It was certain that the prevailing coal shortage at power plants would stay for a longer period than expected. However, despite the rise in domestic coal supply, the situation still remains critical due to the country’s over-dependence on coal to satiate its energy needs.
On its part, domestic coal miner Coal India Ltd (CIL) has posted an improvement in coal supply post-monsoon. Coal dispatches were at 1.76 million tonnes (mn t)/day during the first 13 days of Oct’21 against average dispatches of 1.61 mn t/day recorded in the entire month of September.
Nevertheless, these efforts have shown minimal outcome, as several plants are still gasping due to acute coal shortage.
As on 15 Oct’21, coal stocks at power plant were assessed at 7.5 mn t, sufficient for 4 days of power generation. Although the inventory improved marginally w-o-w compared with 7.23 mn t as on 8 Oct’21, it failed to match the levels seen at the end of September.
Moreover, elevated coal prices have reduced the share of imported coal in the total volume.
As on 15 Oct’21, contribution of imported coal in power plant inventory was down 11% w-o-w to 0.107 mn t.
Out of the 135 power plants being monitored by the Central Electricity Authority (CEA), 112 plants have coal stock that will last for 9 days or less.
Burden on coal-fired generation
The major reason for the fall in coal stock level is the uptick in coal-fired generation, which again resurfaced in Oct’21.
Incidentally, power generation from coal-fired plants had dropped 12% m-o-m to 78.89 (billion units) in Sept’21 compared to 89.6 BU in Aug’21.
However, rebound in power generation was seen during Oct’21 as output increased 6% m-o-m to 44.95 BU during the first 17 days of Oct’21, at a time when the country’s overall power generation had slightly fallen in the period.
Notably, share of coal in the generation volume jumped to 68% in Oct’21 against 64% in Sept’21.
The situation deteriorated with the withdrawal of monsoon as output from hydro station decreased 12% m-o-m to 9.79 BU, which was accompanied by a 30% fall in generation from renewable energy sources.
Gradual return of power units boost coal demand
To mitigate the gap between power supply and demand, several power units which had been out of service were made to return to the grid, due to low stock situation.
It is important to note that electricity shortage has risen 7-fold to 54.9 MU/day during the first 17 days of Oct’21 against 7.7 MU/day recorded in the corresponding period of Sept’21.
As a result, the total capacity of coal-fired units under outage was reduced from 11 GW on 12 Oct’21 to 5 GW on 14 Oct’21, as per data provided by PIB.
But, in the process, the overall coal requirement of plants continued to remain higher than the prevailing coal supply made by CIL. As on 15 Oct’21, power plants’ daily coal requirement was 1.87 mn t compared to the coal receipt of 1.64 mn t.
Non-power sector worst hit
Because of the acute coal shortage faced by the power plants, CIL has gradually increased supply to the power sector, thereby curtailing the supply to the non-power sector.
Data provided by the coal ministry indicates that CIL’s dispatches to the non-power sector decreased by 21% m-o-m to 8.04 mn t in Sept’21. On the other hand, dispatches to the power sector increased by 5% m-o-m to 40.38 mn t in Sept’21.
Recently, the miner temporarily suspended coal supplies to the non-power sector by asking its subsidiaries not to conduct coal auctions, except only the special forward auctions, which is earmarked only for power producers.
This comes against the backdrop of rising seaborne coal prices which have made imports unviable, thus adding to the plight of the customers.
Outlook
Decisions taken by CIL are expected to play a vital role in replenishing the depleted coal stock at the power plants. Besides, efforts are also in place to increase domestic coal supply from the alternative sources.
In a recent development, the country’s largest power producer, NTPC, has commenced coal offtake from the Talabira mines of NLC in Odisha to feed its Lara and Darlipalli power stations. In addition, the company is also ramping up coal production from its captive mines.
The country’s power plants are supplied with rolling coal stock which is being replenished with continual coal dispatches. This implies that there is no risk of a major blackout as was the case with China.
But, with the festive season round the corner we are unlikely to see a steep fall in power demand in the short term. Added to that, any unseen disruption in coal supply may worsen the situation, which would put more pressure on the inventory levels.
At present, some states in the country have already implemented power cuts while some are relying on purchase of expensive electricity from the spot markets to meet the shortfall.
The impact of hike in coal and power costs would eventually be reflected upon the performance of industrial units which is not a healthy sign for the growth of the economy.
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