By Deepak Kannan and Dan Lalor

September 12, 2017 - Coal will remain the mainstay fuel for power generation in India in the next two decades despite stiff competition from rapid capacity additions of renewable energy, an official at state-owned Coal India said Tuesday.

Thermal coal, which accounts for about 55% of India's electricity generation, will still account for 48%-54% going up to 2040, even as the country embarks on an ambitious plan to add huge renewable energy capacity, Director of Marketing at Coal India, S N Prasad, said at the Indian Coal Markets Conference in Kolkota.

Coal India was on track to achieve its production target of 1 billion mt by 2019, Prasad said, adding that higher domestic output has saw imports of seaborne cargoes fall 19% year on year in its India's 2016-2017 fiscal year.

"Renewables will definitely pose competition to thermal coal beyond 2020," he said.

Domestic thermal coal supply also faced challenges such as coal quality improvements and improved logistics, Prasad said.

The government has been expediting construction of three railway lines in the eastern states of Chhattisgarh, Jharkhand and Odisha to improve coal transport between mine mouths and power plants.

"The opening up of the railway lines will unlock at least 170 million mt of coal stocks," Prasad said.

In the next two or three years, several coal washeries will be set up to improve the quality of at least 75 million mt of thermal coal and 48 million mt of coking coal, he said.

Diversification

Coal India is also looking to diversify from the coal business to other segments like fertilizers and solar power generation, Prasad said.

India has set itself a target of adding 175 GW of renewable energy by 2020, of which solar was expected to account for 100 GW, he said, adding Coal India will be a part of the consortium planning to install about 20 GW of solar power in the next three or four years.

Prasad also said the company, which supplies about 80% of India's coal requirements, was proposing to diversify into iron ore or bauxite mining in coming years, with plans to mine copper overseas as well.

There are no concrete proposals yet, he said. "With our own mining efforts, the country can easily save $4 billion per year in import costs."