King Coal is going nowhere; 30 GW projects on way

With a projected cost of over ₹8 crore per megawatt (MW), the estimated capital expenditure for establishing the 30 GW capacity would be around ₹2.5 trillion. The power ministry had last year projected that the construction of 1 MW capacity would require up to ₹8.39 crore.

Land banks would be created near coal mines and then allocated to power generation companies, said two officials aware of the plans being conceived by the Union coal ministry.

Public sector undertakings such as Coal India Ltd would form joint ventures with power generation companies and invest equity in these power projects, they said.

This renewed push for thermal capacity even as India aims for energy transition with 500 GW of installed non-fossil capacity comes after crisis-like situations in 2021 and 2022 amid low availability of domestic coal and high prices of imported coal.

"The plan is in line with the development in the Singrauli district (in Madhya Pradesh), around the Singrauli coalfield, wherein few plants have been set up catered with coal from this field transmitting power across the country," said one of the persons mentioned earlier.

“Six such locations have been identified around which such pithead-based power plants would be set up, turning these places into thermal power hubs. The aim is to cut the transportation cost of coal," this official added.

The coal ministry has identified six mines for this: the Mand Raigarh and the Korba coalfields in Chhattisgarh, the IB Valley and the Sardega coalfields in Odisha, and the North Karnpura and the Rajmahal coalfields in Jharkhand.

"Currently, the plan is to establish up to 5 GW of cumulative capacity at each of the identified locations. The land parcel and the coal would be assured, and provided by the government. The terms and modalities of the joint ventures are yet to be worked out," said the second person mentioned earlier.

With demand for power reaching new highs, and as power demand is expected to double by 2030, the government is looking to scale up thermal capacity as coal-fired plants still form the baseload for the country's power generation ecosystem.

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The power ministry has outlined a roadmap to install an additional 80 GW of thermal capacity by 2030. Thermal power capacity currently stands at 240 GW, out of the country’s total installed power generation capacity of 429.9 GW.

The coal ministry's plans to encourage equity investment by its public sector undertaking and set up these power generation joint ventures comes after Coal India Ltd and its subsidiaries' recent entry into thermal power generation.

In January, the Cabinet Committee on Economic Affairs approved equity investments by Coal India subsidiaries South Eastern Coalfields Ltd and Mahanadi Coalfields Ltd for setting up two power plants in joint ventures with a total capital expenditure of about ₹21,547 crore.

Since then, coal PSUs have been looking at expanding their power generation portfolios in the country. On 30 January, Mint reported that Coal India was in talks with the governments of Uttar Pradesh and Jharkhand for setting up thermal power plants.

NLC India, another central public sector enterprise, is already present in the coal- and lignite-based power generation space.

As the country's renewable capacity is not yet adequate and is still growing, added to the lack of storage capacity to ensure round-the-clock supply of green power, the government has had to resort to thermal power to meet the immediate and massively growing need for power.

According to the Central Electricity Authority, peak power demand this year may hit 260 GW, way above the 243 GW power requirement recorded last year. Union power minister R.K. Singh had in January said that peak demand may reach 366 GW by the end of this decade.