The supply bottlenecks causing power shortages

Context: The power sector in India is going through a crisis. Peak shortages in some states have reached double digits. Coal stocks available at thermal plants are at abysmal levels, and about 106 plants out of 173 plants have reached a critical stage.

In some plants, the stocks available are just about enough to run the plant for a day or two more. Part of the problem of poor coal stock is also rumoured to be on account of the non-payment of dues of coal companies.

But this is not the major cause of the shortage.

What is the chronology of power crisis?

Firstly, with summer approaching before time, power demand has shot up to record levels.  Delhi’s power demand crossed 6,000 MW on April 28 which is a record.

The second reason for the rise in power demand is that the economy is recovering, and demand from the industrial sector is going up.

All things put together, power demand crossed 207 GW on April 29, which is about 14% higher than what it was a year ago.

Is the increased power demand the actual reason for power crisis?

No.

The increase in demand should have posed no problem since there was enough spare capacity available with coal-based stations operating at less than 60% capacity.

The real problem is the availability of coal, as many plants have less than two days worth of stock.

Moreover, generation from gas-based plants has also fallen due to high gas prices in the world market.

Reservoirs, too, are drying up due to intense heat which will adversely affect hydro generation.

What are the reasons behind the coal shortage?

Firstly, it’s important to note that this coal crisis is not because of any deficit in the supply of coal from domestic sources.

– Coal dispatches from Coal India during 2021-22 were 23% higher than in the previous year.

There are two main reasons for coal shortage:

a) The first is that due to a rise in the international price of coal on account of the Ukraine crisis, all plants that were importing coal have either stopped generating completely or are generating at much lower levels. We have a sizeable generating capacity based on imported coal, estimated at about 16 GW to 17 GW. All these plants after stopping imports are now looking for domestic coal, creating pressure on domestic coal.

b) The second reason for low coal stocks is the non-availability of rakes with Indian railways for transporting coal.

– There is also the issue of availability of tracks since they are being used on a back-to-back basis.

What is the way forward?

With efforts now being made to sort out the transportation problems, stocks will begin depleting faster. Thus production has to be enhanced so that the replenishment rate is higher than consumption.

This is the right time to enhance coal production and build adequate stocks because once the monsoon sets in, production will fall.

Anticipating this, the government has asked the power companies to import coal for blending purposes to reduce the pressure on domestic coal.

• The problem is that there may be no takers for this, given the high price of coal in international markets. Besides, these imports will again put pressure on the availability of rakes for domestic coal.

Hence, unless the weather relents, dark days are ahead.

Source: This post is based on the article “The supply bottlenecks causing power shortages” published in The Indian Express on 3rd May 22.