India's coal-fired power plants face critical fuel shortages as demand rises
NEW DELHI: India’s coal-fired power plants are running low on fuel, with nearly half holding coal that can generate power for fewer than three days.The squeeze is getting tighter, with the number of plants reporting critically low stocks climbing to 96 out of 191 as of October 19, up from 60 in mid-September, according to data from the Central Electricity Authority.Overall, coal stocks at power stations have fallen by about 5% since the beginning of October, as per a Reuters report.The shortage comes even as the coal ministry said last week that it had increased supplies to power plants. Hotter-than-usual weather linked to El Niño has pushed up electricity demand, while weaker monsoon rains have reduced hydropower generation.With less electricity coming from hydropower and more demand to meet, coal-fired plants are under greater pressure to keep the power flowing.
Power demand rises as hydropower output falls
Daily peak electricity demand this year has been 45 gigawatts (GW) to 50 GW higher than a year earlier. Weaker monsoon rains have reduced hydropower generation, forcing India to rely more on coal-fired plants to meet demand.In September, the gap between electricity demand and supply rose to 560 million kilowatt-hours (kWh), the highest since August 2023. This happened even as coal-fired plants increased their output to meet rising demand.
Coal-fired power generation rose 13.3% in September from a year earlier, while hydropower generation fell 20%, CEA data showed.Nearly 55% of India's power generation now comes from non-fossil fuel sources. However, the country still depends on coal-fired plants during periods of high demand because it lacks enough batteries to store electricity generated from clean energy sources.
Government puts coal import plan on hold
India has put on hold a proposal to ask power plants to import coal to refill their stocks, Bloomberg reported on Monday, citing people familiar with the discussions.The government had considered asking plants to mix imported coal with domestic supplies to ease the shortage. However, high international prices and a weaker rupee have made imports more expensive, prompting the government to shelve the plan, the report said.Instead, policymakers have asked state-owned Coal India Ltd to increase production and the railways to ensure coal reaches power stations on time, according to Bloomberg.Benchmark thermal coal prices are at their highest level in three years. A weaker rupee has added to import costs, while higher oil prices have increased India's energy import bill.India has previously asked power plants to import coal when domestic supplies were not enough. This time, the government has chosen to focus on increasing local production and improving transportation rather than making imports compulsory.The move comes after an order directing more than 100 captive coal-fired power plants to operate at full capacity from October 1 until the end of the year to meet expected growth in electricity demand.
Coal stocks at their lowest in nearly five years
Coal stocks at Indian power plants have fallen to their lowest level in nearly five years as rising electricity demand and lower hydropower generation put pressure on domestic supplies.Below-normal monsoon rainfall has reduced hydropower output, while higher temperatures beyond the summer months have increased electricity use for cooling and irrigation.
This has added to the demand for coal and reduced stocks at power plants.India's electricity shortage in September was the worst for that month in nearly a decade.However, the pace at which coal stocks are falling has slowed in October. Bloomberg's calculations based on power ministry data showed that domestic coal-fired power plants recorded an average daily drop of around 48,000 tonnes in their stocks during the first 17 days of October.
This was about a fifth of the daily decline recorded in September.The government expects electricity demand to ease as temperatures fall, giving coal stocks a chance to recover. Average temperatures are forecast to drop slightly over the next two weeks but are expected to remain above the 30-year average, according to the European Centre for Medium-Range Weather Forecasts.
Coal ministry says supplies have improved
Earlier this month, the ministry said that daily coal supplies to the power sector had increased by around 36% from September levels.
It also said the pace at which stocks were falling had slowed. The ministry clarified that a plant classified as having “critical stock” is being flagged as a warning and does not necessarily mean the plant is running out of coal or is about to shut down.Plants with low stocks are being closely monitored, and supplies are being redirected to help ensure uninterrupted electricity generation, the ministry said. CEA data showed that 87 of 190 coal-fired power plants had critically low stocks on October 8, compared with 50 in the first week of September.
These plants held 20.6 million tonnes of coal, just 33% of the recommended stock of 61.2 million tonnes.Coal transportation by rail has also improved. The ministry said rail loading averaged more than 465 rakes a day in October, with the target of 470 rakes met on three consecutive days. Coal supplies by road and other modes had also increased. The ministry said that keeping coal transportation at 465-475 rakes a day should help stabilise stocks and rebuild supplies ahead of festive-season, winter and next summer's demand.