States Are Experiencing Power Outages As The Energy Crisis Begins To Bite

Coal India Ltd has been delivering less than half of its committed coal shipments to Rajasthan.

States Are Experiencing Power Outages As The Energy Crisis Begins To Bite
States Are Experiencing Power Outages As The Energy Crisis Begins To Bite

India's electricity problem is beginning to bite, with blackouts affecting regions ranging from Uttar Pradesh to Rajasthan and Kerala over the weekend. According to Subodh Agarwal, the state's additional chief secretary for electricity, there were rolling outages of up to two hours in urban regions and four hours in rural parts of Rajasthan. 

Rajasthan has been receiving less than half of its contracted volumes of coal from Coal India Ltd., he said. There were also power shortages in other states including Punjab and Jharkhand, according to government data. Maharashtra, home to the country's financial capital Mumbai, had 11 gigawatts of capacity under outage on Friday, comprising 35% of its supply sources, for reasons including coal shortages, the data show. 

Due to a lack of coal, which accounts for roughly 70% of India's electricity mix, generators and some industrial users are forced to purchase electricity at the power exchange. Over the last two weeks, spot prices on the Indian Energy Exchange Ltd. have more than tripled, reaching 16.42 rupees per kilowatt-hour on Monday. According to the firm, this is the greatest level in 12 years. 

More widespread blackouts are feared, which could stymie economic growth and impair social infrastructures such as hospitals and schools. Other coal customers, such as aluminium smelters and steel mills, are left with the choice of decreasing output or paying more for the fuel, as supplies to power plants are prioritised to avoid curtailment. 

In a tweet on Saturday, Delhi Chief Minister Arvind Kejriwal warned of a possible power outage in the capital. As of Oct. 5, Mr Kejriwal wrote in a letter to Prime Minister Narendra Modi that he announced on Twitter that at least one power plant that supplies the city had run out of coal, while others only had reserves of one to four days. He claims that Delhi's gas-fired power facilities do not have enough fuel to make up the difference.

India's coal ministry downplayed the severity of the situation, however. "Any fear of disruption in power supply is entirely misplaced," it said in a statement on Sunday, responding to Kejriwal's tweet. There is "ample coal available in the country to meet the demand of power plants," it said.

About two-thirds of India's coal-fired power plants had stockpiles of a week or less, according to data from the power ministry. If the stockpiles dwindle further, the country is counting on importing more coal and reviving idled plants that run on gas.

Coal India

Over the last four days, Coal India Ltd. has increased its output to 1.5 million tonnes per day, up from 1.4 million at the end of September. In an interview with the CNBC TV18 news station, Federal Power Secretary Alok Kumar said the business needs to provide around 1.6 million tonnes of coal per day to power producers and expects to reach that level within a week. "There are challenges in some areas," Mr Kumar said, "but the situation is under control." While power outages increased in the first week of October, they are still less than 1% nationwide, he said. 

India's efforts to import additional coal are hampered by rising demand, which is compounded by China's own energy dilemma. The increase in seaborne coal prices has caused numerous Indian coastal plants to reduce output, putting more pressure on units that rely on domestic coal. 

Debasish Mishra, a Mumbai-based partner at Deloitte Touche Tohmatsu, said India should be able to manage the electricity crisis and that strong rains had filled the reservoirs, allowing for more hydropower generation. "It's unlikely that we'll witness widespread blackouts," he predicted. "There may be some outages in rural regions, but the government cannot afford to shut down industrial supply."