Coal Position Of India.

July 2006

COUNTRY PROFILE

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Map of Coal Reserves in India (billion tonnes)

A FOCUS ON INDIA >> The choice of India for the location of the WCI/IEA workshop was an important one – along with China, India is increasingly influential in global energy markets.>> ARUNACHAL PRADESH

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ndia is also active in international energy and environmental discussions, such as through its involvement in the Asia Pacific Partnership on Clean Development & Climate (AP6), FutureGen, the Carbon Sequestration Leadership Forum and as a signatory to the Kyoto Protocol (see CDM report on page 5).

in total primary energy supply will reach only 9% in 2030 compared to 4% in 2002. A small number of new nuclear plants will be built, leading to a tripled increase in the nuclear share. Hydropower will increase strongly up to 2020 but its growth is expected to then slow as most good sites are exhausted.

Key Energy Facts

Electricity Generation

India is a major producer and consumer of energy: • it is the world’s eleventh largest energy producer, accounting for about 2.4% of the world’s total annual energy production; • the sixth largest energy consumer, accounting for about 3.7% of the world’s total annual energy consumption; • primary energy demand has grown over the last thirty years at an average of rate of 3.6% a year.

India is the sixth largest electricity generating country in the world and accounts for about 4% of global annual electricity generation. India is also ranked as the sixth largest electricity consumer worldwide. Annual electricity generation and consumption have increased by about 64% in the past decade and the projected rate of increase in electricity consumption estimated at as much as 8-10% annually through to 2020 - is one of the highest in the world.

Coal is the dominant commercial fuel, meeting half of commercial primary energy demand and a third of total energy needs. According to IEA projections, coal will remain the dominant fuel in India’s energy mix through to 2030. Demand is projected to grow from 391 Mt in 2002 to 758 Mt in 2030. Only China’s demand for coal is expected to outstrip India’s. The power sector will be the main driver of India’s coal consumption – currently around 68% of India’s electricity is generated from coal, although this share is expected to decline slightly to 64% by 2030. The IEA projects that biomass and waste, the main fuels in the primary energy mix in 2002 (includes noncommercial sources of energy), will increasingly be displaced by coal and oil. Natural gas use is set to increase rapidly but from a low base, therefore its share

Coal Reserves Coal reserves in India are plentiful but low quality. India has 10% of the world’s coal, at over 92 billion tonnes, third only to the USA and China in total reserves. At current rates of production, India has enough coal for the next 217 years. Most of India’s coal reserves are relatively high ash bituminous coal and are located in Jharkhand, Orissa and West Bengal (see map). Less than 5% of India’s coal reserves are coking coal, needed for the steel industry. As a result, India imports coking coal to meet about 25% of its annual needs.

Coal Production & Consumption Indian coal production reached 375 Mt in 2005 (see table). Almost all of India’s 565 mines are operated by Coal India and its subsidiaries, which account for about 86% of the country’s coal production. Current policy allows private

0.8 UTTAR PRADESH

0.3 ASSAM NAGALAND MEGHALAYA

7.5 MADHYA PRADESH

35.4 JHARKHAND 11.4 W. BENGAL

9.4 CHHATTISGARH ORISSA 15.1

4.7 MAHARASHTRA

8.3 ANDHRA PRADESH

Smaller amounts of coal are also located in Arunachal Pradesh (31 million tonnes), Meghalaya (117 million tonnes) and Nagaland (4 million tonnes)

Sources: Ministry of Coal, India; Foreign and Commonwealth Office, UK mines only if they are ‘captive’ operations, i.e. they feed a power plant or factory. Most of the coal production in India comes from opencast mining, contributing over 83% of the total production. Coal India employs around 460,000 people and is one of the largest five companies in India.

Energy Poverty Some 595 million people in India – 60% of the Indian population – depend on traditional biomass for cooking and heating. The electricity industry faces enormous challenges in providing a reliable service and meeting rising demand. The investment cost in meeting the projected increase in generating capacity, transmission and distribution is estimated by the IEA at around $680 billion from now to 2030. Without the introduction of major new government initiatives, the IEA believes India is unlikely to achieve its target of full electrification by 2012.

Coal Production & Consumption in India, 1996-2005 (in million tonnes) 1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Production

268

283

294

290

296

307

320

333

353

375

Bituminous

248

263

273

269

276

285

297

310

328

347

Lignite Consumption

20

21

20

21

20

22

23

24

25

22

301

325

329

341

368

375

391

391

NAV

NAV

Source: CSLF website, original source Government of India

NAV = not available

Line of Control

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July 2006

Continued from page 3

International Activities In April this year, India became the first country to join the USA on the government steering committee for the FutureGen Project. FutureGen is an initiative to build and operate the world’s first coal-based power plant that removes and stores CO2 while producing electricity. The signing of the agreement followed President Bush’s trip to India at the beginning of March. India will contribute $10 million to the FutureGen Initiative and Indian companies are also expected to participate in the private sector segment. India is a member of the Carbon Sequestration Leadership Forum (CSLF), an international initiative to assist in the development of improved cost-effective technologies for carbon dioxide capture and storage. India is also one of the six

countries involved in the newly formed AP6, as well as being a signatory of the Kyoto Protocol.

Challenges Facing Coal in India The Indian energy sector faces a number of challenges. • Lack of investment in mining - in spite of the economic liberalisation of 1991 the mining sector has not seen major investments. • India has not been able to develop a comprehensive solution to deal with the high levels of fly ash generated at coal power stations through the use of Indian coals. • Lowering energy intensity of GDP growth through higher energy efficiency is key to meeting India’s energy challenge, ensuring its energy security and tackling CO2 emissions. • Unreliability of electricity supplies is severe enough to constitute a constraint on the country’s overall economic development.

Electricity Generation (TWh) - Fuel Mix 2500 Coal

Oil

Gas

Nuclear

Hydro

Biomass & waste

2000

1500

1000

500

0

1971

2002

2010

construction of a demonstration plant at Aurya in Uttar Pradesh. The next step is putting together the necessary finance for the Aurya plant, which would be engineered and constructed by BHEL and owned by NTPC (National Thermal Power Corporation). Commissioning would be at the end of 2008. There are plans to follow the demonstration with the construction of a commercial scale (400 MWe) plant in 2012. Activities such as these demonstrate the commitment in India to concentrate in the short to medium term on a policy of

Integrated Gasification Combined Cycle Developments As one route to raising the efficiency of power generation for Indian coals, BHEL is developing an air blown pressurised fluidised bed gasification based IGCC system. Last year, the process reached an important milestone with the achievement of a successful uninterrupted run in the 6.2 MWe facility at Tiruchirapalli in Tamil Nadu using Singareni coal containing over 40% ash. Over 100 tonnes of coal were processed in the facility. Total test run time under pressure now exceeds 4000 hours. There are plans for scaling up the process to 100-125 MWe, with the

Electrification rate:

44.4%

Population without electricity (million)

582.6

Population with electricity (million)

465.9

2030

Sources: IEA 2004 & 2005, CSLF website (www.cslforum.org), BP 2006, EIA, Journal of Mines, Metals & Fuels 2005, Coal India & www.indiacore.com

limiting greenhouse gas emissions through enhancing the thermal efficiency of coalfired power generation by using advanced clean coal technologies. In the longer term, when more efficient plants have been established, carbon dioxide capture and storage is seen as a possible strategy to adopt together with novel plant designs. This is illustrated by India’s membership of the Carbon Sequestration Leadership Forum and participation in FutureGen. Information supplied by IEA Clean Coal Centre: www.iea-coal.co.uk

Recent & Contracted 500 MWe Units in India Generating company

Site

Synchronising date

NTPC

Vindhyachal Unit 8

02/00

NTPC

Simhadri Units 1 & 2

02/02 & 08/02

NTPC

Talcher Units 3, 4, 5

01/03, 10/03, 05/04

NTPC

Rihand Units 3 & 4

01/05 & 09/05

NTPC

Ramagundam Unit 7

08/04

NTPC

Talcher Unit 6

MPEB

Birsinghpur Unit 5

NTPC

Vindhyachal Units 9 & 10

NTPC

Kahalgaon Units 5, 6 & 7

KPCL

Bellary

NTPC

Sipat Units 4 & 5

APGENCO

Vijayawada Unit 7

APGENCO

Bhoopalpally Unit 1

NTPC

Korba Unit 7

Source: BHEL, India

2020

Electricity Access

CLEAN COAL TECHNOLOGIES IN INDIA India has a large number of existing coal-fired power generation plants and there is continuing rapid installation of new units. Most have been and are being constructed by Bharat Heavy Electricals Limited (BHEL). The table shows recent 500 MWe units and those contracted/ under construction. These use 17.9 MPa/540ºC main steam conditions. All currently operating plant use subcritical steam conditions but a move to supercritical conditions is beginning in order to raise efficiency. A supercritical station at Seepat (3x 660 MWe) is being manufactured by suppliers from Korea and Russia and is due to be completed early in 2009. There are also plans for a further 20 GWe of supercritical capacity, and BHEL has associated with Alstom in order to bid for these future supercritical 660/800/1000 MWe coal fired units.

Other renewables

July 2006

CLEAN DEVELOPMENT MECHANISM IN INDIA In this short report, Pamposh Bhat, Head of GTZ CDMIndia, reviews the power industry in India and opportunities for the Clean Development Mechanism. The Clean Development Mechanism (CDM) is a project based mechanism established under the Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC). It has two main objectives: 1. assisting countries not included in Annex I to the UNFCCC (‘developing countries’) in achieving sustainable development; and 2. allowing countries that are included in Annex I to the UNFCCC and have specific GHG emissions targets in Annex B to the Kyoto Protocol (the traditional industrialised countries) to acquire Certified Emission Reductions (CERs) from CDM Project activities undertaken in non-Annex I Parties and count them towards their Kyoto targets.

Kyoto Ratification India ratified the Kyoto Protocol in August 2002, prior to the eighth Conference of the Parties (COP8) to the UNFCCC held in New Delhi in OctoberNovember 2002. The Indian government subsequently approved the establishment of the National Clean Development Mechanism Authority (NCDMA) in December 2003. India has since given host country approval to over 297 projects. The CDM Executive board (EB) has to date registered 71 Indian Projects. Procedures underlying the CDM have evolved slowly and steadily but there are

an increasing number of voices in the international climate policy arena that are calling for improvements to the way the mechanism functions. Concerns have been expressed that projects that are likely to enhance host countries sustainable development - such as renewable energy, energy efficiency and transport - are not competitive in the CDM market and are becoming marginalised.

India – Power Shortages The total installed capacity in India, including captive power plants, increased to 137,552 MW in 2005 compared to 131,424 MW in 2004. However, India is still facing a power shortage in terms of overall and peak demand - the electricity shortage is 8% while peak capacity shortage is about 12%. The Indian government has announced plans to end shortages by 2011-12, with plans to provide power to all by this time. This would require 68,500 MW of base capacity additions by 2012. Coal-fired power plants contribute the majority of electricity in India and will continue to be a major source of electricity generation into the future. Improving the efficiency of coal-fired power plants will be essential in helping to meet some of the demand. The introduction of supercritical technology will also be important, with the addition of 36,800 MW supercritical units to be commissioned during the 11th (2007-2011) and 12th (2012-2016) five year plans.

CDM in India All of these new projects can benefit from GTZ CDM-India, a capacity building project under the Indo-German Energy Programme (IGEN) which is developing methodology for renovation and

ENERGY STATISTICS

>> BP launched the 2006 edition of its "Statistical Review of World Energy" in June.>>

Q

See Ecoal Volume 52 for further information on the Clean Development Mechanism or visit http://cdm.unfccc.int www.cdmindia.com & www.envfor.nic.in/cdm

Other Trends

QUANTIFYING ENERGY

uantifying Energy provides statistical information on energy market developments in 2005. World primary energy consumption increased by 2.7% in 2005. This was below the strong growth in 2004, at 4.4%, but still above the 10-year average. China accounted for more than half of global energy consumption growth. The largest consumption slowdown was in oil - to 1.3%

modernisation schemes (R&M) and for supercritical power plants in India. These would be groundbreaking methodologies if they are approved by the CDM Executive Board and would benefit future projects in India. The national baseline for carbon burning in the Indian power sector has been jointly prepared by IGEN and the Central Electricity Authority (CEA) and a first edition is due to be published in September 2006. This will enable Project Design Document (PDD) developers, validators and project owners to base CERs on well-researched and officially sanctioned performance data in the power sector. CEA will periodically update the database. A supercritical coal-fired power project can generate substantial amounts of CERs. As an initial estimate, each project is expected to generate annual CER revenue of US$4.5 million (annual emission reductions of 750,000 tCO2 at a conservative CER price of US$6). Importantly, it has a good chance of passing the ‘additionality’ test and being registered as a CDM project because it is likely that the technology will be considered as ‘first of its kind’ in India. The Indian government has introduced a new tariff policy which assists CDM projects. The policy also encourages Public Sector Units (PSU) to develop CDM projects and directs Central Electricity Regulatory Authorities and State Electricity Regulatory Authorities to set tariffs taking the CDM benefits into consideration.

Coal Coal is the world’s fastest growing fuel this was the case in 2005, in 2004 and for the last decade, from 1995. This is only true, however, as a result of China. In 2005 China alone represented 76.8% of the growth in world coal consumption. Chinese coal growth represented 38.8% of the growth in total energy consumption worldwide in 2005. Outside of China, coal consumption grew by 1.8% in 2005.

• Energy prices – in both 2005 and so far in 2006 there were sharp rises in energy prices, especially the price of oil. • Fuel switching – away from higher cost energy into lower cost sources. Gas faced competition from cheaper coal, particularly in liberalised markets. • Weather – energy markets in 2005 were particularly affected by the weather. • Geopolitical situation – particularly in oil producing countries, has been perceived to have deteriorated. Energy security has risen up the agenda in almost every country. A copy of the BP Statistical Review of World Energy can be downloaded on the BP website: www.bp.com

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