On Feb. 20, the Indian government brought forth an emergency law to fully drive coal output from power plants in preparation for an expected rise in demand for power from March to June, an internal power ministry notice says according to Reuters.
This is the second time the emergency law has been executed in recent years, which will drive up coal usage.
Coal overdrive
The emergency law to maximize coal power output was announced last month, Reuters reported. In January, the government planned to have its power plants consume around “eight percent more coal in the financial year ending March 2024.”
The power ministry notice was given to all power plants — which have a total capacity of 17 gigawatts combined — that run on imported coal, saying that the ministry anticipates that they will run at full capacity, while offering power to buyers on exchanges.
Several of India’s power plants, like those under Adani Power and Tat Power in Gujarat, were unable to operate at full efficiency because they had to rely on cheap domestic coal.
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With the plan to put the law into effect on Mar. 16, the power plants have been given time to import their coal before an expected rise in power consumption. This is expected to last until June 15.
The notice also said that the variable tariff for the plants would be settled by a “government-appointed panel,” which would use “the index with the lowest cost of imported coal for calculating the variable tariff for every plant.”
In anticipation of a peak in demand — around 229 gigawatts by April — the government will need to utilize a thermal capacity of 193 gigawatts for that month, the notice said. It also anticipates that its power plants would consume around eight percent more coal in the financial year ending March 2024.
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Coal industry cheers
The demand for more power supply has incentivized the need for more coal mines and an increase in imports.
“King coal is coming back and coming with a big bang,” Anil Kumar Jha, chairman of Jindal Power Ltd., told the Coaltrans India conference, which saw every speaker joining him in cheers for the promise of more coal, Reuters reported.
Coal imports are already soaring, with 10.19 million tonnes of coal being delivered in February alone, data from analysts Kpler says. However, thermal coal imports could decrease in the next few years, with predictions that the trade would conclude by 2030.
The state-owned Coal India Ltd. will reportedly produce one billion tonnes of coal by 2025-26, CareEdge Ratings wrote in a report.
With the Indian government willing to distance themselves from other nations to focus on energy transition on its own terms, Prime Minister Narendra Modi’s office approved coal deals from controversial tycoon Gautam Adani, even if it was deemed “inappropriate.”
