Power plants designed to run on imported coal are struggling to play their part in catering to the country’s power demand as a number of these plants remain out of service.
Power generation from the imported-coal-based (ICB) plants fell 39% y-o-y to 2,814 million units (MU) in July, 2022 against 4,589 MU in July, 2021. The volume was also 36% lower m-o-m compared to 4,425 MU in June, 2022.
At present, there are 15 ICB plants with an installed capacity of 17,255 MW, which account for a mere 8% of the total coal-fired plant fleet. During July, no power generation was recorded from five of these ICB plants that are facing prolonged outages.
The power sector saw easing demand owing to the monsoon, which usually slows down industrial activities. Notably, power consumption dropped to a four-month low of 127.8 billion units in July.
However, subdued output from ICB plants compelled the domestic coal-based plants to raise their generation schedule. In July, the domestic coal-based power generation grew 7% y-o-y to 86,430 MU.
Adverse impact on coal logistics
ICB plants have ceased their operations as they do not have regular supplies of imported coal and incurred huge losses due to the high cost of imported coal and shrinking margins.
These operating constraints have not only increased the burden on the domestic coal-based plants, but also affected the entire coal supply chain.
Primarily, ICB plants help meet the power demand of the southern and west coast states such as Gujarat and Tamil Nadu. When these plants are operational it helps relieve the Indian Railways of pressure for additional rakes, as the supply of coal to the southern states through railways often involves a high turnaround time.
Moreover, in an attempt to priortise coal dispatches to the power plants, the coal companies have curtailed the supplies meant for the non-power sector.
Subsequent cooler temperatures in the ensuing months indicate that there would be lesser coal consumption at the power plants compared to the peak summer season. At the same time, coal companies would raise their production to scale the inventory levels of the plants.
Nevertheless, looking into the inefficiencies of the ICB plants it is expected that the domestic coal-based plants would be pivotal in catering to power demand which, in turn, is likely to keep the coal supply chain disrupted in the medium term.
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