In a recent interview with Power Line, Prasanna Kumar Motupalli, chairman and managing director, NLC India Limited (NLCIL), shares his views on the current state and future outlook of the power sector as well as operational highlights of NLCIL and the company’s future plans. Edited excerpts…
What is your assessment of the current state of the power sector in the country?
The power sector in the country performed exceedingly well in the last decade with a paradigm shift from a power deficit scenario to a power surplus scenario. There have been all-round improvements in all areas of generation, transmission, distribution and renewable energy. India’s per capita electricity consumption is around 1,250-1,350 kWh, which is only around 30 per cent of the world’s average per capita electricity consumption and it is even lower when compared with developed nations in Europe and the US, hence, definitely there is a lot of scope and potential for growth in the energy sector.
With major policy interventions, the government is taking all measures to make this transition towards a cleaner future. The ambitious 500 GW RE programme of our country on a growth trajectory towards 2030. Concerted efforts by the government have paid off well with reduced aggregated transmission and distribution losses in the country. Through various initiatives, energy efficiency has largely improved.
What has been the key operational and financial performance of NLCIL in the past two to three years?
NLCIL has commenced maiden coal production from Talabira II and III mines in 2020-21 and started production ahead of the scheduled date in record time. Coal production grew from 1 mtpa to 6.4 mtpa during 2021-22 and during the past year we achieved 10 mtpa. We have plans to achieve 13 mtpa coal production during the current year.
Our company generated 16.73 BUs during 2020-21, 22 BUs during 2021-22 and reached an all-time high of 30 BUs during last year. Of this, 2.20 BUs was generated through green energy, which is also the highest ever green energy generation by NLCIL. Our RE CUP has improved from 13.58 per cent during 2019-20 to 16.56 per cent during 2020-21, 17.54 per cent during 2021-22 and 2.19 BUs of power generated during 2022-23. Meanwhile, against the national average plant load factor (PLF) for thermal power plants of 64.15 per cent, N LCIL has achieved 68.86 per cent during 2022-23.
In the past three years, the company’s income has grown by 50 per cent (from Rs 115.93 billion to Rs 173.83 billion). The net worth of the company has grown by almost 19 per cent (from Rs 127.77 billion to Rs 151.69 billion).
The power sector in the country has performed exceedingly well in the past decade. There is a lot of scope and potential for growth.
What are the various power and mining projects under implementation or in the pipeline? When are these expected to be commissioned?
- NUPPL-Ghatampur Thermal Power Project (3×660 MW) in Uttar Pradesh is under construction and will include all features of emission control such as SOx and NOx as well as maintain efficient operations. The plant is likely to be commissioned in this financial year.
- The NLC Talabira Thermal Power Project (3×800 MW) – Phase I is proposed to be set up at Jharsuguda and Sambalpur districts, Odisha. Land acquisition has been started for the project and is in full pace with the support of the state government. Being a pit head station, the variable cost of electricity from the plant would be less than Re 1 per kWhr.
- The Thermal Power Station II second expansion (2×660 MW) comprising a lignite-based ultra supercritical technology thermal power plant of capacity 1,320 MW, with two units of 660 MW capacity each, is proposed to be set up in Neyveli, Cuddalore district, Tamil Nadu.
- For Pachwara South Coal Block (9 MTPA), the mining plan has been approved and obtaining necessary clearances for the commencement of pre-mining activities is at advanced stages. The coal block is expected to be operational in the current financial year.
- For a 150 MW hybrid (solar+wind) renewable power project (SECI), bid evaluation is in process. The 510 MW solar power project under the CPSU scheme is being executed in three phases – 300 MW in Rajasthan, 200 MW on a pan-India basis (Telangana state discom has expressed consent for usage) and 10 MW at Neyveli for smart city, which is already synchronised.
- The Mine III project with a capacity of 11.5 mtpa is proposed to be commissioned to fuel the requirement of TPS II second expansion. A revised mining plan as per the revised guidelines is under approval and the project is expected to be operationalised by 2027.
- Recently, NLCIL emerged as a successful bidder for the North Dadhu-West block of the North Karanpura coalfield in Jharkhand. This was awarded under the government’s auction process for commercial mining of various coal blocks across the country. NLCIL intends to participate in the upcoming commercial coal block allocation schemes also and try for additional blocks.
What are some of the initiatives being taken by NLCIL to promote sustainable mining operations?
Sustainability is one of the core values of NLCIL – COMMITS. We continue to promote sustainability in all our operations. Various sustainability initiatives being undertaken in mining are as follows:
- Backfilling of mined-out land and reclaiming it to premining condition. About 2,800 hectares of land has been reclaimed so far.
- As a diversification measure, we are planning to develop a lignite to methanol project with a plant capacity of 1,200 tonnes per day. This project will replace 1.5 mmscmd of natural gas and will reduce around Rs 10 billion of LNG imports.
- As an eco-friendly measure, the overburden (or waste) available from the mines is proposed to be utilised in the construction industry as manufactured sand (M Sand). For this purpose, NLCIL is setting up M Sand beneficiation plant of 2.62 LM3 per annum at one of our mines. Another plant with a capacity of 6.25 LM3 is also planned and is at the tendering stage.
- We are also developing a 50 MW solar power project in the mined-out lands in Neyveli. Tenders have been floated. This will be the first project of such a capacity in mine-reclaimed land in the country.
What are your plans in the renewable energy segment? What are the key targets of NLC India Renewables Limited?
We have set a target to reach a renewable energy capacity of 6 GW by 2030 from 1.4 GW at present. We are currently implementing renewable energy projects aggregating 660 MW capacity in various parts of the country. Tender is under way for developing 150 MW wind-solar hybrid projects. Our company intends to participate in all the upcoming renewable energy tenders in the country. Our target of 6 GW is not firm and we intend to increase the same to any level, based on the prevailing scenario. We are exploring possibilities for floating solar projects.
What are NLCIL’s future plans and targets? What is the capex plan for the coming years?
Our company’s corporate plan envisages to reach 17 GW of capacity by 2030, including 6 GW of renewable energy from the present capacity of 6 GW, which includes 1.4 GW of renewable energy. This capacity addition is planned in a phased manner in the next six to seven years. To achieve this capacity expansion programme, NLCIL will undertake a capital expenditure of around Rs 750 billion, with optimum debt-equity mix of 70:30, 75:25 and 80:20 on these projects. We are confident that funding these projects will not be a constraint as NLCIL has the highest rating accorded by credit rating agencies.
What, according to you, will be the role of thermal power generation in the emerging power sector scenario?
From the standpoint of our country in climate summits, it is clear that thermal power generation is expected to act as an important source in the sector, at least till 2040. Considering our net zero ambition, this may even get elongated. The role of base load generation will be lost and replaced by flexible generation plants, with high ramp up and ramp down characteristics. It was initially feared that the PLF of thermal power plants will fall drastically. However, the same has been offset due to restrained capacity addition in the past few years. An optimal energy mix study conducted by the Central Electricity Authority projects 777 GW of capacity by 2030 for meeting India’s climate commitments. NLCIL’s Ghatampur project, along with NLCs Talabira thermal power project in Odisha, are being considered as project under implementation and candidate projects, respectively. Taking into account these thermal projects, a study has been carried out for grid stability and meeting the power needs of the country.
What is your outlook for the power sector for the medium to long term?
In the medium to long term, a larger penetration of renewable energy into the grid is expected and subsequent grid balancing issues will become dominant, which will be handled through energy storage systems and flexing of thermal plants. As the sector is growing, new avenues are expected to come up in a surprising way. The role of green hydrogen in the power sector, along with electric vehicles and carbon capture will have a great role in the future. From a longer perspective, India’s installed capacity is expected to saturate around 1,000 GW capacity. As per the 20th Electric Power Survey by the CEA, India’s power requirement by 2042 would be around 3,776 BUs.