India faces an unimaginable power crisis.
Over half of 135 coal-fired electricity plants in the country are on fumes, as critical coal stocks remain low.
India is 70% dependent on coal for electricity, so this concern is serious.
This crisis was in development for many months.
India’s economy rebounded after the second deadly wave of Covid-19. The demand for power increased sharply.
The power consumption for the past two months jumped almost 17% compared with the same time in 2019.
Global coal prices went up by 40% while India’s imports plummeted to a 2-year low.
It is home to the nation’s fourth-largest coal reserve, and the country is therefore the second largest global importer.
Indian coal has increased the dependence of power plants, which used to rely on imports.
Experts believe that it is impossible to import more coal in order to compensate for current domestic shortages.
According to Dr Aurodeep Nadi, India Economist, Vice President of Nomura, “We’ve seen scarcity in the past but it is unprecedented now that coal is so expensive.”
“If you are…” [as a company]If I import expensive coal, will my prices rise? These costs are passed on by businesses to consumers at the end, so inflationary effects – both indirect and direct – could possibly result from it,” he said.
Consumers will feel the effects of an increase in electricity prices if the crisis persists. As everything, from food to oil, has gone up in price, retail inflation is already very high.
Vivek Jin, India Ratings Research Director described the situation to be “precarious”.
India has seen a decline in production over the years as it tried to lessen its dependency on coal for climate goals.
In an interview, RK Singh, India’s power minister, stated that it is “touch-and-go” in the current situation and suggested the nation should be prepared for the next five to six month.
On condition of anonymity, a senior official from the government confirmed that the situation was alarming to the BBC.
This will continue, and Asia’s third-largest economy, Asia, will be struggling to get its feet on the ground, warns Ms Zohra Chaterji, former Chief of Coal India Limited, a government-owned enterprise that supplies 80% of India’s coal supply.
The entire industry of manufacturing, from cement to steel, is powered by electricity.
According to her, the present situation is an “awakening call for India”, and it’s time to lessen its dependency on coal as well as pursue more of a renewable energy strategy.
India has struggled to find a way to balance the demand for electricity and its dependence on coal-burning power stations.
Dr. Nandi says that the scale of this issue makes it unlikely to find a solution in a short time.
“It is just the sheer magnitude of things. Our energy source is thermal. [coal]We have not yet reached the point where there is an efficient substitute for heating. It’s certainly a wakeup call. However, I do not believe that the centrality and importance of coal for our energy requirements will be lost anytime soon.
As a long-term solution, experts recommend that a mixture of coal and renewable energy be used.
- India is unable to live without coal
Transitioning 100% to renewables is impossible and not possible. It’s important to have a backup in case you need it. Otherwise, you expose a lot manufacturing to environmental risks.
While long-term investment in power resources is not recommended, ex-bureaucrats Ms Chatterji and others believe that an emergency like this one can be avoided with more planning.
Her opinion is that there should be closer coordination between Coal India Limited, the biggest supplier of coal in India, and the other stakeholder parties.
Ms Chatterji states that India’s power companies must be accountable for their last mile delivery.
We have not seen this in the past, as maintaining an inventory has a financial price.”
Although it is not clear how much longer the current situation can last, Dr Nandi remains cautiously optimistic.
According to him, “With the monsoon approaching and winter coming on the horizon, the demand is usually lower for power.”
This means that the supply-demand mismatch may eventually be resolved.
Vivek Jain states, “This is an international phenomenon that’s not restricted to India. A switch to gas could occur if oil prices fall today. This is a dynamic environment.
At the moment, India’s government says it will work with state-owned enterprises in order to boost production and reduce the supply/demand gap.
Also, the government hopes to get coal from “captive” mining operations. Captive mines produce only coal and minerals for their owners, so they are prohibited from selling what they make to any other business.
Experts agree that while short-term solutions may be able to help India get through this energy crisis, the country must look at long-term options to meet its increasing domestic power demands.
India is working to get out of the worst recession of all the major economies. The country will try to stay ahead of any other obstacles.