- Thursday, May 02, 2024
By: Shubham Ghosh
INDIA could witness a massive power crisis, thanks to its shrinking coal supply which left the country’s coal-fired power stations with an average of four days’ worth of stock of the fuel at the end of September.
More than half the plants are on outage alert as the coal stock has plummeted to the lowest level in years.
With coal used to produce nearly 70 per cent of electricity in India, spot power rates have gone up and supplies of the fuel have been diverted away from key customers, including aluminium smelters and steel mills, the Times of India reported.
India, like China, is faced with two key challenges — soaring electricity demand as industrial activity has revived after pandemic curbs were withdrawn and a fall in local coal output.
The country meets around three quarters of its demand locally but heavy rains have left several mines and key transport routes inundated.
Those who operate India’s coal-run plants have faced a major challenge — pay large premiums at domestic auctions to secure any available local supply or get into the coal market linked by the sea routes where prices have reached record levels.
Already, the Indian government is drawing up guidelines in case it needs to bring into action idle power stations.
Pranav Master, director for infrastructure advisory at credit ratings from analytical firm Crisil Limited, told the Times, “Until supplies stabilize completely, we are likely to see power outages in some pockets, while customers elsewhere may be asked to pay more for power.”
“Because of imported coal prices shooting through the roof, plants running on domestic coal have had to do a lot of heavy-lifting. Things are expected to get better as the rains abate,” he added.
Coal inventories at Indian power plants fell to around 8.1 million tons at the end of last month, about 76 per cent less than a year earlier, according to the government, the report said, adding that the average spot power prices at the Indian Energy Exchange Limited jumped more than 63 per cent in the same month to Rs 4.4 a kilowatt hour.
