India's Thermal Plants May Become Economically Unviable

According to Buckley, a written-down plant can be reconfigured to be viable, particularly if cheap ($20/tonne) domestic coal can be procured in proximity to the plant without exorbitant rail freight costs. However, a key requirement is that blending in low energy and high ash Indian coal requires high quality existing Australian thermal coal which is high energy and low ash.

But coal from Carmichael would be low energy and high ash and far from ideal for blending with cheap domestic Indian coal, he said. Commenting on Energy Minister Piyush Goyal’s recent assertions that India would need to keep importing coal, including from the proposed Carmichael mine, Buckley said: “The strategic aim to cease non-coast power plant usage of imported thermal coal within the next two to three years means domestic operators will need to reconfigure their plants so that they can use domestic coal.”

In May, the Indian government stated that it was considering auctioning Coal India’s domestic coal for supply and blending at import coal-based power plants where possible.

As India works through and resolves domestic supply shortages, the need for imported thermal coal will continue to progressively decline.

India targets for all public sector undertakings to be using 100 pct domestic coal by this fiscal, following NTPC’s move to virtually cease coal imports in 2016-17. “As proof of the gradual success of this program to protect India’s current account deficit and currency, Indian coal imports peaked in 2014-15, and have progressively declined since then. May 2017 saw a six pct year-on-year decline for the month,” said Buckley, who is in Mumbai and New Delhi this week.

For India, tapping renewable energy sources is a great opportunity, he said. “The move away from thermal fuel imports improves the balance of payments, helps improve the currency and hence reduces imported inflation generally,” Buckley added.

An IEEFA report titled “NTPC as a Force in India’s Electricity Transition” showcases how the Indian government is shifting rapidly towards a low-carbon economy — a step towards achieving the 2015 Paris Climate Agreement aim of cutting greenhouse gases from burning fossil fuels. India’s draft “Ten Year Electricity Plan” calls for a staggering 275 GW of renewable energy by 2027, in addition to 72 GW of hydro and 15 GW of nuclear energy.

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