New Delhi: The post-pandemic growth in the manufacturing sector has stoked power demand and gripped power producers to such an extent that India is in a prime position to power crisis.
Several states such as Delhi, Gujarat, Punjab, Rajasthan and Tamil Nadu claim: shortage of coal Despite India producing a record amount of coal, electricity generation is being affected.
In Maharashtra, 13 units of 7 thermal plants supplying to state-run power utility company Maharashtra State Electricity Distribution Company have shut down due to shortage, while the Delhi government has said that three plants supplying coal to the national capital have Stock only. one day.
However, the Coal Ministry has reiterated that the apprehensions of ‘blackout’ and ‘power disruption’ are completely misplaced and that India has sufficient stock to meet the demand of coal in thermal power plants.
The government has asked power producer NTPC to provide the distribution companies in Delhi with the full capacity of the power announced in the power purchase agreements.
Over the weekend, Tata Power asked Delhi consumers to use electricity “judiciously”, citing fears of dwindling stocks, power cuts and blackouts across the capital.
Outages were also reported in other states. Punjab is facing power cuts for around 3-4 hours every day, while Tamil Nadu Generation and Distribution Corporation (Tangedco) has shut down power in many parts of Chennai due to maintenance work, which has led to coal shortage in the city. likely to be caused by.
In Rajasthan, electricity is being cut for one hour every day so that it does not end due to shortage of coal.
Unscheduled power cuts have become routine in Andhra Pradesh, while the Telangana government has said they have enough coal for ten days. In fact most of the power stations have only 3-4 days of coal, which is much less than the government guidelines of minimum 14-day supply.
Union Power Minister RK Singh said the miscommunication from GAIL and Tata has “unnecessarily created panic about shortage of coal”: “We have enough power available… we are supplying electricity to the entire country.” Whoever wants, give it to me. One demand and I will supply them.”
Coal Minister Pralhad Joshi blamed the increase in the international price of coal and the shortage of coal for the heavy rainfall in the country.
The chief ministers of Delhi and Andhra Pradesh had earlier written to Prime Minister Narendra Modi seeking an immediate increase in the supply of coal and gas to power plants in their states.
A Reuters analysis shows that “India’s power shortage in the first seven days of October was more than 21 times in the same period last year, and more than four times in 2019.”
While Jharkhand has a power deficit of 18 to 24 per cent, Bihar and Rajasthan have a 6 per cent to 17 per cent shortfall in power supply.
Why are we running out of power?
*Unprecedented growth in electricity demand
As India’s economy boomed after the second wave, demand for electricity increased but production did not.
Electricity consumption has increased by about 17% in the last two months alone as compared to the same period a year ago.
Coal India, which is still a major supplier of coal, can produce the same quantity of coal in the first six months of FY22 as it did in the same period a year ago.
The daily consumption of electricity has exceeded 4 billion units per day.
It is worth noting that the share of Coal India alone in the total coal production of the country is 83.26%. And dispatches for the April-September period have grown by 20.6% year-on-year but we are still unable to meet the demand.
As told by Dheeraj Nayyar, chief economist at Vedanta today’s edit, “The legacy of nationalization and the long monopoly of the government-owned Coal India Limited has resulted in substantial exploration and mining of the mineral.”
* Prices of imported coal increased
Not only has the demand increased but global coal prices have also increased by 40%. India’s imports fell to a two-year low, resulting in a reduction in power generation from imported coal-fired plants.
Prices rose from $50 a tonne in August 2020 to over $200 a tonne in October 2021, making it impractical to import at these higher prices as power producers cannot pass on these high costs to power distribution companies.
Note: Coal produces 70% of India’s electricity. And despite having the fourth largest coal reserves globally, India is the world’s second largest coal importer. And due to the decline in imports, power plants that usually rely on imports have now turned to Indian coal, putting even more pressure on already stretched domestic supplies.
Due to record high rates, imported coal-fired power plants are now producing less than half of their capacity.
For example, Tata Power has been forced to shut down power generation from its coal-fired power plant in Gujarat’s Mundra and Adani Power is facing similar problems at its Mundra unit.
Eight power plants in Uttar Pradesh have reportedly stopped production. Jharkhand, Bihar and Andhra Pradesh are in the same boat.
* Heavy rains in September affected production and dispatch
Add to this the problem of monsoon. Rains this year were higher and longer than normal, which continued well into October, making the extraction and transportation of coal from the mines even more difficult.
Rain in several states, including Gujarat, Punjab, Rajasthan, Delhi and Tamil Nadu, has affected the movement of mines to power generation units.
Nomura warns
For now, the government says it is working with state-run enterprises to increase production and mining to bridge the gap between supply and demand.
Nomura has already warned that if power cuts become more widespread, industrial output could suffer while higher energy costs could shrink firms’ margins and drive up inflation.
“With a continued economic normalization and the upcoming festive sales expected to drive power demand, the supply-side disruption poses a significant downside risk to the pace of growth in the near-term,” Nomura said.
Several states such as Delhi, Gujarat, Punjab, Rajasthan and Tamil Nadu claim: shortage of coal Despite India producing a record amount of coal, electricity generation is being affected.
In Maharashtra, 13 units of 7 thermal plants supplying to state-run power utility company Maharashtra State Electricity Distribution Company have shut down due to shortage, while the Delhi government has said that three plants supplying coal to the national capital have Stock only. one day.
However, the Coal Ministry has reiterated that the apprehensions of ‘blackout’ and ‘power disruption’ are completely misplaced and that India has sufficient stock to meet the demand of coal in thermal power plants.
The government has asked power producer NTPC to provide the distribution companies in Delhi with the full capacity of the power announced in the power purchase agreements.
Over the weekend, Tata Power asked Delhi consumers to use electricity “judiciously”, citing fears of dwindling stocks, power cuts and blackouts across the capital.
Outages were also reported in other states. Punjab is facing power cuts for around 3-4 hours every day, while Tamil Nadu Generation and Distribution Corporation (Tangedco) has shut down power in many parts of Chennai due to maintenance work, which has led to coal shortage in the city. likely to be caused by.
In Rajasthan, electricity is being cut for one hour every day so that it does not end due to shortage of coal.
Unscheduled power cuts have become routine in Andhra Pradesh, while the Telangana government has said they have enough coal for ten days. In fact most of the power stations have only 3-4 days of coal, which is much less than the government guidelines of minimum 14-day supply.
Union Power Minister RK Singh said the miscommunication from GAIL and Tata has “unnecessarily created panic about shortage of coal”: “We have enough power available… we are supplying electricity to the entire country.” Whoever wants, give it to me. One demand and I will supply them.”
Coal Minister Pralhad Joshi blamed the increase in the international price of coal and the shortage of coal for the heavy rainfall in the country.
The chief ministers of Delhi and Andhra Pradesh had earlier written to Prime Minister Narendra Modi seeking an immediate increase in the supply of coal and gas to power plants in their states.
A Reuters analysis shows that “India’s power shortage in the first seven days of October was more than 21 times in the same period last year, and more than four times in 2019.”
While Jharkhand has a power deficit of 18 to 24 per cent, Bihar and Rajasthan have a 6 per cent to 17 per cent shortfall in power supply.
Why are we running out of power?
*Unprecedented growth in electricity demand
As India’s economy boomed after the second wave, demand for electricity increased but production did not.
Electricity consumption has increased by about 17% in the last two months alone as compared to the same period a year ago.
Coal India, which is still a major supplier of coal, can produce the same quantity of coal in the first six months of FY22 as it did in the same period a year ago.
The daily consumption of electricity has exceeded 4 billion units per day.
It is worth noting that the share of Coal India alone in the total coal production of the country is 83.26%. And dispatches for the April-September period have grown by 20.6% year-on-year but we are still unable to meet the demand.
As told by Dheeraj Nayyar, chief economist at Vedanta today’s edit, “The legacy of nationalization and the long monopoly of the government-owned Coal India Limited has resulted in substantial exploration and mining of the mineral.”
* Prices of imported coal increased
Not only has the demand increased but global coal prices have also increased by 40%. India’s imports fell to a two-year low, resulting in a reduction in power generation from imported coal-fired plants.
Prices rose from $50 a tonne in August 2020 to over $200 a tonne in October 2021, making it impractical to import at these higher prices as power producers cannot pass on these high costs to power distribution companies.
Note: Coal produces 70% of India’s electricity. And despite having the fourth largest coal reserves globally, India is the world’s second largest coal importer. And due to the decline in imports, power plants that usually rely on imports have now turned to Indian coal, putting even more pressure on already stretched domestic supplies.
Due to record high rates, imported coal-fired power plants are now producing less than half of their capacity.
For example, Tata Power has been forced to shut down power generation from its coal-fired power plant in Gujarat’s Mundra and Adani Power is facing similar problems at its Mundra unit.
Eight power plants in Uttar Pradesh have reportedly stopped production. Jharkhand, Bihar and Andhra Pradesh are in the same boat.
* Heavy rains in September affected production and dispatch
Add to this the problem of monsoon. Rains this year were higher and longer than normal, which continued well into October, making the extraction and transportation of coal from the mines even more difficult.
Rain in several states, including Gujarat, Punjab, Rajasthan, Delhi and Tamil Nadu, has affected the movement of mines to power generation units.
Nomura warns
For now, the government says it is working with state-run enterprises to increase production and mining to bridge the gap between supply and demand.
Nomura has already warned that if power cuts become more widespread, industrial output could suffer while higher energy costs could shrink firms’ margins and drive up inflation.
“With a continued economic normalization and the upcoming festive sales expected to drive power demand, the supply-side disruption poses a significant downside risk to the pace of growth in the near-term,” Nomura said.
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