KOLKATA (miningweekly.com) – Thermal power plants across India have achieved significant drawdown on existing coal stocks this month, but this is not expected to be a sustained emerging trend.

According to government data, total coal stocks carried by all thermal power plants in the country were pegged at 24-million tonnes as at February 11, compared with just over 36-million tonnes as at February 11, 2016.

Stocks of imported coal at thermal power plants were also down to 1.2-million tonnes this year, about half of the stocks carried in February 2016.

The government report attributed the sharp fall in stocks to thermal power companies having forward booked the dry fuel, based on assured and ready supplies from major miners including Coal India Limited.

Over the past several months, the 110 thermal power plants in the country were receiving an average of 52-million tonnes of coal a month, compared with an average of 43-million tonnes in the early months of 2016.

The report pointed out that, with the higher availability and assured supplies, thermal power companies did not have to carry large stocks of fuel and incur additional carrying costs.

However, based on forecasts from the Central Electricity Authority (CEA), the statutory government authority for the electricity sector, slack demand for the fuel is likely to continue in the long term, with the authority claiming that the country does not need any more coal-based thermal power plants until 2027.

The forecast is based on the CEA's assumption that electricity demand in 2022 would be around 235 GW, or about 17% lower than demand estimates made in 2012 when a large number of thermal power projects were planned for implementation.

Power Ministry officials say the viability of even the aggregate 50 GW of new thermal capacity under implementation will be hard to achieve in view of falling electricity demand and thermal power plants sharply reducing plant load factor (PLF).

They say most thermal power plants in the country are operating below the 60% PLF mark, the minimum capacity utilisation required to recover operational costs of a thermal power plant.

In the period April to December 2016, the average PLF slipped to 59%, the lowest in ten years, according to government data.

In fact, the officials point out that with increased power generation from renewables, it is possible that thermal power plants operating at 50% PLF would be sufficient to meet immediate electricity demand.

Renewable-energy capacity grew 34% in 2016, compared with 9% for coal-based generation capacity, according to government data.

Against this backdrop, current coal stock depletion should be seen as a temporary phase. In the long run, domestic coal production is set to go on rising while demand for thermal electricity will, at best, be on a plateau in the medium and long term, the officials add.