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India is struggling to cope with the escalating crisis as coal stocks (the fuel used to generate about 70% of the country’s electricity) are reduced to their lowest levels in many years, and electricity demand will surge.
According to the latest data, coal-fired power stations have an average of four days of fuel inventory, and more than half of the power plants are already in a power outage alarm state. Electricity Minister Raj Kumar Singh warned that the country may face up to six months of supply austerity.
According to government data from the Ministry of Electricity, power shortages have emerged, and the gap between available power supply and peak demand on Monday widened to more than 4 GW.
Although China’s coal shortage and the country’s electricity squeeze are of the most concern, India is facing a potentially worsening situation.
As India enters the holiday season from late October, industrial and domestic consumption usually peaks, which may hinder the rebound of Asia’s third-largest economy, which has been at an unprecedented 7.3 for the fiscal year ending in March. % Of the contraction is recovering.
The following are some potential next steps and constraints of the Indian crisis:
Mining rebound
State Coal India Limited, the world’s largest fuel producer, is seeking to increase its daily coal supply from the current approximately 1.7 million tons to 1.9 million tons by mid-October. This increase will greatly help ease deficit. Anil Kumar Jain, Minister of Coal of India, stated that there is a shortage of 60,000 to 80,000 tons per day in the supply of power plants.
During the typical monsoon season, severe floods in the eastern and central states of India affected coal production, and coal mines and major logistics routes were affected. Any recovery will depend on the weather-rainfall needs to be stopped to allow mines to speed up operations and allow coal trucks to resume deliveries.
On Tuesday, the government said it would allow companies that have allocated coal and lignite mines for their own use to sell 50% of their annual output to ease the shortage.
Although the coal inventory of power plants is very low, it is still unlikely that the fuel in operation will be completely exhausted. Government departments and industries are closely monitoring inventory and may take action again to shift supply from industrial users (such as aluminum and cement manufacturers) to prioritize power generation. This will make these industries face their own dilemma: curb production or pay high prices for imported coal.
Supply control
The rationing of domestic electricity supply, especially in rural and semi-urban areas, may become one of India’s simplest solutions-although it will pose other challenges for Prime Minister Narendra Modi.
When power generation is lower than demand, Indian power distribution companies usually cut off power supply in certain areas in turn. If power plants are further hit, they may consider extending the load shedding time.
However, doing so may jeopardize the country’s fragile economic recovery, and the Modi government has faced criticism for failing to create enough new jobs.
Price incentives
Soaring electricity prices may make it possible for some coastal factories to use high-cost imported coal, thereby reducing part of the burden on domestic miners.
About three-quarters of the country’s electricity demand comes from locally produced coal, and most of the rest comes from countries such as Indonesia, South Africa and Australia.
Official data showed that the spot price of electricity sold through the Energy Exchange of India Ltd. in September rose by more than 63% year-on-year, averaging 4.4 rupees ($0.06) per kWh, up to 13.95 rupees on Wednesday. This means that some factories may now seek to snap up immediate cargoes of seaborne coal, even if commodity prices hit record highs.
New guidelines are being drafted to allow power generation companies to sell excess electricity on exchanges, in part to stimulate idle factories to restart operations. Two large power plants owned by Tata Power Co. and Adani Power Ltd. in Gujarat were sealed due to issues such as high prices of imported coal.
Fuller Dam
The monsoon rains that flood coal mines may promote hydroelectric power generation.
Large hydropower projects on dams are India’s main source of electricity after coal, and the industry peaks around the rainy season (usually from June to October).
During the six-month period ending September 30, these projects accounted for approximately 14% of India’s total power generation, and this proportion may increase if the power plants can operate at a higher utilization rate. Recent data shows that hydropower is above the target, indicating that the company is beginning to increase production.
Switch to natural gas
Even with the current surge in global prices, natural gas may still play a greater role. India has nearly 25 GW of natural gas power generation capacity, but due to high fuel prices, nearly 80% of the capacity is still unused.
Arun Kumar Singh, chairman of Bharat Petroleum Corp, India’s second largest fuel retailer, said that at current prices, imported LNG purchased on the soaring spot market Cargo is not a solution for Indian power producers.
However, in desperate situations, the gas-powered fleet can help prevent any large-scale blackouts. For example, the idle capacity of the state-owned generator NTPC Ltd. can be activated in about 30 minutes when needed and connected to the gas grid.
Expensive diesel
Due to pollution control and high prices, any switch to petroleum products such as fuel oil and diesel may be restricted. For now, the lack of large oil-fired power plants directly connected to the grid means that natural gas fuel exchange is unlikely to be carried out on a large scale.
Some commercial establishments, including hospitals and shopping malls, and small industries use diesel generators to ensure uninterrupted power supply during power outages. But the country’s record diesel prices will prevent its widespread use.
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