The coal crisis has hit the power supply in India, there is no adequate supply against demand. It is uncertain how long the current situation will last. This is not the problem only in India but a global occurrence, one not specifically constrained to India.
The Indian government has said it is working with state-run enterprises to ramp up production and mining to reduce the gap between supply and demand. A sharp uptick in power demand as the economy recovers from the Covid-19 pandemic coupled with supply issues have led to the current coal shortage.
India consumed 124 billion units of power in August 2021 compared to 106 billion units of power in August 2019 that was not impacted by the pandemic.
Coal-fired thermal power plants have also supplied a higher proportion of the increase in demand leading the share of thermal power in India’s power mix to increase to 66.4% from 61.9% in 2019.
The biggest challenge India has to achieve a balance between meeting demand for electricity from its almost 1.4bn people and the desire to cut its reliance on heavily infesting coal-burning power plants has been a major challenge for the government in recent years. This could be little difficult to change the scenario without having enough backups. But in the past, we have seen that has not happened because maintaining such an inventory comes at a monetary price.
In a country where 70% of the electricity is generated using coal, this is a major cause for concern as it threatens to derail India’s post-pandemic economic recovery. As India’s economy becoming steady after a fatal second wave of Covid-19, demand for power rose suddenly. Power consumption in the last two months alone jumped by almost 17%, compared to the same period in 2019.
At the same time, global coal prices increased by 40% and India’s imports fell to a two-year low. Coal Minister Singh told that the government has connected an additional 28.2 million households and these households are buying lights, fans, and television sets leading to an increase in power demand. Other key reasons for the supply crunch include lower than normal stock accumulation by thermal power plants in the April-June period and continuous rainfall in coal-bearing areas in August and September that led to lower production and fewer dispatches of coal from coal mines.
A constant move to lower imports coupled with high international prices of coal has also led to plants cutting imports. An inter-ministerial team, including representatives of the Power and Railway Ministries, Coal India Ltd, the Central Electricity Authority, and Power System Operation Corporation, is monitoring the supply of coal to thermal power plants.
The government is pressing thermal plants with captive coal mines to boost their coal output so that they can meet more of their own demand and is also prioritizing coal supplies for thermal power plants with low levels of stock. The Power Ministry is also trying to increase the supply of coal by expediting the start of production from a number of mines that already have all requisite clearances in place.
The government has also boosted the number of rakes of coal being transported to thermal power plants daily with 263 rakes of coal dispatched from coalmines on Monday up from 248 rakes on Sunday. It is expected that the dispatches from coal lines will increase further government mentioned in its release.
Let’s see how the Indian government deals with the energy crisis looming in some states, including Delhi and Punjab, due to a combination of factors such as excess rainfall hitting coal movement and imported coal-based power plants generating less than half of their capacity due to record-high rates.
The government listed four reasons for the depletion of coal stocks at power plants — the unprecedented increase in demand for electricity due to revival of the economy, heavy rains in coal mine areas, increase in the price of imported coal, and legacy issues such as heavy dues of coal companies in certain states like Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Rajasthan, and Madhya Pradesh.
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