Coal back in focus as scorching summer spikes energy demand

In 2018-19, all three thermal power stations in Karnataka received oly 39.89 lakh tonnes of coal against the annual linkage quantity of 119.55 lakh tonnes

With unrelenting heatwave, particularly in parts of north-west, central and east India, the demand for power is shooting up. On June 10, the country’s electricity demand was at a record 211.85 GW, which according to energy experts, is only expected to go up further to 215-220 GW in two months. Besides scorching summer, the rise in demand is attributed to increased economic activities and summer farming. However, poor coal stocks in thermal power plants, higher global prices, and a shortage of railway rakes remain a concern in ensuring adequate supply.

According to the latest report on coal stock by the Central Electricity Authority (CEA), as of June 12, out of 173 thermal power plants, 95 plants have critical stocks, which is less than 25% while all the plants have just 37% of coal stock against the normal stock. Now, the question is whether the government can meet the energy needs or will the country faces an April-May-like situation when severe shortage prompted several states to effect massive power cuts.

Demand for electricity from the agriculture sector will jump in the coming days as farmers get ready to sow for the Kharif season. Farmers have already started sowing paddy, the major Kharif crop, which is water-intensive. Any shortage in electricity supply will hit irrigation and farmers will be forced to resort to diesel pumpsets.

Though the Indian Meteorological Department (IMD) predicted a normal south-west monsoon this year with rainfall at 103% of the long-period average, total monsoon rainfall is 42% below the long-period average during the first week of June and 94% down for north-west India. According to IMD, the monsoon has further advanced after a slow start and has further said that heatwave conditions in most of northern India will continue with no significant relief till June 18.

Anticipating the demand for electricity to accelerate in the coming days, the power ministry has asked states and thermal power generating companies to import at least 10% of their coal requirement for blending. Since thermal power contributes to 75% of the country’s total power generation, the government has also directed the state-owned Coal India Limited (CIL) to be ready to import a total of 12 million tonnes of coal for power utilities over the next 13 months. CIL has already floated tenders to import 8.4 million tonnes of coal to supply to states and independent power producers.

The import tender was floated post the government directive to build up a stock of fossil fuel to avoid the recurrence of power outages that affected the country in April this year on account of fuel shortage. CIL has said the current import tender is for July-September.

Dismissing the apprehension of a possible power shortage, Union Power Minister R K Singh said the government is preparing to meet the demand.

Apart from increased economic activities, power demand has also risen as a total of 2.86 crore households which did not have access to power earlier have been electrified, said Singh. The minister also admitted that there is a need to build coal stocks quickly. The demand for electricity has increased to 132 billion units per month in 2022 while in 2021 it was 124.2 billion units per month and 106.6 billion units every month in 2019.

The country’s power demand this year increased to about 40-45,000 MW on a daily basis, and in energy terms, the demand and consumption went up to 4,500 million units from 3,500 million units, according to the minister. The power sector is facing multiple problems due to poor financial health. The data available with the Ministry of Power shows that the total outstanding dues owed by the state electricity distribution companies (Discoms) to power producers went up from Rs 1,05,029 crore in April 2021 to Rs 1,23,244 crore in April 2022. The power sector NPAs are currently at Rs 50,300 crore.

Though the government opened up commercial mining of domestic coal fields, the new coal mines are expected to be operational by 2025 as they are required to obtain green clearances, acquire land and rehabilitate people, which are all lengthy processes.

To meet the requirement, the Ministry of Coal says, the coal production in the country jumped by 33.88% to 71.30 million tonnes (MT) in the month of May as compared to 53.25 MT recorded during the same month last year. The coal-fired thermal power plants will remain a major source of energy in the coming years. CIL, which supplied 80% of domestic coal needs, is given a production target of 700 MT for 2022-23 against 622.63 MT for the previous fiscal.

The real test for the government will be keeping sufficient coal stocks during monsoon season as domestic coal production is feared to slow down due to work at mines and lag in the movement of railway wagons. If the electricity situation did not improve, it would hit the agriculture, manufacturing and services sectors as well.

On the renewable energy front, India has failed to achieve its targeted growth. In 2015-16, the Centre had announced an ambitious target of installing 175 GW of renewable energy, excluding large hydro plants, by 2022. However, only around 53 GW was achieved as of March 2022. Many states including UP, Punjab and Haryana are lagging behind on this front.