In this article, we will discuss Power Crisis in India. So, let’s get started.
India was recently hit by a power crisis when the daily peak power shortage rose to 10,778 MW and the energy deficit reached 5% at the national level, with some states experiencing steep deficits of up to 15%. Consequently, discoms resorted to load-shedding, resulting in long hours of outage for many households and rationed supply for economic activities.
Depleting coal supplies at thermal power plants has resulted in this crisis. However, this is not a new phenomenon. The shortage occurs almost every year and the government, despite its various measures, has not succeeded in overcoming the problem.
Now, unless the underlying issues and structural problems are addressed, this crisis won’t be the last one to occur. The arithmetic solution is to make sure coal power plants stockpile enough fuel.
India’s Dependency on Coal
- As of September 2021, thermal power (power generated from burning coal, gas and petroleum) comprised 60% of India’s installed capacity in power generation.
- Coal-based power generation, with a capacity of around 210 gigawatts (GW) of the total 396 GW, accounts for about 53% of India’s total power capacity as on March 2022.
- India imports about 20% of its thermal coal requirements.
- According to a CEEW (Council on Energy, Environment and Water) assessment, a disproportionate share of generation comes from older inefficient plants, while the newer and efficient ones remain idle for want of favourable coal supply contracts or power purchase agreements.
- Revival of Economic Activities: The heatwaves and revival of economic activities after Covid-19 disruptions propelled electricity demand.
- In April 2022, average daily energy requirement increased to 4,512 million units (MU) from 3,941 MU in April 2021, registering a 14.5% growth, compared to average year-on-year growth of around 5%. The jump from March to April was 6.5%.
- The Railways, which dominate long-distance transport are also facing high passenger traffic on shared track.
- Inefficiency of TPPs: With 236 GW of thermal power plants (TPPs) running much below their capability (at 59% capacity utilisation), India could have managed this demand surge by ramping up thermal generation.
- The TPPs’ inability to ramp up power generation is explained by critical coal stockpile levels at plant sites.
- While TPPs are required to maintain stockpiles approximating two-three weeks of fuel needs, more than 100 plants are operating with fuel stocks below 25% of the required level, and over half of these have stocks below 10%.
- Cash Flow Problem In The Electricity Sector: The inability of discoms to recover costs has resulted in outstanding dues of over ₹1 lakh crore to power generation companies. Consequently, power generation companies (GenCos) default on payments to Coal India Limited (CIL).
- Following the Ukraine war, international spot market coal prices have soared to over $400 a tonne from around $50 a tonne in 2020.
- Discom Losses: Despite two decades of sectoral reforms, the aggregate losses of discoms stand at 21% (2019-20).
- This is reflective of both operational inefficiency and poor recovery of dues from consumers, including those affiliated with state governments and municipal bodies.
- These losses are also the reason for discoms not being able to pay the generators on time, resulting in payment delays to Coal India, which, in turn, is reluctant to supply coal on request.
- Multiple Structural Fault Lines: First is the chronic insolvency of discoms which has disrupted upstream supply chains.
- Another is that the utilities do not undertake effective resource planning.
- Moreover, the blame-game in such cases is inevitable; with every crisis, states blame the Centre for faulty coal allocation and dispatch, and the Centre blames states’ inability to pay upstream suppliers.
- The result is ‘band-aid solutions’ to suppress the crisis rather than fixing structural fault lines.