all-time peak of 700 points in 2008. Now, the index is hovering around 32 points.

Dirty fuel
With the growing consciousness of human-induced climate change, of late, the facts about the skeletons on real colour of coal are stumbling out of the cupboards. Debunking the claims of the coal biggies like Peaboy Energy that the coal is ´clean´ and that it will eliminate energy poverty, especially in the developing world, EAS Sarma, Former Secretary, Ministry of Power, Government of India is quoted as saying: ´Such claims are farcical and highly misleading, as coal is inherently a dirty fuel, containing several toxic pollutants. While coal burning in power plants invariably generates greenhouse gases (GHG) that cause global warming, scientific studies have shown that those who reside in the vicinity of power plants have been subject to mercury poisoning, exposure to radioactivity and several other ill effects. If the health costs of these adverse impacts of coal are assessed accurately, the socioeconomic cost of coal would far outweigh its perceived benefit.´ Coal is responsible for about 1.7 billion metric tons a year of carbon dioxide out of the 5.3 billion ton annual total.

Credible alternatives
There has been a lot of buzz going around about using renewable sources of energy as an antidote. The renewable energy sources which have got significant policy support in India for power generation include wind and solar for they are clean and green. The government has set an ambitious target of deploying 100 GW of solar power capacity by 2022.

However, the costs are still working in favour of coal (See table on Cost of Electricity from Different Sources).

The latest auction of solar energy capacity in India has achieved a new record low price of 4.34 rupees/kWh, bringing it ever closer to coal-parity pricing. ´The record low tariffs, which have fallen below INR 5/unit to INR 4.34/unit, are raising uncomfortable questions about the profitability and business viability of the sector. At the same time, India cannot ignore coal which is still cheaper since the government has to provide affordable power for all,´ says Upadhya.

So is the solar revolution finally here to stay in India? Yes, if the government thrust is any indication. However, the devil is in detail, when one delves deep into rated capacity and real output of solar and wind. In practice the actual power output is less than the rated power output.

Rated capacity
Solar power depends on sunlight. And because the amount of sunlight falling on it throughout a day is not constant, the output of the solar plant also varies. On an average, a solar plant which has a power output of 1 kW provides 5 units of electrical energy in a day (24 hours) approximately (the output may vary subject to different factors). But on the other hand, the 1 kW power which is produced from coal (in power plants), provides 24 units (1 kW * 24 hours = 24 kWh) during a day. It means, the solar capacity required to produce a given amount, let us say 1 MW, will be 5 MW, while 1 MW coal-based plant produce the same amount of electricity. That is, the electrical energy produced by a solar power plant and a coal power plant, both of which have the same maximum capacity, is very different. As such solar power capacities require transmission and distribution capacities that are five times more than that of coal as the T&D capacity has to match the installed capacities of solar. Ultimately, the point in using solar energy is to supplement the coal energy, which is a more stable source of energy and to ease the enormous pressure on coal and other fossil fuels used for power generation. This is because solar power can be harnessed only during daytime and there is no inexpensive storage technology available as of now where the energy generated could be stored for later use. It means that the power generated have to be consumed instantaneously.

Indian Scenario
India´s coal-fired electricity generation capacity is largely based on subcritical technology and is designed to use domestically-sourced coal. Although subcritical technology is relatively cheaper compared to other available technologies, it uses more coal and generates more CO2 emissions. It has the lowest efficiency (around 30 per cent) of the available technologies, and has low capital cost making it attractive for investors. ´From 2017, all new coal-fired projects developed in India will be required to use supercritical technology or better. Newer coal-fired technologies operate at a higher efficiency, which means that they consume less coal per kilowatt hour generated, thereby improving environmental performance. Increasing the efficiency of a coal-fired power plant by 1 per cent can reduce its emissions by 2û3 per cent,´ says Bratin Roy, Vice President - Industry Services, T_V S_D South Asia. ´To bring down the SO2 emissions, flue-gas desulfurisation (FGD) technology is required, which would result in massive changes to the boiler. The relevant selective catalytic reduction (SCR) technology is the current available technology to bring down nitrogen emissions (NOx). However, no company in India currently possesses the technological capabilities required to meet the reduction in NOx emissions,´ says Upadhya.

Thus, high efficiency low emissions technologies are critical to maintain coal-based energy security and as a precursor to the longer term deployment of carbon capture and storage (CCS) technology.

Ultra Supercritical
Coal has gotten immensely cleaner over the past generation. Historical improvements to power cycle efficiencies; reaping economies of scale leading to larger units; higher temperature steam cycles and better integrated operating procedures are already developed. However, the additional cost and availability of technology are obstacles for wider adaptation of these technologies. Coal-based power capacities are scalable and reliable in ways that renewable energy sources simply aren´t.

Ultra-supercritical technology that boosts conversion efficiency and reduces emissions is now fully proven. General Electric (GE)-Alstom combine pioneered technology at the RDK 8 coal-fired power plant in Karlsruhe, Germany has achieved 47.5 per cent net thermal efficiency, while producing 912 MW of electricity out of 1000-MW plant, making it one of the world´s most efficient hard coal-fired steam power plants. The plant reduces specific CO2 emissions by 40 per cent compared to the global average conventional coal-fired plants fleet and connecting the plant to Karlsruhe´s district heating system boosts fuel utilisation to levels in excess of 60 per cent. As efficiency increases, the fuel consumption lowers significantly per kW/h produced, improving plant operating and overall lifecycle costs.

´With ultra-supercritical steam power plants, we are contributing to raising the current average global efficiency rate of coal-fired power plants from 33 per cent today to over 40 per cent,´ said Michael KeroullT, head of commercial at GE power division, a subsidiary of US conglomerate GE, while discussing about the plant. The plant employs ultra-supercritical steam technology, whereby the water pressure inside the plant´s giant boiler reaches 4,400psi (300bars), more than is exerted when a bullet strikes a solid object. Boiler mills crush coal down to a fine powder that turns into a fireball inside the boiler and heats the water above 1,112¦F (600¦C). At this temperature and pressure, the water becomes a ´supercritical´ fluid in that it no longer has specific liquid and gas phases, but instead exhibits properties of both. In this unique state, supercritical steam becomes much more efficient at driving the turbines that spin the coal-fired power plant´s electricity-producing generators, KeroullT explained. As such ultra-supercritical technology becomes an industry norm today.

Looking ahead
Rapid industrialisation in developing nations such as China, India and East Asia seems to preserve a significant role for coal in the years to come. GE, which is the owner of the advanced ultra supercritical power generation technology, in January 2016 predicted that coal will remain the backbone of the power systems in many countries. ´In South East Asia, where energy demand is projected to spike by 80 per cent, coal will likely be the single largest energy source, owing to its abundance and relative affordability,´ it added.

About 85 per cent of new coal-fired power plants are expected to come up in Asia and those countries are interested in investing further in coal-fired power plants in response to growing energy demands and also to secure their energy supply. ´If coal must be used to power growth, affordability, accessibility and reliability are key drivers for these countries. Lower emissions and ultra-supercritical technologies are responding to these challenges,´ GE said.

GE´s hypothesis, whether it holds good or not elsewhere is a different issue, but it supports at least the Indian context where the government is targeting coal production of 1.5 billion tons, including 500 million tons from non-public sector sources.

That means India is far from saying ´Good-bye´ to coal in the near future. A more viable strategy might be to focus on improving the efficiency of India´s coal-fired power plants, replacing older coal plants with supercritical units and pushing for newer technologies such as coal gasification to breach the viability barrier by taking a leaf out of the experiences of Japan, Germany and the US. ´A renewed push for hydro and gas-based capacity is simultaneously needed to beef up the green component in India´s base-load capacity,´ says Upadhya. However, these clean coal technologies should ensure sustainability through security of supply, environment protection and economical competitiveness.

India is where coal-based power plants have the highest life expectancy, with several of them living beyond 25 years. While closing down the unviable is the best means available for such an old plants, others, where compatibility is found, should be converted to supercritical and ultra supercritical technologies. As such, coal is certainly not dead. Not even close to it.

Time to revisit distribution policy
By Rajendra P. Ritolia, Advisor, Swaymbhu Natural Resources Pvt. Ltd, India Power
Out of India´s total installed capacity of 250 gigawatt (GW) of electricity, even in the best of times it produces only 160 GW, primarily due to fuel shortages and coal is the mainstay for a majority of these power plants. Over 15 billion units of electricity have been lost thanks to non-availability of coal over the last two fiscals, precipitating a peak deficit of 15 per cent.

Let´s take stock of the overall scenario and try to put our finger on the problem. Coal production was stagnant from 2011 to 2014 and thereafter, showed significant improvement, with a quantum jump of 9% in the year 2015-16.

The government of India has ambitious plans to produce 1 billion tonnes of coal by CIL and 0.5 billion tonnes by other companies to touch 1.5 bt by 2020. It is not a daydream that CIL can achieve 1 billion tonnes, by observing the proactive measures taken by the central government in land acquisition, R&R, forest & environment clearances, etc.

Here, state governments are the major beneficiaries in terms of local employment in case a mine becomes operational in their state, by way of increase in tax revenue, and hence are showing keen interest in resolving issues by helping in land acquisition and rehabilitation and resettlement.

The way the MoC is working as seen in the auctioning and allocation of coal blocks, and the follow-up made in monitoring the achievement of milestones, one can be reasonably confident that non-CIL companies also will achieve the 0.5 bt by 2020 as planned. Also, there are many large mines of 5-15 MPTA production capacity and plans are being implemented by NTPC, WBPDCL, OPGC, CSPDCL, Mahagenco, PSPSCL, KPCL and other state government power and minerals development corporations to leverage those.

The speed of laying new rail lines at high-traffic patches gives us the confidence that the logistics bottlenecks will be resolved soon, paving the way for CIL to achieve the targeted production of 1 bt by 2020.

What exactly is the present scenario? With an increase of around 50 million tonnes in 2015-16, the present status is that major power plants have more than sufficient coal stocks (34 mt, the highest ever), enough for 24 days´ consumption. The pithead stocks at CIL mines increased to 53 mt and power generators declined to lift coal as their coal yards are already full. Lack of evacuation is one of the reasons for CIL pegging down production during ´15-16 and also in April ´16.

So, what lies in store? Based on the Paris Declaration (COP21) the government of India has drawn up an ambitious plan of setting up 175 MW capacity in the new and renewable energy sector by 2022 (solar-100 GW, wind-60 GW, biomass-10 GW, small hydro projects-5 GW). The plan is to increase the contribution of power from renewable to 40% by 2030 from the present level of 13%, reducing the dependency on fossil fuels, in turn helping reduce the effect of greenhouse gases.

For an ambitious country like India to achieve the planned growth of 8%, to fulfil the dreams of its citizens for 24X7 power and power to all, for rapid industrialisation and to make the vision of ´Make In India´ a success, coal should be used full-throttle now. All power plants constructed should work with full PLF and there should be no shortages in supply.

There´s a fallacy in the system, though. On the one hand, we are saying CIL is not able to sell coal because there is surplus coal as production has increased so much, on the other hand, the fact is in 2015-16, the quantum of coal imports were 220mt, about one-third of the country´s production. There are buyers in the country for whom, coal is not available and there is surplus coal where buyers are not visible. The New Coal Distribution Policy (NCDP) 2007 was formulated when demand for coal was high and production was low. It envisages distributing the available coal to all to fulfil partial requirement of all by giving some preference to certain priority sectors. To supply coal to desperately needy consumers, e-auction sale at a 30% higher price was introduced.

What should be the way forward? In the present situation, where coal is surplus for all consumers, the private sector, public sector, IPP & CPP, power & non-power, cement, sponge iron, etc should be treated equally. There should not be deferential or preferential pricing to anyone.

The domestic coal prices should be revised to make it on par or less than international coal prices. In that scenario, the Indian coal consumer would not think of importing coal. So, the time is now ripe to revisit NCDP 2007 and to promulgate a new Coal Distribution Policy to keep the Indian coal consumer with the Indian coal producer.

-BS Srinivasalu Reddy

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