India’s Power Crisis: Over Half of Coal Plants Experience Critical Fuel Shortages Amid Rising Demand
NEW DELHI: India’s coal-fired power plants are facing a critical fuel shortage, with nearly half of them holding coal reserves sufficient for less than three days. As of October 19, 96 out of 191 plants reported critically low stocks, a significant increase from 60 in mid-September, according to the Central Electricity Authority. Overall coal stocks at power stations have decreased by about 5% since the beginning of October.
The shortage is exacerbated by a rise in electricity demand due to hotter-than-usual weather linked to El Niño and reduced hydropower generation from weaker monsoon rains. With less electricity available from hydropower, coal-fired plants are under increased pressure to maintain power supply.
Power demand rises as hydropower output falls
Daily peak electricity demand this year has surged by 45 to 50 gigawatts compared to last year. The decline in hydropower generation has forced India to rely more heavily on coal-fired plants. In September, the gap between electricity demand and supply reached 560 million kilowatt-hours, the highest since August 2023, despite increased output from coal-fired plants. Coal generation rose by 13.3% in September, while hydropower output fell by 20%, according to CEA data.
Currently, nearly 55% of India’s power generation comes from non-fossil fuel sources. However, the country still depends on coal during peak demand periods due to insufficient battery storage for electricity generated from renewable sources.
Government puts coal import plan on hold
India has paused a proposal to require power plants to import coal to replenish their stocks, as reported by Bloomberg. The government had considered allowing a mix of imported and domestic coal to alleviate the shortage. However, high international prices and a weaker rupee have made imports less feasible. Instead, policymakers are focusing on increasing production from state-owned Coal India Ltd and improving transportation logistics.
Benchmark thermal coal prices are currently at their highest in three years. The government’s decision to halt imports comes after an order for over 100 captive coal-fired power plants to operate at full capacity until the end of the year to meet rising electricity demand.
Coal stocks at their lowest in nearly five years
Coal stocks at Indian power plants have dropped to their lowest levels in nearly five years, driven by rising electricity demand and decreased hydropower generation. Below-normal monsoon rainfall has further reduced hydropower output, while higher temperatures have increased electricity consumption for cooling and irrigation. September saw the worst electricity shortage for that month in nearly a decade.
However, the rate of decline in coal stocks has slowed in October. Data indicates that domestic coal-fired power plants recorded an average daily drop of around 48,000 tonnes in their stocks during the first 17 days of October, significantly lower than the daily decline in September.
Coal ministry says supplies have improved
Earlier this month, the coal ministry reported a 36% increase in daily coal supplies to the power sector compared to September levels. The ministry clarified that a plant flagged as having “critical stock” is a warning signal and does not necessarily indicate an imminent shutdown. As of October 8, 87 of 190 coal-fired power plants had critically low stocks, holding only 33% of the recommended coal reserves.
Coal transportation by rail has also seen improvements, with an average of more than 465 rakes loaded daily in October. The ministry aims to maintain this level of coal transportation to stabilize stocks ahead of the festive season and the upcoming winter demand.
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