India Is Experiencing A Power Crisis As Coal Reserves Hit Critical Limits

India Is Experiencing A Power Crisis As Coal Reserves Hit Critical Limits

As coal stockpiles run dangerously short, More than half of the country’s 135 coal-fired power plants are emitting noxious emissions. This is a significant cause of concern in a country where coal provides for 70% of electricity output since it threatens to derail India’s post-pandemic economic recovery.

Moreover, with increased electricity demand, India faces significant domestic coal scarcity. While Coal India has promised to increase output, rising import coal costs have made it harder for Indian enterprises to operate successfully. According to research, more than half of India’s 135 coal-fired power plants have fuel reserves of fewer than three days, falling far short of federal norms that demand supplies of at least two weeks.

Power-generation fuel prices are rising internationally as industrial expansion boosts electricity demand, causing coal and liquefied natural gas supplies to tighten. India is competing with consumers such as China, the world’s top coal consumer, which is under pressure to increase imports due to a chronic power shortage. Rising oil, gas, coal, and electricity prices fuel global inflation and hamper the economic recovery from the COVID-19 epidemic.

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Industrial Power Consumption and Demand Surge

India’s power plants also deal with increased demand from sectors as the economy recovers from the latest wave of the COVID-19 epidemic. Power consumption in industrialized states such as Maharashtra, Gujarat, and Tamil Nadu increased by 13.9 percent to 21% in the three months to September, according to a Reuters data analysis from federal grid regulator POSOCO.

These three states use about one-third of India’s annual energy consumption. Industries and offices are responsible or account for half of the country’s annual power use. Following the first wave of coronavirus, the residential and agricultural sectors were essential drivers of electricity demand during the last two quarters of the fiscal year ending March 2021. Although there have been no massive power disruptions in India, shortfalls have nearly quadrupled from the insignificant levels observed last year.

Why Is India Experiencing A Coal Shortage?

Coal accounts for more than 70% of India’s electricity generation. More than 12% of this is imported coal. The Russia-Ukraine war has disrupted the world coal supply, increasing the cost of coal imports and impacting India’s coal imports. The price of imported coal in India is predicted to grow 35% over the previous year in 2022-23. According to an Indian Express story, power companies had to pay premiums of up to 300 percent in March to obtain domestic spot coal supply.

The primary cause of coal scarcity has been rising electricity demand. According to the Center’s core management team (CMT), heavy rains in coal mining areas like Gujarat, Punjab, Rajasthan, Delhi, and Tamil Nadu, according to the Center’s core management team (CMT), have resulted in reduced coal production. Furthermore, most thermal facilities had insufficient coal-stock build-up before the monsoon season, driving them below dangerously low levels. Some businesses have a fixed coal connection with Coal India and its subsidiaries, guaranteeing a set coal supply throughout the year. However, severe rains at various mines around the country and logistical issues have resulted in a domestic supply crisis.

Every year, Coal India requests that utilities stock up before the monsoon season, when rains make transportation and output of raw materials problematic. Despite this, many coal companies could not stockpile enough since domestic supply was limited and imported coal was at an all-time high. As a result, several enterprises, particularly those on the coastline line, which rely heavily on imported coal, have reduced or ceased operations.

How Does The Center Intend To Address The Coal Crisis?

The Center has urged the state governments of coal-depleted power plants to begin importing coal for the second time in recent weeks. The BJP-led government in Delhi has also authorized states to utilize up to 25% of their captive coal stockpiles to fulfill rising domestic demand. In addition, it has allowed power firms to mix imported coal up to 10% to reduce the pressure on CIL. The Center is also considering expanding imported coal supplies, but increased coal prices make this problematic.

China Is Factor For The Higher Cost Of Imported Coal

The Chinese need for power has increased as its economy rebounds from COVID-19. However, Chinese pollution-control rules have reduced coal supply in the nation, requiring power producers to import more, raising worldwide costs.

Beijing has attempted and put efforts to alleviate the country’s power disruptions by releasing batches of coal reserves and instructing local coal firms to raise output. However, according to Chowdhury, the scarcity in China would undoubtedly linger throughout the winter as demand for heating rises.

Conclusion

The government is also aiming to obtain coal from “captive” mines. Captive mines are operations that generate coal or minerals purely for the benefit of the firm that owns them and are not permitted to sell their output to other enterprises under normal circumstances. Experts agree that while short-term adjustments may help India get through its present energy crisis, the country must focus on long-term solutions to guarantee that its expanding domestic power demands are addressed.