Genco Fuel Supply Crisis: Many States Face Blackouts
A peak summer, coupled with an industrial recovery, has led to a huge power shortage in the country. Even as the government says it is doing everything it can to avert a nationwide energy crisis, mounting fuel stocks at thermal power plants risk crippling electricity supplies in the coming weeks, slowing the economic activity.
The power shortage rose to 80 million units (MU) on April 7, close to the record high of 82 MU seen on October 12, 2021, and up from a daily average of just 19.7 MU in March . The peak-hour supply shortage was 6,124 megawatts (MW) on April 7, even higher than the recent high of 5,591 MW (October 12).
States that have already started experiencing temporary power cuts in recent days include Andhra Pradesh, Madhya Pradesh, Bihar, Jharkhand, Punjab, Haryana, Rajasthan, Telangana and Uttar Pradesh. Maharashtra, Gujarat and Tamil Nadu, the country’s most industrialized states, are trying to avoid load shedding by letting state-run utilities buy expensive power – from gencos under short-term arrangements and even in the spot market.
Stating that the current situation is a “fallback from high imported coal and gas prices, which have increased pressure on domestic coal suppliers” rather than laxity on the national coal front or on the part of the railways In fuel transportation, Union Power Secretary Alok Kumar told FE that the current level of coal stocks at power plants (24.5 million tonnes) would be enough for 12 days at the current level of consumption. He added that it was “almost impossible” to change the logistical design in the short term, but listed the measures taken by the government to avoid a major energy crisis. “National coal production and transportation by railways are increased to the maximum level possible in the short term. We’ve also advised states and Center-owned utilities like NTPC and DVC to import coal for blending, and that’s started to happen. Our utilities will also import about 9 million tons of coal by June, without putting additional pressure on the transportation of domestic coal by railroads.
Kumar noted that imported coal-fired power plants from Adani and Tata Power in Gujarat started producing in March. “We have been working with them (units that depend on imported coal) and the ministry will convene another meeting with them next week to address some outstanding issues.” The official added that all relevant ministries – coal, railways and electricity – were working collectively to ensure that there was no disruption in electricity supply. “It is our highest collective priority. We are trying to solve the problem in the best possible way,” he said.
The secretary said the railways are committed to introducing 0.1 million additional railcars over the next 2-3 years and have identified several locations on their rail network to improve loading and hauling capacity.
To address the power shortage, the Maharashtra Cabinet on April 9 approved the purchase of 760 MW of power from Coastal Gujarat Power, a subsidiary of Tata Power. Under the agreement which will be valid until mid-June, the distribution utility MahaVitaran will obtain electricity at Rs 5.5-5.7/unit against the spot electricity price of ` 12/unit. The deal will help Tata Power’s loss-making 4,000MW ultra-mega-electric project in Mundra recover some of its under-recoveries. The company is currently operating three of its six units to supply power to Gujarat discom on an additional basis.
Although the high cost of coal has made operations difficult for plants that use imported fuel, JSW Energy and JSPL have been supplying expensive energy to point buyers on power exchanges in recent weeks. GVK Power, which supplies power to Punjab from the Goindwal Sahib thermal project, is operating at a PLF of 10% as the state government halted purchases due to the higher tariff of Rs 5-6 /unity.
Issac George, CFO of GVK Power, told FE: “Transporting coal to a landlocked state like Punjab further increases fuel costs. Additionally, the state government only buys as needed, which forces us to operate at a very low PLF. George added that if domestic natural gas had been made available to the company, it could have generated electricity from gas-fired combined cycle plants at a cost of `1/unit less than that of coal-fired power plants.
According to the Union’s energy secretary, since “certain imbalances (supply and demand for coal)” persist in many parts of the country, the states have had the possibility of reallocating the coal extracted from their quotas between their different power stations. “It’s a matter of optimization and offloading infrastructure. In some factories in Maharashtra and Gujarat, for example, the level of consumption is high. There is therefore pressure on the unloading of the rakes. The holding time of the rakes is sometimes much longer than the norm. We are aware of the need to give coal to plants that have little coal stocks,” he said.
Kumar said power consumption in FY23 would be in line with projections. Unlike a CAGR of 4.5-5% in recent years, consumption could grow 7-8% in the current fiscal year, he said. According to projections, supply could fall short of demand by 9%, he noted.
Prices for imported coal, which ranged between $50 and $60 per ton, have consistently exceeded $100 per ton over the past ten months. Current prices are even higher at $150-160 per ton.
Similarly, the landed cost of LNG, which was previously available at $8-9 per mmBtu, has recently been very high at around $40, due to the Russian-Ukrainian war.
In Tamil Nadu, the average daily electricity consumption has increased from 290-300 MU in 2021-22 to a level of 320 MU currently and could reach 390 MU in the next few days. While the state’s installed thermal power capacity is 16,219 MW, the average electricity demand is about 15,000 MW, and the summer peak demand is 17,000 MW.
According to state government officials, the low availability of coal is putting pressure on the operations of TANGEDCO’s state-run thermal power plants in the state. The total coal required for TANGEDCO power plants is 72,000 tons per day and the annual requirement is 26.28 million tons. Fuel Supply Agreements (FSA) available with coal companies currently cover 23.8 tonnes per year.
Recently, Chief Minister MK Stalin met Prime Minister Narendra Modi and urged him to request Coal India to allocate the full amount of coal under the FSAs and additional amounts to the state to meet his balance needs.
“The shortage of rakes leads to an insufficient supply of coal for TANGEDCO. The electricity production deficit is thus filled by buying power at exorbitant rates on the energy exchanges, the State had indicated to the Center. the Center to provide at least 20 rakes for the transportation of 72,000 tons of coal per day from the Talcher/IB valley to the ports of Paradip and Visakhapatnam.Additionally, the state wanted the railways to allocate an adequate amount of coal rakes to achieve the full amount of bonding coal allocated.
West Bengal government officials, however, say they saw little possibility of power outages in the state, as its power stations are not heavily dependent on supplies from Coal India. The West Bengal Power Development Corporation sources only one-third of its coal needs from CIL and meets two-thirds of its needs from captive sources. The same goes for CESC, generating 1,225 MW with its control area limited to Kolkata and adjoining areas. DVC, generating 5,750 MW of electricity from West Bengal, is the main industrial supplier. It sources 50% of its coal from CIL, imports some of it and obtains the rest from its captive mines. “West Bengal can more or less meet the peak demand of 7,000 MW and is not subject to a coal shortage,” an official said.
“Last year around September, when the whole country was facing an electricity crisis, West Bengal was the only state to ensure a stable supply even amidst the extra load of electricity required for the puja from Durga. In some cases, we buy electricity for cash to meet our demand, but rarely resort to blackouts. Only a fault in the system can lead to power outages in the state now,” state energy minister Aroop Biswas told FE.
(With contributions from Indronil Roychowdhury in Kolkata)