Why Centre may review policy mandating gencos to blend 6% imported coal | Mint

Why Centre may review policy mandating gencos to blend 6% imported coal

Growth in thermal power generation was the highest in October at 25%, the power ministry has said.
Growth in thermal power generation was the highest in October at 25%, the power ministry has said.

Summary

  • The review will decide the future of imported coal blending as India balances growing power needs with supply challenges

New Delhi: The power ministry is set to review its policy of mandating power generation companies to blend 6% imported coal amid a steady rise in power demand and shortage of domestic coal.

The review, likely in January, will determine whether to continue the blending requirement beyond March or to increase the blending percentage in response to growing demand and fluctuating coal stocks, said two people in the know of the development.

“The coal stock position and demand situation would be looked into and if the demand seems to be rising, the blending quantum may even be increased," said one of the persons on condition of anonymity. The review will take into account the expected rise in demand as temperatures increase following the end of winter, the person added.

Queries sent to the ministry remained unanswered at press time.

Following a demand surge and a resultant crisis in September-October 2022, the government directed all power generation companies (gencos) to blend 6% imported coal, a temporary measure extended till March due to low domestic supplies.

However, the current coal stock situation appears comfortable, with data from the Central Electricity Authority indicating sufficient fuel availability as of 7 December.

As per official data, consumption at domestic coal-based power plants stood at 2.02 million tonnes as of 7 December, with supplies at 2.4 million tonnes.

This decision to reassess blending norms is influenced by record-breaking power demand in recent years. In FY23 and FY24, peak power demand in the summer months reached new highs, with September 2023 witnessing a historic peak of 239.9 GW.

This surge followed high temperatures, the El Nino phenomenon, and dry weather. Consequently, gencos have significantly increased coal imports, with over 35.3 million tonnes imported as of October, of which 13.6 million tonnes were for blending at domestic coal-based plants, as per data from the Union power ministry. The rest was imported by imported coal-based plants.

Power minister R.K. Singh had said the growth in thermal power generation was the highest in October at 25%. Meanwhile, there was a 14% year-on-year fall in hydropower generation in the first half of FY24 due to erratic monsoon rains. Around 2GW of hydro capacity is currently non-operational because of floods in Sikkim.

The surge in power demand post the pandemic, coupled with the government’s ambitious energy transition goals, has led to a dual strategy of augmenting renewable energy capacity while also expanding thermal capacity.

The power minister announced plans to add 12GW of coal-based power generation capacity this fiscal year and a total of 75GW by 2030. This strategic approach addresses the immediate energy needs while aligning with long-term sustainability objectives.

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