Fear of blackouts returns as India's electricity demand soars

By Rajesh Kumar Singh

India’s electricity demand has soared to new records, raising fears that blackouts that had eased in recent weeks could return.

Peak electricity use jumped to a record 210.8 gigawatts on Thursday, surpassing the previous record clocked a day before, data from country’s grid operator shows. The power ministry expects demand to rise to as high as 220 gigawatts this summer and is pushing power plants to import coal to be able to supply that much.

Soaring temperatures and rising industrial activity have boosted sales of electricity this summer, pressuring domestic supplies of coal, which generate about 70% of the country’s power. Power plants have been loath to import the fuel after seaborne prices jumped to record levels after Russia invaded Ukraine, exacerbating the supply squeeze.

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“The high power demand scenario is here to stay,” said Rupesh Sankhe, vice president at Elara Capital India Pvt. in Mumbai. “We either brace for higher power prices on account of expensive coal imports or risk facing blackouts.”

India’s power plants are operating with coal inventories of about 9 days, nearly a third of what is required. The stockpiles have risen in recent days, thanks to an increase in renewable power generation easing the burden on coal plants, but the situation is far from comfortable just weeks after an earlier heatwave caused widespread outages.

Adding to the power sector’s woes, the approaching monsoon rains could start flooding coal mines within weeks, impeding production and shipment of the fuel. Last autumn, the country saw its worst coal and power crisis in years, caused by a range of factors including a prolonged rainy season.