By Shashank Suresh
India is facing an intensifying crisis as coal stocks, the fuel needed to generate around 70% of its energy, fall to their lowest levels in years, just as power demand is expected to rise. According to the most recent statistics, coal-fired power plants have an average of four days’ worth of fuel on hand, and more than half of them are already on high alert for disruptions. Raj Kumar Singh, the power minister, has warned that the country might be dealing with a supply shortage for up to six months.
According to government statistics from the power ministry, the difference between available energy supply and peak demand grew to more than 4 gigawatts on Monday, indicating the emergence of power shortages. While China’s coal and electricity shortages have received the most attention, India is facing a possibly deteriorating situation.
As India approaches its holiday season later in October, industrial and home spending typically peaks, potentially slowing the recovery in Asia’s third-largest economy, which has been rebounding from a historic 7.3 percent contraction in the fiscal year ended in March.
Here are some possible future stages in India’s crises, as well as specific constraints:
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Mining Rebound
Coal India Ltd., the world’s largest coal producer, aims to raise daily coal supply to 1.9 million tonnes by mid-October, up from around 1.7 million tonnes now, which would go a long way toward reducing the shortfall.
Severe flooding has affected coal output in India’s eastern and central regions during the regular monsoon season, affecting mines and vital transportation lines. Any recovery will be dependent on the weather; rain must cease for mines to reopen and coal trucks to restart delivery. To alleviate shortages, the government announced on Tuesday that businesses that have been allocated coal and lignite mines for their use would be allowed to sell 50 percent of their yearly output.
While coal stocks at power plants are dangerously low, it is doubtful that the facilities would run out of fuel entirely. Government departments and businesses constantly monitor supply levels, and supplies may be diverted away from industrial users like aluminum and cement producers to favor electricity generation. That’d leave those sectors with their dilemma: restrict output, or pay exorbitant costs for imported coal.
Supply Controls
Rationing household electricity supply, particularly in rural and semi-urban regions, might be one of India’s most straightforward answers, but it would present Prime Minister Narendra Modi with additional problems. When generation falls short of demand in India, power distributors generally restrict supplies to specific areas rotating. An extension of load-shedding will likely be considered if power plants take any more knocks. However, doing so would jeopardize the country’s fragile economic recovery, and Modi’s administration is already under fire for failing to create enough new employment.
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Price Incentive
With rising electricity costs, some coastal plants may employ high-cost imported coal, alleviating some of the pressure on domestic miners. Around three-quarters of the country’s electricity needs are met by domestically produced coal, with the remainder coming from Indonesia, South Africa, and Australia.
According to official data, spot rates of power traded through the Indian Energy Exchange Ltd. increased by more than 63 percent year on year in September, averaging 4.4 rupees ($0.06) per kilowatt-hour and reaching as high as 13.95 rupees on Wednesday. As a result, even if coal prices are at an all-time high, some facilities may now try to purchase immediate seaborne coal cargoes.
New rules are being written to allow generating firms to sell excess power on the markets, in part to reactivate idled facilities. Two massive power facilities in Gujarat state, operated by Tata Power Co. and Adani Power Ltd., have been shut down due to high imported coal prices.
Fuller Dams
The monsoon rains that swamped coal mines are also expected to increase hydropower output. After coal, large hydroelectric projects on dams are India’s primary source of power, and the industry peaks around the rainy season, which lasts from June to October.
During the six months ending Sept. 30, generation from the projects accounted for approximately 14% of India’s total. That percentage might rise if the plants can function at more excellent utilization rates. Hydropower generation is now above target, indicating that businesses are starting to ramp up output.
Turn to Gas
Even though worldwide prices are now increasing, natural gas may have a more significant role to play. India has over 25 gigawatts of gas-based generating capacity, but roughly 80 percent of that capacity is idle due to high fuel prices. According to Arun Kumar Singh, chairman of Bharat Petroleum Corp, India’s second-largest fuel retailer that also buys and sells LNG, imported LNG cargoes purchased on the soaring spot market aren’t viable options for Indian power generators current prices.
However, in a pinch, the gas-powered fleet might save the day and avoid widespread power disruptions. NTPC Ltd., for example, is a state-run generator with idle capacity that can be cranked up in about 30 minutes if needed and is connected to a gas grid.
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Pricey Diesel
Due to environmental controls and excessively high pricing, any move to oil products such as fuel oil and diesel may be limited. Due to the lack of extensive oil-fired facilities directly connected to the grid, large-scale gas-to-fuel swaps are improbable. In a power outage, some commercial establishments, such as hospitals and shopping malls, and small businesses, use diesel-powered generators. However, the country’s record-high diesel costs will hinder broad use.