Coal supply debate heats up ahead of festival season power demand
India’s coal supply position is now at a crossroads, with power generators blaming less-than-optimum supply and Coal India (CIL) claiming it is on a “war footing” to ensure adequate supply.
Since September 1, the number of power plants with less than eight days of coal has increased to 104, from 79. However, government officials said there was no energy shortage in the country and fears of scarce electricity supply are “unfounded”.
According to the data available with the grid operator Power System Operation Corporation (POSOCO), the national energy shortage stood at 21 million units (MU) as on October 2. The national average energy met was 3,820 MU. The shortage has increased from a month before, when it was 10 MU on September 2.
“During September, the demand uptick came from the northern states, especially those with paddy cultivation. Punjab, Haryana, and Uttar Pradesh were leading the power demand. With the monsoon receding and temperatures moderating, demand, too, will stabilise,” said a senior sector official.
Power demand might be plateauing, but coal stocks continue to paint a grim picture. Compared to 79 units (98 gigawatt, or Gw) thermal capacity facing coal shortage (less than eight days of stock) on September 1, there are 104 units (126 Gw) capacity still below the optimum coal stock. The units which have one day of coal have also trebled to 27.5 Gw by the end of last month.
Coal ministry officials, however, pointed out CIL has increased coal despatch. “Against the daily demand of the power sector at 1.7 million tonnes (mt), 1.35 mt is met by CIL. The company has been despatching 1.6 mt and will increase it to 1.7 mt this week,” said a coal ministry official.
The official pointed to the POSOCO data, saying there was barely any energy shortage. He said year-on-year thermal power production increased 24 per cent till September, renewable power 16 per cent, while hydropower and imported coal are in the negative.
“Coal continues to be the backbone of power supply and measures have been taken to ensure greater availability,” said the official.
Power generators, especially NTPC, are claiming shortage, with only four days of coal stock and high festival demand in the months ahead.
The Ministry of Power in a recent note said: “The coal despatch needs to be increased in order to exceed daily consumption for building up coal stocks as power demand is expected to stay at the present levels."
The power ministry also said as coal consumption by thermal power plants is likely to exceed 700 mt this fiscal year, a comprehensive strategy has been prepared by the Ministries of Coal, Power, and Railways “to remove logistic bottlenecks in order to sustain high demand and consumption of coal by power plants”.
To start with, the availability of coal with plants that supply cheaper power will be increased. The power ministry has notified that coal supply will not be restricted to the annual contracted quantity of power plants, but plants will be given coal consistent with their actual requirements.
“Those plants coming higher on the merit order despatch, according to the security constrained economic despatch, will get more coal,” it said.
A senior coal ministry official said as CIL maintains a normative price for its coal, this demand-supply mismatch will in no way impact consumers, like in other countries.
“Whatever be the demand situation, CIL'S coal-based power plants will not have to resort to tariff increase or load the consumer with high energy prices, as is happening in China for instance,” he said.
However, to make the coal supply situation more comfortable, the coal ministry has allowed captive mine (selfuse) owners to sell coal in the open market. Through a gazette notification, the coal ministry has allowed mine owners to sell 50 per cent of their production in the open market.
The captive mines have produced 18 mt of coal this fiscal year. The production, however, is lower than their target. The ministry expects captive mines to produce 70 mt of coal this year, against 38 mt in the earlier fiscal year.
These captive mine owners were recently reprimanded by the Ministry of Coal, asking for a ramp-up in production or face regulation in coal supply for their units. Over the past five years, 43 captive mines have been allotted to private players.
Senior officials said mine owners will be allowed to price the coal, according to their requirements.