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What Led to India Facing Its First-Ever Major Coal Crisis

© REUTERS / AMIT DAVEWorkers unload coal from a supply truck at a yard on the outskirts of Ahmedabad, India October 12, 2021
Workers unload coal from a supply truck at a yard on the outskirts of Ahmedabad, India October 12, 2021 - Sputnik International, 1920, 15.10.2021
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Coal-fired plants currently fuel 37 percent of global electric power production. Since April this year, the price of coal has been soaring in the international market. India, however, met its coal needs with domestic production and the cost of electricity has remained the same.
Soaring electricity demand amid the ongoing festival season in India has for the first time caused a power crisis in the country.
The problem was triggered by a coal shortage in the plants that generate approximately 70 percent of the nation's electricity.
According to data released by the Central Electricity Authority (CEA) of India on 11 October, 116 coal power plants have a capacity of 142 Gigawatt (GW) of electricity, which is less than eight days of electricity reserve. The experts believe that if a country has coal stock for eight days, then it is considered to be critically low, while if it has coal stock for 18 days, then it is in an ideal situation.
The peak power shortage in October was 5591MW. On the other hand, the power shortage in September was only 400 MW.
How India Reached the Crisis Situation?
A combination of factors like the global rise in coal's cost and a spike in power consumption for the last four months in India are said to be the major factors that led to the present crisis.
Speaking with Sputnik, Aditya Lolla, Senior Electricity Policy Analyst at EMBER, a not-for-profit organisation and a think tank working on climate and energy issues, believes there are many factors on why India is going through the coal crisis, to begin with: global energy crisis.
He says while global coal prices rose steeply in the last year, Coal India Limited kept the prices steady, "as it is a politically sensitive matter to increase prices".
"This meant that coal generators shunned coal imports, which increased the dependency on domestic coal." "This came at a time when India started to recover economically post the second wave of the pandemic and demand was picking up," Lolla states.
The government-owned Coal India Limited, which is a coal mining and refining corporation, accounts for over 80% of the country's coal output, and they mostly decide prices.
The import of coal by power plants declined 45% in July and August, compared to the same period last year.
Meanwhile, uneven monsoon season added woes to the production, Lolla says.
"This year, prolonged monsoons constrained domestic coal supply as even the transportation from mines to power generator was disrupted, as India witnessed excess rainfall in some of these areas," he explains.
Has The Crisis-Hit India?
Earlier this week, Prime Minister Narendra Modi discussed the country's coal supploy situation with the senior officials of the coal and power ministries. Federal Home Minister Amit Shah also held a meeting with the Coal Minister and Power Minister earlier this week.

"It's not a full-blown crisis yet. The next two weeks will be crucial, but we can't deny that many states government has warned blackout. So officially or unofficially, many states are seeing power cuts," Lolla says.

Several states, including India's capital Delhi, Maharashtra, Punjab, and Rajasthan have raised concerns about potential blackouts due to low coal inventory at thermal power plants.
States like Rajasthan, Punjab, and Bihar have already reported load-shedding lasting up to 14 hours (in a few cases) as a result of thermal power plants operating at a low capacity.
Last week, Delhi State Chief Arvind Kejriwal wrote to the Prime Minister that the national capital "could face a blackout" if power stations did not receive more coal.

India is heavily reliant on coal. The country has a total installed capacity of 388 GW, of which coal constitutes about 209GW.

The ongoing festive season makes the situation very critical because during this time, power demand spikes along with industrial activity. So, the federal government has to play a balancing act where it has to fulfil the residential and industrial needs, Lolla observes.
What Can Modi's Government Do?
According to Lolla, the government needs to plan things based on the immediate crisis and future requirements.
Explaining the immediate need, he said: "Energy security is the priority. Govt's need is to ensure that everybody has their lights on. For that, we may need to import coal. The government can also think about that."
This week, federal Power Minister R. K. Singh told the Indian Express that he was bracing for a "trying five to six months".
According to experts, the crisis has emphasised India's need to develop more renewable energy — hydro, solar and wind.

Experts advocate a mix of coal and renewable energy as a possible long-term solution.

"This is the first time when India is seeing such a situation. The current example should serve as a turning point for India," Sunil Dahiya, an analyst at the Center for Research on Energy and Clean Air, stated.
India's target is 175 GW of renewable energy by 2022 but it is still around 101 GW as of August 2021 due to various technical issues.
According to Lolla, it means the country needs to add 74 GW in the next 15 months. The policies adopted now should address the current shortage and ensure a more sustainable power system in the coming years.
"If we meet 175 GW and a crisis like this occurs in future, we will be in a better position to manage the situation," Lolla says.
With the onset of winter, the electricity demand may begin decreasing in mid-November, and coal stockpiles might also improve due to current measures, giving some breathing space to the government.
"If things are managed carefully, by December, India may be able to build an all India coal stockpile of about 7-8 days, and by March 2022, it could be increased to more than 15 days, Lolla added.
Last week, the Federation of Indian Mineral Industries warned the country's Coal Ministry that the coal shortage had created "an immensely precarious situation for coal consumers, mainly for the aluminium and steel industry" and said the situation could cause factories to shut down.
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