Indian coal shortage highlights Coldry opportunity
The southeast Indian state of Tamil Nadu is currently experiencing a shortage of black coal.
According to the below articles, over 2,600 MW of coal-fired capacity is sitting idle due to the shortage, including 810 MW of generation capacity at the North Chennai Thermal Power Station and 630 MW at the Tuticorin Thermal Power Station and another 630 MW at the Mettur Thermal Power Station.
These power plants run on black coal sourced from coal mines located interstate, namely Andhra Pradesh to the north and Odisha, some 1200km northeast.
They need 75,000 tonnes a day but can only get their hands on about 30,000 tonnes.
And while the Indian government has swung into crisis management mode to address the shortfall, with Minister Goyal allocating more coal train deliveries, this crisis shows the tremendous challenges being tackled in the drive to establish reliable, affordable energy and infrastructure in the face of tremendous growth objectives.
The state of Tamil Nadu is also home to NLC India Limited, the majority government-owned energy company and custodian of 70% of India's lignite resources.
NLC is also our partner, along with India's national iron ore miner, NMDC Limited in the development of our integrated Coldry-Matmor R&D project.
The project is proposed to be located at NLC's lignite mine and power generation site in the town of Neyveli, 200km southwest of Chennai.
Here are some interesting facts about power generation in Tamil Nadu:
- Tamil Nadu is home to India's largest brown coal reserves.
- NLC contributes 4.3GW of capacity to the Tamil Nadu power grid, mining around 30 million tonnes of lignite a year, and has recently diversified its energy asset portfolio, adding black coal, wind and solar assets, reducing the emissions intensity of its output.
- Around 3.2GW, or 74% of its power generation capacity, comes from lignite, which accounts for just over 90% of electricity production across its assets.
Our project, which commences with an R&D stage, is the prelude to commercial rollout in India.
And while the ultimate commercial tonnage of a future Coldry plant will be decided based on market conditions at that time, the current shortage highlights the opportunity for NLC to support Tamil Nadu's black coal power stations via upgraded lignite.
The 75,000 tonnes per day requirement the keep the black coal power stations running equates to an annualised figure of just under 30 million tonnes. The current supply shortfall is around 16 million tonnes annualised. We believe NLC's site could host a Coldry plant of up to 4 million tonnes capacity, based on current waste heat availability under a retrofit scenario. This won't solve the coal shortfall, but it may improve energy reliability and could provide NLC with an increasing role as a diversified energy company.
The map below shows the current sources (and bottleneck) of black coal supply to Tamil Nadu.
It’s not hard to see the benefit of NLC’s mine location (orange dot). It’s in-state and relatively central, making it ideally placed to produce upgraded solid fuel (Coldry) to supplement black coal-reliant operations within the state.