Is India heading towards a power crisis? How bad is the situation?
Several States across the country are expected to face coal shortages , a scenario that leads to power shortages in the coming weeks with India entering the peak power demand season from April to October. Experts predict that high global thermal coal prices and below normal imports will further exacerbate the crisis.
In fact, coal supply shortage is playing out at a time when power demand is rising and is expected to surpass the July 2021 peak power demand of over 200 gigawatts (GW). The daily peak power demand for Q4 FY22 averaged at 187 gigawatts (GW). During April 1-12, the average daily peak demand was more than 194 GW.
Prices in spot markets are also at multi-year highs. The market clearing price (MCP) at the Indian Energy Exchange (IEX) in FY22 stood at around ₹4.4 per kilowatt hour (kWh), which is the highest in the last 10 years.
What is causing this crisis?
Depleting coal supplies at thermal power plants, the mainstay of India’s power sector, has resulted in this crisis.
Coal-based power generation, with a capacity of around 210 gigawatts (GW) of the total 396 GW, accounts for about 53 per cent of India’s total power capacity as on March 2022.
Experts predict that depleted coal supplies at power plants will lead to power outages, a scenario that played out in September-October 2021. Due to high demand and interruption in coal supply (mainly due to heavy rains), the coal stock at power plants fell sharply leading to power outages in several States. With concerted efforts of the government, the stocks rose to levels which is sufficient for an average of 10 days at 85 per cent of the plant load factor (PLF), or simply put, capacity.
How critical is the coal shortage?
The situation at thermal power plants is deteriorating consistently and had reached critical levels. For perspective, as per the National Power Portal, 11 imported coal-based (ICB) power plants had critical stocks, as on April 13. Similarly, 79 domestic coal-based power plants were facing critical stocks of the key commodity on the same day. Again, on April 13, of the total 173 coal-based power plants, the total stocks available were 23.17 million tonnes (MT) against a daily requirement of 2.76 MT. The stocks at this level will last for less than nine days.
What steps has the government taken to tackle this problem?
To begin with, the government has issued revised coal stocking norms, which mandate the power plants to maintain sufficient stocks at all times; if necessary, through imports for blending to meet any contingent situation.
Besides, an Inter-Ministerial Sub Group with senior officials from Ministries of Power, Coal, Railways, CEA, CIL and SCCL meet regularly to take various operational decisions to enhance supply of coal to thermal power plants
Power Ministry has advised power plants to import about 36 MT coal for blending during 2022-23 with a view to build sufficient coal stock at Power Plants. The Ministry also has a Core Management Team (CMT) to ensure close monitoring of coal stocks at thermal power plants (TPPs) and operational decisions are being taken in CMT to augment supply of sufficient quantity of coal to the TPPs.
Why is this crisis recurring every year?
Power plants in India having low supplies of coal is not a new phenomenon. The shortage occurs almost every year and the government, despite its various measures, has not succeeded in overcoming the problem.
At the heart of the issue is the lack of planning and coordination between various ministries involved in the process — Power Ministry, Coal Ministry and Railways.
While the Coal Ministry blames the Indian Railways for non-availability of adequate rakes, the Railways has pointed out the mismanagement in loading and unloading of rakes by the Coal India (CIL).
Despite high coal production and despatch by CIL and other PSU miners, the supply at power plants has still not gone above 15 days in the last six months and lack of coordination and planning is to be blamed for this.