Why India Is Facing Coal Shortage And How It Affects Power Supply?
May 1, 2022 - India is undergoing a second major power crisis since October 2021. Several states across the country, including Andhra Pradesh, Gujarat, Maharashtra, Jharkhand, Bihar, Haryana and Uttarakhand, are reeling under long power cuts to meet the increased demand for electricity triggered by hotter-than-normal temperatures. The electricity supply in the country fell short of demand by 1.88 billion units, or 1.6%, during the first 27 days of April, according to a report by Reuters.Also Read - Govt Making Efforts to Minimize Impact of Power Crisis: Rajasthan Chief Minister Ashok Gehlot
The electricity supply in the country fell short of demand due to a shortage of coal, which fuels 70% of India’s power demand. As per the latest reports, coal stocks, at more than 100 thermal power plants in India, that meet 70% of India’s electricity demand, have fallen below 25% of the required stock (critical mark). In over 50 thermal plants, the coal stock has depleted below the 10% mark, leading to states seeking additional coal supplies from India’s sole coal producer Coal India Ltd (CIL), according to a report by The Hindu. Also Read - Jharkhand: Minor Girl Sexually Assaulted By Man Dressed As Sadhu In Khunti
As per Central Electricity Authority (CEA) data of April 19, 2022, India’s electricity production via thermal plants using domestic coal stood at 182.39 GW with an average of 34% coal stock in them. Meanwhile, power plants using imported coal are generating 16.73 GW of electricity with an average coal stock of 34%. Nine thermal plants with the capacity to generate 3.56 GW are currently non-functional. Also Read - Delhi: 77-Year-Old Builder Killed, Robbed At Home In Posh Civil Lines Area
Of the 173 thermal power plants, 85 plants fired by domestic coal have less than 25% stock while 11 plants running on imported coal have hit critical levels. In view of the shortage of coal, state-run Coal India has ramped up coal production by 27.2% in April.
The peak in demand has been met with load shedding and planned outages by states like Andhra Pradesh, Gujarat, Maharashtra, Jharkhand, Bihar, Haryana and Uttarakhand. Since the start of April, Jharkhand has been facing an average supply shortage of 10-12%, the worst in the country, followed by Andhra Pradesh (10%), Uttarakhand (8-10%), Madhya Pradesh (6%) and Haryana (4%).
Coal contributes to over 70 per cent of India’s power generation. Of this, over 12 per cent is import-based coal. the Russia-Ukraine war has led to a disruption in international coal supply, making the coal import much more expensive and affecting India’s coal import. The cost of imported coal in India is expected to rise 35 per cent in the fiscal year 2022-23 compared to the past year. As per a report by Indian Express, power producers had to pay premiums of up to 300 per cent in March to secure coal supplies in the domestic spot market.
The already dwindling coal stock available with state-run thermal plants was further strained after India witnessed a sudden rise in energy demand in March — the hottest in its recorded history. This pushed peak power demand to 199 GW in the middle of March. The last week of March saw a 13 per cent higher demand over past year trends, accompanied by high electricity prices on the power exchange, the Indian Express report said.
Furthermore, the biggest reason for coal shortage is the increasing power demand over the years. As per a report by the Hindu, in 2021, demand increased to 124.2 BU per month from 106.6 BU per month in 2019. In 2022, the demand has further increased to 132 BU.
According to the Centre’s core management team (CMT), heavy rains in coal mining areas like Gujarat, Punjab, Rajasthan, Delhi and Tamil Nadu had resulted in lesser coal production. Moreover, prior to the monsoon season, there was inadequate coal-stock build-up in most thermal plants, pushing them below critical levels.
On Tuesday, government-owned CIL said that it had increased the coal supplies to thermal power stations by 14.2% during the first half of April 2022, compared to the same period last year. Coal generation has hit 1.64 million tonnes (MTs) per day compared to 1.43 MTs in 2021, said a report by the Hindu.
The company further informed that t had raised coal production to 26.4 million tonnes during the first half of April, achieving 27% year-on-year growth.
Additionally, 8.75 MTs of coal will be made available to state and Central generating companies via rail till May 31, 2022, stated CIL. The government has also halted hundreds of passenger trains to may priority routes for coal wagons to reach power plants on an urgent basis.
The daily electricity deficit in India has increased from 0.3% to 1% in April 2022, said American credit rating agency Fitch. This power deficit has led to an 85% increase in the price of electricity traded on Indian exchanges from an average of Rs 3/kWh to Rs 8.23/kWh in March. To regulate prices, CEA has capped short-term power exchange rates to Rs 12/kWh.
The Centre has pleaded with the state governments of coal-starved power plants to start importing coal — the second time it has made such a request in recent weeks. The BJP-led government in Delhi has also allowed states to use its captive coal reserves up to 25% to meet growing domestic demand.
It has permitted power generating companies to blend imported coal up to 10% to ease the burden on CIL. The Centre is also mulling on increasing the imported coal stock, higher coal costs make it difficult.