Approach:
- Introduction stating power shortfalls.
- Mention the factors pointwise.
- Mention the emergency measures taken to ease coal supply.
- Conclusion.
India was hit by a power crisis when daily peak shortage rose to 10,778 MW and the energy deficit was 5% at the national level, with some states experiencing steep deficits of up to 15%. Most cities have reported frequent power outages. In October 2021, India experienced similar crisis induced by coal shortages.
Factors inducing power shortages:
- Surge in demand: till August 2021, India’s electricity demand has risen by 13%, propelled by heat & revival of economic activities following Covid-19. India’s grid reported a record load of 200,570 MW. In April 2022, average daily energy requirements shot to 4,512 MU from 3,941 MU in April 2021 – a 5% growth, compared to the average growth of 5%. The jump from March-April was 6.5%. Also, 236 GW of thermal power plants are running at 59% capacity, much below their potential. Country’s peak power demand touched all time high of 207.11 GW on April 29, 2022.
- Heatwaves: India witnessed the hottest April in last 171 years. Household power demands spiralled due to increased use of ACs & other utilities.
- Supply shortfalls: coal accounts for 75% of India’s power output. Thermal power plants’ (TPP) inability to ramp up power generation is explained by critical coal stockpile levels at plant sites. While TPPs are required to maintain stockpiles 2-3 weeks of fuel needs, the Central Electricity Authority of India pointed that more than 100 plants are operating with fuel stocks below 25% and over half of these have stocks below 10%. However, this wrongly implies coal production problems as India’s biggest coal suppliers Coal India & Singareni Collieries have produced 5% more than in 2021. Coal India has increased its supply by 21.4%. Coal did not reach plants on time partly due to shortage in railway wagons and partly due to inflation impact on imported coal prices. So, power production from 17 GW TPPs, which run only on imported coal, has slowed down.
- Russia Ukraine war has disrupted the global coal supply chain to India.
- Dysfunctional cash flow : inability of DISCOMS to recover costs has resulted in outstanding dues of over Rs. 1 lakh crore to power generation companies. This chronic insolvency of DISCOMS has disrupted upstream supply chains. Also, utilities lack effective resource planning.
- Political opportunism has plagued periodic power shortages & their management.
‘Emergency’ measures taken:
- A major decision on reduced reliance on imported coal was reversed by directions given to private players to step up coal imports for the next 3 years.
- The limit to blend imported coal with domestic coal was relaxed to 10% from 4% to ease stress on domestic coal supplies.
- To address the issue of high tariffs on imported coal, the government has allowed TPPs operating solely on imported coal to pass on the cost, thus restarting electricity generation capacity of 7,980 MW.
- Centre allowed states to use its captive coal reserves up to 25% to meet surging coal demand.
The shortages testify that coal dependency is neither predictable nor cheap. A strategic approach to the energy transition that harness low-cost renewable energy & diversification opportunities in energy mix is critical to address persisting power shortages. Policy should focus on long-term structural solutions that address distribution financial viability and robust mechanism for resource planning.