Indian generation growth points to coal supply mismatch

Spanish Market: Coal, Electricity
06/06/24

India's coal-fired power generation in May grew at its fastest pace in the previous seven months, dwarfing the rate of increase in domestic coal supplies to utilities, a trend that could exacerbate an inventory drawdown at power plants and support the outlook for imports.

India's overall coal-fired generation — which meets most of the country's power requirements — rose by 13pc from a year earlier to 119.54TWh last month, according to data from the Central Electricity Authority (CEA). May coal-fired generation was also higher from April's 116.5TWh, the highest monthly output since at least since 2016, according to Argus data. The year-on-year growth last month was the highest since October 2023 when coal-fired generation increased by 33pc from the same month in 2022. The generation growth hovered between 2-10pc during November 2023-April 2024.

Domestic coal supplies to utilities also grew to cater for the increase in power output and demand but the pace of growth was softer than the rate of increase in generation. Domestic coal supplies to utilities grew by 7pc from a year earlier to 74.22mn t in May, according to data from the coal ministry. Average growth during January-May was 7pc this year, up from 6pc a year earlier but still weaker than the average 10pc growth in coal-fired generation in the same period this year.

This has led to an increased inventory drawdown, especially as summer heatwaves supported power demand, lifting the prospect of stable coal imports by Indian firms, led by the utilities. Combined coal stocks at Indian power plants slipped by 6.2pc to 47.55mn t as of 4 June from 50.69mn t on 31 March, the end of India's 2023-24 fiscal year, according to CEA data. The drop in inventories has been cushioned by a steady increase in domestic coal output and supplies, along with an increase in imports.

The country might have imported 17.05mn t of thermal coal last month, according to data from global trade analytics firm Kpler. This would be up on the previous month's 16mn t but down from 17.65mn t estimated for May 2023 by Kpler. Data for last month's coal imports are yet to be released by shipbroker Interocean but it estimated imports at 16.99mn t for April, up from 16.46mn t a year earlier.

The increase in domestic coal supplies and imports comes as authorities have implemented measures to ensure steady power supplies to meet peak summer electricity demand. The measures include directives from the federal power ministry to utilities that run on domestic coal to use 6pc imported coal in their fuel mix until 30 June. The ministry has also asked power plants that run on imported coal to keep power generation levels high until 15 October, supporting the prospect of higher imports from these utilities. These coal-fired plants have a combined capacity of 17.5GW.

Authorities are re-evaluating the order to domestic coal-fired utilities for importing coal for blending. The directive might not be extended beyond June, given the prospects for above average monsoon rainfall this year that could lift hydropower generation and put pressure on coal-fired output, a government official told Argus.

Domestic coal supply mix

State-controlled Coal India (CIL), which meets most of India's coal requirements, supplied 55.81mn t of coal to the power sector, up by 5.7pc from a year earlier and from 51.88mn t in April. This was supported by growth in its output and overall supplies last month. CIL produced 64.4mn t in May, 7.5pc higher from a year earlier.

Higher supplies by CIL helped to partly offset reduced flows to the power sector by fellow coal producer Singareni Collieries (SCCL) in May. SCCL supplied 5.18mn t, down by 2.8pc from a year earlier and nearly unchanged from 5.17mn t in April. SCCL's overall output dropped by 2.4pc from a year earlier in May to 5.73mn t, coal ministry data show.

Captive coal block producers and other small government mining entities comprised the remainder of supplies to utilities last month.

Generation mix

India's hydropower output last month rose by 7pc from a year earlier to 12.26TWh, according to CEA data. This was also up from 8.11TWh in April. The increase was partly supported by increased flows at dams, with snowmelt from the mountains boosting river flows, the government official added.

India's gas-based power generation increased to 5.05TWh in May, up from 2.83TWh a year earlier, CEA data show. This rose following an order from the power ministry in April to boost output between 1 May-30 June to help partly meet summer demand.

Renewable power output rose to 21.07TWh in May, up from 18.12TWh a year earlier, according to grid operator Grid Controller of India, also known as Posoco. Increased wind generation during the month partly supported the higher renewable power output and helped to meet electricity demand, the official added.

India's nuclear power generation was 4.39TWh in May, up from 3.50TWh a year earlier.

By Saurabh Chaturvedi

Growth in coal-fired power vs coal supplies to utilities 2024 (y-o-y % ±)

Growth in coal-fired power vs coal supplies to utilities 2023 (y-o-y % ±)

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21/11/24

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Talks in Baku torn between mitigation and finance

21/11/24

Cop: Talks in Baku torn between mitigation and finance

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Cop: EU, four countries commit to 1.5°C climate plans

21/11/24

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Australia backs no new coal power call: Correction

20/11/24

Cop: Australia backs no new coal power call: Correction

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Indonesia advances coal-fired power phase-out to 2040

20/11/24

Indonesia advances coal-fired power phase-out to 2040

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