Massive power outages likely as coal shortage worsens
30 August 2014
India narrowly averted a power crisis this week, but blackouts may widen across the country in the coming weeks if the scarcity of coal persists, which renders power plants inoperative.
The uniting of the coal and power ministries under a single minister, Piyush Goyal, hasn't helped so far. As of Friday, 13,122.5 MW of coal-fired power generation capacity was shut across the country; and 80 per cent of the shutdown came over the past two weeks.
The national peak shortage as of Friday expanded to more than 6 per cent from the 3.9 per cent average in July, according to data from the union power ministry and the Power System Operation Corp, a unit of the Power Grid Corporation of India.
Compared to other regions, the country's western and northern parts are at a higher risk, with 7,200 MW and 2,300 MW of generation capacity respectively being shut due to lack of coal.
With substantial generation capacity shut and temperatures soaring in August, daily demand on power exchanges shot up to 238 million units from the usual 180 million units.
"This translates into 10,000 MW of power demand a day. However, the supply last week was 3,500 MW. Substantial demand was seen from Uttar Pradesh, Bihar, Rajasthan and West Bengal. These states kept quoting high prices to get a share of the limited power availability," said a senior executive with India Energy Exchange (IEX), India's premier power trading platform.
What is worrying is that even states like Gujarat, Madhya Pradesh and Maharashtra, which have been reasonably comfortable on the power front over the past few years, are also witnessing power cuts.
As power generation stations across northern and western India bore the brunt of the coal scarcity, spot prices at IEX rose to Rs10.8 a unit during 25-27 August, compared with Rs8.7 a unit on 22 August. On Wednesday, the western grid faced a power supply crunch of 7,200 MW, while the northern grid recorded a deficit of 2,300 MW on Thursday.
On Friday, however, prices fell to Rs5.47, though demand continued to be higher than supply.
"Around this period, demand from southern states is high, but with northern part of the country witnessing an elongated dry spell, there is not enough generation and power demand continues to go up. The southern region, however, has caught up on demand, with some improvement in rain- and wind-based power being fed in the grid," said the IEX executive.
Various units of the state-run National Thermal Power Corp (India's largest producer) are shut due to the coal shortage. Besides, Adani Power shut its Mundra unit (990 MW) last week due to a coal shortage, while another 1,980 MW of capacity was shut due to a payment default by utilities in Haryana.
Tata Power's Mundra ultra mega power plant shut 1,600 MW of capacity, citing technical reasons. For the closure of its 300-MW Rosa power plant in Uttar Pradesh, Reliance Power, too, cited technological reasons.
The shutdowns of Tata Power and Adani Power came a day after the Supreme Court ruled power generators couldn't levy additional charges on buyers due to escalating fuel costs.
While Tata Power maintained it would resume operations in a day, Adani Power did not respond to queries on the shutdown.