Untimely rains bring relief to thermal units as power, coal demand tapers

Downpour allows power plants to stock coal for upcoming summer months

Heavy rains in spring have halted the surge in the demand for power, which had touched a record high of 200 gigawatt (Gw) with the onset of 2023. Not only have these unseasonal, abnormally high rains cooled down power demand, but have also allowed thermal power units to stock up coal for the upcoming summer months.

From 205 Gw in the beginning till mid-March, the power demand has come down to 180 Gw at the commencement of the new fiscal year on April 1, 2023. With this, the coal stocks at the end of the thermal units has also increased, as units reduce their consumption.

Sector experts said, unlike last year when the temperature started soaring in March, this year, the same month has acted as a buffer for the thermal power units. “Given that this month is cooler and thermal units have started preparing in advance to maintain adequate supply of coal for the summer months, they can now stock up coal at their end. Coal India has reported high production, plus several states have placed tenders for imported coal. Coal stock should remain at comfortable levels,” said a senior power sector professional.

Average coal stock across thermal units maintained a streak of 10-12 days last month. Average spot power prices have also cooled off by half to Rs 4 a unit in the past two weeks, due to slowing demand.

The relief period of the power units, however, is short-lived. According to the India Meteorological Department's (IMD's) latest forecast, above-normal heatwave days have been predicted in most parts of the country during April-June. "A significantly higher number of heatwave days are predicted over parts of Bihar, Jharkhand, Uttar Pradesh, Odisha, West Bengal, Chhattisgarh, Maharashtra, Gujarat, Punjab and Haryana," IMD Director General Mrutyunjay Mahapatra said on Saturday.

It is expected that by the second week of this month, power demand will cross the 200-GW mark again and will only rise from there. The Centre has moved fast and early this year to address coal-demand supply issues, even as it anticipates a shortfall in domestic coal supply.

According to government data reported by this paper recently, during April-June 2023, the total coal requirement across the country would stand at 222 mt to meet the anticipated record high power demand of 229 GwW this summer. The likely availability of domestic coal is expected to be around 201 mt. This shortfall is translating to a 100,000- to 300,000-tonne daily deficit in the supply of domestic coal, said sector executives. The current daily (average) stock at the thermal units stands at 35 million tonnes (including both domestic and imported).

Considering the same, the ministry of power in January this year directed all power generating companies (gencos) to mandatorily import coal up to six per cent of their total requirement.

Six states namely — Andhra Pradesh, Haryana, Punjab, Maharashtra, Rajasthan, and Tamil Nadu have already placed imported coal tenders totalling 5.6 million tonnes.

Recently, the union minister for coal said, “There won't be any shortage of domestic coal during the peak power demand in summer. Both public and private players have been asked to raise coal production and prepare for the monsoon in June and July.” National miner Coal India Ltd has also reported a record high coal production of 700 million tonne at the close of the last fiscal.