Coal Shortage: Is India Staring At Another Power Crisis?

Amidst soaring temperatures and rising power demand, India is likely to face another power crisis as several thermal plants are reeling with extreme shortage of coal stocks.

The Daily Coal Stock report, released by the Central Electricity Authority (CEA) on 11 April 2022, paints a grim picture of the coal stock with thermal power plants (TPPs) in the country. A total of 96 out of 173 TPPs have critical levels of coal stock — 76 of these plants are based on domestic coal, 11 plants are designed on imported coal whereas nine plants are currently not in operation.

As of now, a total of 50 out of 73 plants identified as critical have less than 10 per cent of stock, which can be used for power generation for less than 10 days.

The Report

CEA monitors daily coal stock position of all coal based TPPs (presently 173) in the country having fuel supply agreement (FSA) with Coal India Limited (CIL)/Singareni Collieries Company Limited (SCCL).

The coal report is published based on the online data submitted by the power plants on National Power Portal (NPP) on a daily basis. The daily coal report shows stock position of coal available at a plant and number of days of coal stock sufficient to run the plant as per consumption pattern.

The report highlights the plants having critical/super-critical stock of coal based on certain criteria. The report identifies the coal stock as critical if the coal stock available with the plant is less than 25 per cent of normative coal stock.

Coal Stocking Norms

The earlier coal stocking norms were advisory in nature; at times power plants did not maintain coal stock as per the norms, which was not desirable for a sustained plant operation.

Meanwhile, in October 2021, a number of thermal plants faced a severe coal shortage, whereby coal stocks fell to an average of four days worth of stock with about 11 GW of thermal power capacity facing outages due to low coal stocks. The low coal stock situation had forced a number of states to purchase power on the energy exchange, bidding up the average market clearing price of power to Rs 16.4 per unit in October, prompting the government to revise coal stocking norms.

The CEA issued revised coal stocking norms on 6 December 2021 which prescribes the coal stocks to be mandatorily maintained by the power plants with provisions for penalty for non-maintenance of prescribed coal stock.

This has been done to ensure more fuel security to the power plants, reflect true picture of the stocks being maintained at each power stations and ensure sufficient coal stock even during the period of less supply by CIL and SCCL during the months of July to September.

The revised coal stocking norms based on 85 per cent plant load factor (PLF) mandates the coal stock of 12 to 17 days at pit head stations and 20 to 26 days at non-pit head stations, to be maintained by power plants through February to June every year. Month-wise variation based on the coal dispatch/coal consumption pattern during the year has been allowed.

PLF is the ratio of average power generated by the plant to the maximum power that could have been generated in a given time. More PLF results in more revenues, and lesser will be cost of per unit (kWh) energy generated.

The power plants are graded as red, yellow and green for not maintaining the coal stocks; and would be penalised for not maintaining their normative availability due to reduced coal stocks and their fixed charges shall be reduced in a graded manner.

Stock Position

The data from the CEA report shows that the total stock available with 155 non-pit head plants (non-pit head plants are power plants where the coal mine is more than 1,500 km away) is a mere 28 per cent of the normative stock.

For 18 pit-head plants with a cumulative installed power generation capacity of 39,222 MW, the situation is far better with total stock being 82 per cent of the normative stock.

Around 23,524.5 thousand tonnes of coal stock was available with the 173 TPPs, the CEA report said. This is about 35 per cent of the normative coal stock of 66,720.4 thousand tonnes required to be maintained by the TPPs and enough only to meet the near-term demand.

The coal crisis has been lingering for the last few years. However, in contrast to widespread blackouts experienced in October last year, the current problem is the result of strong demand as well as supply problems.

Supply Side Challenge

The very low level of coal stocks at power plants at the start of the maximum annual demand period can be attributed to the shortage of railway rakes. Rakes are used to transport coal to thermal power plants.

In a recent meeting chaired by cabinet secretary Rajiv Gauba, Indian Railways admitted that it has exhausted its rake availability capacity and has no more spare capacity. According to a railway official, Indian railways have improved its wagon turn round (WTR) time by 16 per cent between September 2021 and February, and is putting efforts to improve it further.

WTR represents the average period of time in which a particular wagon completes its average loaded trip and after which it again becomes available for loading. Lower WTR would mean more wagons being available in a shorter period.

In an effort to increase the rake availability, an inter-ministerial sub-group led by Ministry of Coal advised the railways to provide additional 20-25 rakes per day to the power sector. Following this, the supply of rakes to power sector has been improved from 373 to 405 rakes a day.

While rake availability is being increased, the coal companies also need to focus on reducing the loading time at colliery sidings which is very high at some sidings. Reducing the detention of all rakes at coal sidings to three hours or less can provide three to four additional empty rakes per day which can be gainfully utilised for more loading of coal.

An inter-ministerial sub-group led by Ministry of Coal has been monitoring the coal stock situation twice a week. In order to manage the coal stock and ensure equitable distribution of coal, Ministry of Power constituted a core management team (CMT) in August 2021 comprising of representatives from Ministry of Power (MOP), CEA, the railways and CIL to ensure daily monitoring. The CMT is closely monitoring and managing the coal stocks on a daily basis and ensuring follow up actions with CIL, the railways to improve the coal supply to power plants.

Amidst the lingering coal shortage, the shortfall is being met through imports. Central power generation utilities like NTPC and Damodar Valley Corp have begun to import coal as also states like Gujarat, Maharashtra, Rajasthan and Tamil Nadu.

Demand Management

Exceptionally high loads have arrived far earlier this year, well before the most intense period of summer heat. Temperatures in northern India have been unusually high for the time of year since mid-March, resulting in a rapid rise in electricity demand, fuelled by the rapid growth in load from commercial and residential air-conditioners.

The grid reported a record load of 200,570 MW on 7 July 2021, at the height of last summer, according to the National Load Dispatch Centre of the Power System Operation Corporation (POSOCO). But since the middle of March this year, the grid has routinely reported maximum loads above 195,000 MW, including a peak of 199,584 MW on 8 April — less than 0.5 per cent below the record demand witnessed in summer of 2021.

With temperatures likely to continue rising to a peak at the end of June or beginning of July, electricity demand would further accelerate over the next two to four months. Given the plummeting coal stocks, the grid is unlikely to be able to serve higher loads between May and August, making load-shedding and other power cuts more or less inevitable during any period of unusually hot weather.