Coal remains a critical fuel source for India’s growing economy. The power sector accounts for the lion’s share of coal offtake and has seen a significant rise in coal consumption and supply in recent years. The total coal consumption for power generation increased by 11.4 per cent (79.5 mt) and reached 776.8 mt in 2022-23, surpassing the previous year’s figure of 697.3 mt. Despite the growing emphasis on renewable/non-fossil fuel-based energy, it is envisaged that there will be incremental coal-based thermal capacity additions to cater to the growing domestic energy needs, further creating demand for this resource.
Coal production and supply trends
In 2023-24, India’s largest coal producer, Coal India Limited (CIL) contributed 77 per cent of the total production in the country. Overall, CIL produced 773.6 mt of coal, registering 10 per cent growth over a base of 703.2 mt in FY23. This is the first instance where the company has recorded double-digit growth in two successive years since its inception. In volume terms, the output expanded by 70.4 mt, the second-highest increase.
For FY24, CIL’s supplies to the power sector have reached 618.5 mt, an increase of 31.9 mt compared to the 586.6 mt in FY23, reflecting a growth of 5.4 per cent.
Source-wise, the domestic coal receipt by power plants (from CIL, Singareni Collieries Company Limited, captive coal mines and e-auctions) increased by 64.1 mt, representing a growth of 9.6 per cent from 667.6 mt in 2021-22 to 731.7 mt in 2022-23.
There has also been a growing dependence on imported coal for the power generation sector. Compared to 2021-22, coal imports by the power plants surged by 28.6 mt, reflecting a 106 per cent rise translating to a total import volume of 55.6 mt in 2022-23 compared to 27 mt in 2021-22. During 2022-23, domestic coal-based plants imported 35.1 mt of coal, while coal-based plants imported 20.5 mt.
Due to the lower coal stock in thermal power plants (TPPs) during the second quarter of 2021-22 and supply patterns from domestic sources, the Ministry of Power (MoP) issued a letter dated April 2022 regarding the import of coal for blending purposes for the period 2022-23. As per the advisory, approximately 61 mt of coal was to be imported for blending purposes during 2022-23 by TPPs. The coal imported for blending during 2022-23 was about 35.1 mt. In 2023, due to the rising trend in power demand in the country and a 14 per cent fall in hydro generation recorded in the first half of FY2024 compared to the corresponding period of FY23, an additional burden has been placed on coal-based thermal generation. In order to ensure uninterrupted power supply across the country, the MoP, in a letter dated October 25, 2023, directed all gencos (central, state and IPPs) to continue importing coal for blending at a minimum of 6 per cent (by weight) for the remaining period of 2023-24 until March 2024.
In 2023-24, according to data from the Ministry of Coal, there was an increase of 94.21 per cent in coal imports by imported coal-based power plants during April 2023 to January 2024, compared to the corresponding period in the previous year. However, there was a reduction of 36.69 per cent in the volume of coal imported for blending by TPPs, amounting to 19.36 mt during April 2023 to January 2024, in contrast to the same period of the previous year.
The way forward
Coal remains an indispensable component of India’s energy mix in the current scenario. A key highlight in FY24 was coal and lignite production reaching 1 billion tonnes (1,039 mt). As per projections, the demand for coal is expected to reach 1.3 billion-1.5 billion tonnes by 2030. CIL has set a target of achieving a production volume of 1,000 mt by FY26. While the long-term goal is a transition towards cleaner energy sources, the immediate focus lies in optimising coal utilisation and exploring cleaner alternatives.