IN EARLY MARCH, the India Meteorological Department (IMD) released its seasonal forecast from March to May 2003. According to the forecast, India will experience a scorching summer this year, and most parts of North, East and Central India will have above-normal maximum temperatures. There is also a probability of heatwaves (periods of abnormally high temperatures) over parts of Northwest and Central India.
“For the March to June period, all-India electricity demand is expected to grow 8.5-11.5%, driven by signs of improved economic activity and unusual rise in temperature,” another report by S&P Global analysis says.
It’s not only India. As per the World Meteorological Organisation (WMO), 2023 will be a “triple-dip La Niña” year, with the potential for widespread warmer-than-average sea surface temperatures during spring and summer.
These predictions also raise concerns regarding the availability of power, as load-shedding is a common phenomenon in most parts of the country during summer. But this time around, things are different. Recovering from the effects of Covid-19, the economy is powering back and industrial units are peaking production. Industries accounted for 41% electricity consumption in India in 2021, followed by homes (26%), the farm sector (18%), commercial (8%) and others (6%). Though the Centre says it is preparing to meet the crisis, can India escape the wrath of a likely harsh summer is a reality that will be addressed in the coming weeks.
To get a perspective, peak demand (highest energy consumption in a single day) was about 187 gigawatt (GW) in October, 188 GW in November and 206 GW in December 2022. While the demand was met, companies could supply only around 210 GW in January 2023, against a demand of 212 GW. The Central Electricity Authority (CEA) estimates the peak electricity demand to further rise to 229 GW during April 2023, when electricity demand is normally highest during a year. The demand tapers off by early June as the monsoon season picks up from the southern parts and covers the whole country over the next 3-4 months. Though peak demand in April 2022 was only around 215.88 GW, many parts of the country had to face severe load shedding, due to domestic coal shortage, record prices of imported coal and transmission system failures, according to sources.
Despite huge capacity additions in renewable energy, coal is still India’s most important fuel, accounting for 51.27% of the total installed capacity (including lignite) of around 411 GW. The share of wind, solar & other renewable energy is only 29.5%, besides another 11% from hydro power. During summer, production of hydro power, considered the most reliable fuel to stabilise grids during peak hour demand, goes down drastically.
Efforts are on to meet any possible crisis, and an inter-ministerial sub-group comprising of representatives from power, coal and railways ministries, CEA, Coal India Ltd. (CIL) and Singareni Collieries Company Ltd. (SCCL) are holding regular discussions to solve any crisis. As on March 12, the total coal stock available with coal-based thermal power plants is 33.5 million tonnes (MT), sufficient for an average of 12 days at a requirement of 85% plant load factor (PLF), a measurement of power production efficiency. (About 30 MT represents about 50% of the stock requirement in Indian power plants.)
Power utilities have been directed to undertake maintenance for coal-based power plants well in advance so that no planned maintenance is required during the crunch period. Directions have been issued under Section 11 to all imported coal-based plants to run at full capacity from March 16. Adequate stocks would be made available at coal-based power plants. In order to solve the problem of rakes for transporting coal, a major issue last year, the railways ministry has agreed to provide 418 rakes to subsidiaries of CIL, SCCL and captive blocks, and also enhance the number of rakes so that sufficient coal stock can be maintained at power plants. The ministry estimates an additional capacity of 2,920 MW would be available through new coal-based plants which would be commissioned by the end of this month. In addition, two units at Barauni (2X110 MW) can be made available during crunch periods. The ministry has issued an advisory to power utilities not to retire any thermal plants (till 2030) if they can be made available for dispatch after renovation and modernisation.
Officials hope to bridge the gap with gas-based power as well. The ministry has directed NTPC to run its 5,000 MW gas-based power stations during the crunch period in April-May. In addition, 4,000 MW of additional gas-based power capacity would be added by other entities for availability during the summer months. GAIL has also assured the power ministry of the necessary supply of gas during summer. All hydro plants have been instructed to operate to optimise water utilisation in the current month for better availability next month. The ministry has also asked NHPC and Himachal Pradesh State Electricity Board Ltd to operationalise Unit 1 of Kishanganga project and Unit 2 of Sainj project, respectively, by March 31, which were lying defunct for a few months.
The question is will power companies be able to produce adequately to meet demand? Coal India, which says it is on course to achieve 700 MT of mining target for the year and plans to supply 156 MT during the peak summer months of April-June, has indicated it is thinking of increasing coal prices. “There is a strong case for increasing coal prices and the hike could be effected very soon as discussions are underway with stakeholders,” CIL chairman and MD Pramod Agrawal said recently. Coal prices have not been revised since 2018, he added.
The power sector owes mining companies such as CIL around ₹20,500 crore (of which Coal India alone accounts for ₹16,000 crore plus). Increased coal prices may further discourage producers from stocking adequate coal, which may impact peak summer production plans. The target for 2023-24 from captive/commercial coal usage is about 161 MT, but production is likely to be only around 112 MT. Captive production in the last year was only around 89 MT.
While domestic coal is supplied to power generation companies at notified prices except independent power producers (IPPs) and prices are revised only periodically, the international price of coal varies according to the demand-supply situation, shipping and logistic considerations and other factors. In recent times, international prices of coal have shot up steeply. Imported coal stocks have declined since the easing of import guidelines in October 2022, according to S&P Global.
The mandate to run all imported power plants at full capacity for three months will ensure higher availability of coal plants despite high coal prices in the international market and the high cost of generation will be passed on to consumers, says S&P.
With planning underway at the official level, all are hoping India may see through the summer hot test.