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MAY 31 2017

Coal available aplenty, yet thermal plants face shortage

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 31st MAY 2017


After two years of oversupply, coal is in short supply at Indian power plants in May.

According to the Central Electricity Authority (CEA), as on May 22, the average coal stock at the 113 power stations that receive domestic supplies is down to 12 days. Of these, 13 utilities had only seven days’ stock, and six others had less than four days’ stock.

Typically, coal demand for power generation rises in summer, but CEA records reveal that this year, thermal power generation has been relatively subdued. Indicatively, between April 1 and May 20, when the total electricity generation was up by 4.7 per cent, coal-based generation was up by only 3.8 per cent.

Hydel and other renewable energy sources account for only a small share of power generation, but they have seen an upsurge. Hydel generation was up 25 per cent in April-May, and while RES data is unavailable, the installed capacity of solar power was up 80 per cent to 12 GW in FY 17.

The situation is in striking contrast to last year.

In April-May 2016, thermal generation was up 18 per cent, and yet there was no coal crisis. Power stations had 22 days’ coal inventory and not a single utility had less than seven days’ stock.

Root of the problem

So what accounts for the short supply of coal this year?

The problem, it appears, lies in the lack of preparedness of the electricity generation sector to meet the summer demand. Normally coal-fired plants stock adequate fuel at the beginning of summer, but this year there were slow off the blocks.

As on April 1 this year, power plants had 19 days’ coal stock, down from 26 days’ stock on the same day last year. By April 30, however, they were down to 16 days’ stock. Even some pit-head power plants of NTPC and DVC had lower stocks than usual.

Strikingly, Coal India Ltd (CIL) ended the last fiscal with a mammoth pit-head stock of 67 million tonnes, equivalent to two months’ production. In fact, CIL despatched 6.2 per cent more coal till date this fiscal. `

This is despite the fact that production was down to half at the Rajmahal Mines in Jharkhand following a fatal accident last year, and some mines in Talcher in Odisha are operating sub-optimally owing to failure to secure environmental clearances.

But despite the plentiful availability of coal, CIL sources say that till April, thermal utilities did not take allotted quantities. Utilities in Gujarat and Rajasthan were particularly keen to keep their stocks low, evidently to reduce their operating cost.

Coal-based generation is reeling from overcapacity and low realisation. The average round-the-clock (RTC) tariff on the IEX was Rs. 2.70 in April and Rs. 2.97 in May. The relative rise in the share of renewable energy sources is compounding the problems of thermal power plants.

In May, however, even as demand was rising, the share of hydel power started coming down. Utilities demanded coal on an urgent basis in order to tap the opportunity. CIL, too, had stocks, but railway logistics could not be cranked up at such short notice.

Additionally, the government’s push to reduce imports may have had accentuated the ‘shortage’. According to IHS McCloskey Coal Report, thermal coal import was down by 7.6 per cent in April as the state sector shifted to domestic coal.

Today, CIL sees the coal shortage at power plants as an opportunity to ramp up sales. “Sales will be good next month as utilities have run out of coal,” said a source. The company has now appointed an observer for each thermal utility.



Rajasthan TOTAL India Energy Exchange Ltd. Gujarat Jharkhand Odisha Damodar Valley Corporation India Energy Exchange Damodar Valley Corporation Renewable Energy Coal Coal India Limited Power Generation Tariff Environmental clearances NTPC Ltd Energy Central Electricity Authority Import CIL Power IEX Electricity India solar power Solar

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