Table of Contents
What has happened?
- India’s electricity shortage from March 1 to March 30 was its worst since October, a Reuters analysis of government data shows.
- A surge in power demand in March has forced India to cut coal supplies to the non-power sector.
- Many northern states suffered hours-long power outages in October, when a crippling coal shortage caused the worst electricity deficit in nearly five years.
Which places?
- Shortages in the eastern state of Jharkhand and Uttarakhand in the north surpassed those of October, the latest data showed.
- Gujarat, one of the country’s most industrialized, has ordered a staggered shutdown of “non-continuous process“ industries in key cities next week.
- A Gujarat energy department official said the move was due to power shortages and to facilitate continuous power supply to farmers, adding a similar strategy was last used in 2010.
- Andhra Pradesh and Goa, which registered marginal shortages in October, suffered deficits several times larger in March.
- The deficit in March was 574 million kilowatt-hours, a measure that multiplies power level by duration.
- That amounted to 0.5% of overall demand for the period, or half the deficit of 1% in October.
- The northern states of Haryana, Rajasthan and Punjab and the eastern state of Bihar, some parts of which suffered widespread outages in October, accounted for most of the deficit in March, but shortfalls were lower, the data showed.
Is it because of coal?
- A sharp uptick in both international and domestic coal prices due to the ongoing Russia-Ukraine conflict is set to increase input prices for independent power producers and
- power distribution companies.
- Higher coal prices have also pushed up spot power tariffs on the India Energy Exchange.
How higher coal prices impacting power sector?
- Indian power producers and discoms are facing high international coal prices, while domestic coal supply has already been struggling to meet demand in the past six months.
- High demand for domestic coal amid high international prices had led to rolling power cuts in a number of states in October 2021 as several thermal power plants ran out of coal stock.
- The average market clearing price of power on the Day Ahead Market at the India Energy Exchange (IEX) hit Rs 13.76 per unit, Up from an average clearing price of Rs 3.86 in the beginning of March.
- ICRA projected that spot power tariffs are likely to remain elevated at about Rs. 4.0 per unit in FY2023 due to higher coal prices, compared to average spot tariffs of Rs 2.8 per unit in FY2021.
Why coal prices are rising?
- The war has led to a disruption in the supply of coal by Russia, which is unlikely to be fully replaced by other suppliers.
- ICRA has estimated that imported coal prices are set to rise 45-55% in the first quarter of FY23.
- ICRA also noted that a coal shortage was likely unless Coal India is able to ramp up domestic coal production to 700 million tonnes in the next fiscal, up from about 601 MT in FY21.
- The price of Australian coal for March delivery had hit an all-time high of about $330 per tonne.
- Australia and Indonesia are key sources of coal import for Indian thermal power generation companies using imported coal.
- The price of domestic coal has also risen sharply in spot e-auctions conducted by Coal India Limited,
- With premiums over baseline prices set by Coal India reaching an all-time high of 270% in February 2022, which have reportedly increased further to about
- 300% in March 2022.
Q) Which gas is generally produced when coal is burnt in the presence of a lot of air?
- Carbon monoxide
- Sulphur dioxide
- Nitrogen dioxide
- Carbon dioxide
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