Coal, Power ministries plan winter coordination to prevent power shortages

Buoyed by the success of keeping coal supplies steady – and thus, power supply undisturbed – in the blistering summer, the ministries of coal and of power are aiming to replicate the feat during the chilling winter months.

 

Senior officials of both ministries at the Centre have checked data on coal supply and projected power demand during the winter this year. The winters in most parts of India have rarely led to power outages, but officials are unwilling to take chances. 

 

“In any case, air conditioners have become a year-round stream of demand for power.  If there are local surges due to any additional factors, the peak demand on any day could surge,” explained one of the officials.  

 

While summer marks peak power demand across the country, with aggregate demand going beyond 250 GW on some days this year, winter highs also need to be watched, they said.  

 

The World Energy Outlook 2024 from the International Energy Agency projects electricity use to grow six times as fast as overall energy demand because of factors like the adoption of electric vehicles, air conditioning use, digitalisation of the economy, and the expansion of artificial intelligence. This is particularly true of growth hot spots like India. While month-on-month changes are likely to remain minimal, the need to ring-fence the sector from fluctuations has become imperative, government officials say.  

 

The country’s hunger for power has been breaching new highs in recent years, so it is important to be prepared, argue officials. This is compounded by the often-unreliable supply of coal, which typically dips in the monsoon months. Underground mines become unsafe to operate while opencast mines face their own challenges from the rains. This means supply only recovers September onwards. This year, too, production has dipped a bit in the monsoon months. In the quarter ended September 2023, which coincides with the monsoon, production at Coal India Ltd (CIL) – which accounts for 83 per cent of the national output – was 3.4 per cent lower than the same period last year. This year’s output dropped to 152.06 metric tonne (MT) from 157.43 MT in the same period last fiscal.  

 

The big scare of 2021 has also informed the government’s new initiative. That year, power stations faced a sudden shortage of coal supplies in September, for more than one reason. Coal stocks at the power plants often fell to a precarious level of just a day of operations, meaning they would not be able to generate electricity beyond a 24-hour period. The plants had not placed long term orders for coal since prices were falling but were caught wrong-footed. In addition, plants faced delayed payments from buyers, which ate into their cash balances. 

 

The result was that both the coal and the power ministries had to scramble to keep the lights on in homes as well as industry. The former allowed coal imports to tide over the buildup in shortages. Wiser after the supply shock, the coal ministry began a system of sending out instructions to all the chiefs of CIL subsidiaries to not slacken production in the summer months. Key subsidiaries of the company, Mahanadi Coalfields and South Eastern Coal Limited, which account for as much as 51.2 per cent of the group’s total production, were marked for monitoring monthly production, establishing linkages with the railways, and so on. 

 

The power sector accounts for 74 per cent of the total output of CIL, so any fluctuations there are a matter of concern. Consequently, the power ministry has over the past few years institutionalised strong coordination mechanisms with the coal ministry. This also extends to the ministry of railways to decide on state-wise requirement of rail rakes for transport of coal.  

 

There is another risk. India has added generation capacity of 6.5 GW in the July-September quarter, almost all of which comes from renewables. While these additions are welcome, taking India’s cumulative renewable energy capacity to over 200 GW, an EY analysis shows the critical role of base load plants is rising. RE power peaks at a different time of the day than consumption surges, so coal-fired plants must remain in a high state of readiness to maintain energy security. For thermal power companies this means access to adequate coal supplies at every moment, even when the aggregate demand on the grid has not peaked. This point was highlighted at a conclave titled 'Indian Power Sector Scenario 2047' organised earlier this month by the Central Electricity Authority.   

 

The demand for power at all-India levels is rather benign right now. Data from the Grid Controller of India shows the average during October has been 201 GW, a sharp drop from the peak of 250 GW just a few months ago. The mechanisms put in place have proved durable. “It ensures we face no surprise,” another ministry official said.  

 

Essentially the management of the Indian electricity grid has now been escalated to the level of ministries instead of being confined to state-owned companies. As a result, it has literally translated into a mere walk across the corridors of ministry offices in New Delhi when needed, which has decongested and streamlined management of the energy needs of the economy.