What can India do to address its perennial power shortage?
The summer here and tonnes of coal are burnt in power plants to keep homes and offices cold. But most plants are grappling with a coal shortage and hinted at a power crisis. What's the situation now?
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Every year, the coal behemoth advises power producers to stock up before the monsoon since the mines tend to get flooded, impacting production.
This year’s March was hottest in over a century, leading to earlier-than-usual surge in electricity demand.
The big mismatch in demand and supply forced several states to resort to power cuts. India gets 75% of its electricity from coal.
And the average coal stocks at domestic power plants have fallen to nine days as of mid-April, the lowest in at least eight years.
This is way lower than the government-mandated norm of an average 24 days of stock. It prompted The All India Power Engineers Federation to warn of an impending energy crisis in 12 states.
The shortage of electricity as a percentage of demand has shot up to 1.4% this month compared to 1.1% in October when India last faced a serious coal shortage.
Bihar, Jharkhand, Haryana and Uttarakhand are facing an electricity deficit of more than 3% each while Andhra Pradesh is facing a power shortage of 8.7%.
According to Central Electricity Authority (CEA), as of April 17, out of 173 plants that it tracks, 101 are left with critical levels of coal stock.
To supply coal to the thermal power stations, 453 wagons are required. While only 379 were available in the first week of April, which has now increased to 415. But the shortage is worsening the supply crisis.
State-run Coal India, which accounts for 80% of India’s coal output, increased its production by 27% in the first half of April.
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But the world’s largest coal mining firm said the escalating demand -- driven up by post-pandemic economic buoyancy and hotter than normal summer -- seem to be 'dwarfing' the supply increase.
Coal India has sharply reduced supplies to the non-power sector which includes aluminium smelters, cement factories and steel mills despite record production. It raised its supplies to the power sector by 14% in the first half of April.
Nomura has said that if supply does not catch up with the demand, it would result in more power outages in summer and a diversion of coal from non-power sectors, weighing on industrial output and increasing electricity costs. This can become "another stagflationary shock", it warned.
So why does India face a recurring coal shortage and how can the issue be addressed?
Even as power outages rise, the coordination between power, coal, and railway ministries has also come to the fore.
Ashok Khurana, director-general of the Association of Power Producers told Business Standard that the blame game has always plagued the power sector.
Coal India, on its part, said that it is coordinating with these ministries to build up stock at power plants but exhorted power plants designed to run on imported coal to meet their requisite imports set for the year.
The power ministry also asked utilities to increase coal imports for blending. Fitch Ratings however said that high international coal prices would limit any significant increase in imports.
Coal India was caught unprepared by the surge in electricity demand after the third wave of the pandemic. The long-standing problem of insufficient railway rakes to transport coal from pitheads to power plants added to the woes. Eliminating chronic short- and long-term deficiencies in coal-supply logistics and better inter-ministerial planning can help solve India’s power shortages.
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First Published: Apr 21 2022 | 7:00 AM IST
