With rising coal inventory, Indian power plants are at last in a comfortable spot after suffering for most of the year due to inadequate coal supply.
The continuous increase in demand for electricity post-lockdown has placed massive pressure on power generation plants, most of which are operating on coal.
To satisfy the energy requirement, the thermal plants had scaled up their generation schedule by consuming more fuel. As a result, coal inventory at the plants fell to record-lows in the end of September 2021. Since then the power sector has been on a recovery mode.
This sent shockwaves across the end-user segment by impacting the entire coal supply chain. However, the situation seems to be under control.
With concentrated efforts of coal companies and stringent measures taken by the government, the coal inventory at plants has increased to 30.89 million tonne (mnt) as on 22 August, 2022, sufficient for 11 days of power generation. Notably, this is the first time the stock level has crossed 30 mnt mark since last June.
Besides, there are early signs that indicate the country could possibly avoid another round of coal shortage similar to last year.
Easing power demand
Power demand post monsoon this year has been stagnant, supported by extended monsoons recorded in various regions.
As per data provided by POSOCO, power consumption during 1-22 August stood at 4,143 million units/day (MU/day), which was at par with the previous year’s levels of 4,178 MU/day.
Most importantly, coal-based power generation dropped 4% y-o-y to 2,760 MU/day in 1-22 August as against 2,877 MU/day in the same period last year. This was partly relieved by the uptick in hydro power generation which rose 12% y-o-y to 741 MU/day during 1-22 August, 2022.
CIL ramps up dispatch
The low-inventory situation at power plants last year was partly accounted for by the disruption in coal supply owing to the monsoon as the plants were unable to lift coal at a time power demand was soaring.
However, state-run miner Coal India Ltd. (CIL) has maintained higher coal dispatches this year to aid the plants.
Barring the impact of monsoon across some of the coal producing subsidiaries, CIL’s overall coal dispatch has increased 7% y-o-y to 37.58 mnt during 1-23 August, 2022.
CIL: Subsidiary-wise coal dispatch for 1-22 August, 2022
Quantity in mnt | Source: Coal Ministry
In this period, the power plants received coal to the tune of 1.94 mnt/day from domestic miners as well as imports, which is slightly higher than the consumption rate of 1.89 mnt/day.
In addition, CIL has finalised contracts for supply of 6 mnt imported coal on behalf of power plants, which can be used as an additional source to feed the plants in case of any abrupt rise in power demand.
Nevertheless, coal supply crunch has become a recurring phenomenon every year led by peak summer demand as any shortcoming tends to impact operations of the power plants. To solve this problem, substantial investment in rail infrastructure is the need of the hour to tide over unwanted supply shortage scenarios.
Leave a Reply