Coal stocks at domestic coal-based plants hit year’s low on robust power demand, transportation woes

India has extended the mandate on imported coal-based power plants to run till June 2024.

Coal stocks at India’s domestic coal-based power plants have hit the year’s lowest at 18.55 million tonnes (MT), as per latest Central Electricity Authority (CEA) data. The stocks are much lower than during the peak summers between April and July when coal stocks hovered around 33-35 MT.

Even when the country met its all-time high power demand of 239.978 GW (239,978 MW) on September 1, coal stocks at domestic coal-based plants were at 27.59 MT, while 40 of them had critical stocks.

However, now as many as 75 domestic coal-based power plants have critical stocks. Power plants are labelled as having critical coal stock when the dry fuel is less than 25 percent of the normative level.

Overall, if imported coal-based power plants and others such as plants based on washery rejects are also included, then the total coal stocks at all thermal power plants in India stood at 20.5 MT. Of a total of 181 thermal power plants in India, 83 had critical stocks as on October 23.

Data post October 23 was not compiled by the CEA at the time of filing this report.

“The gap between receipt of domestic coal and consumption of coal (domestic + equivalent domestic of imported coal) from September 1 to October 9, 2023, was to the tune of 12 MT,” the power ministry said in a note issued on October 25.

Government raises imported coal blending mandate from 4 percent to 6 percent

Taking cognisance of the coal shortage at thermal power plants, the Ministry of Power on October 25 directed all thermal generating stations, including Independent Power Producers (IPPs), to mandatorily blend imported coal at 6 percent of their total capacity till March 2024.

Until now, the mandate was limited to blending at 4 percent.

“In order to ensure uninterrupted power supply across the country, after careful consideration and in consultation with CEA and Grid India, it has been decided that blending of imported coal at 6 percent (by weight) minimum may be continued till March 2024. The Gencos may continuously review their stock position and opt for blending as per the requirements if the shortfall in domestic coal supply is more than 6 percent,” read the Ministry of Power order dated October 25. Moneycontrol has a copy of the order.

The government has also extended the emergency clause (Section 11) of the Electricity Act, 2003, mandating imported coal-based power plants to run on their full capacity till June 30, 2024, instead of the end of this month.

Why have coal stocks declined now despite it not being peak summer?

First, coal generation was impacted due to monsoon rains in major coal producing states such as Odisha, Jharkhand, Chhattisgarh and Madhya Pradesh.

“After a long rain spell during early October in coal-producing states, production has picked up during the last 10 days. Total production from all sources during the last 10 days is over 26.57 lakh tonnes per day, exceptionally higher. During the last one week, the trend of coal stocks at the TPP end has been reversed. Now the daily supply of coal is more than the average daily consumption and there is a trend of coal stock accretion,” the coal ministry said in a statement.

Second, according to government data, there is a consistent rising trend in India’s power demand. Even now the peak power demand is clocking over 190 GW. Adding to that is the non-solar, or night-time power demand, which also is in the range of 175-199 GW.

For example, between October 16 and 25, the highest peak demand recorded was 209 GW on October 20. While there was no peak shortage during solar hours, or day time, on that day, it was during the night when the power deficit rose to 464 MW. The night-time, or non-solar, peak demand on that day was 199 GW.

“While day-time power demand is increasing, the night-time demand is also increasing rapidly. During the day, meeting the power demand is fairly easy as we have solar power of more than 40,000 MW available. But when it is night and all the renewable energy sources go away in the absence of storage solutions, the entire burden falls on coal-fired power plants,” said a senior power ministry official requesting anonymity.

But there are other factors as well for the depletion of coal stocks. There has been a decline of about 11 percent in hydropower generation in the first six months of FY24 compared to the same period last year due to variable monsoon rainfall.

“Approximately 2 GW of hydro capacity is out because of the recent floods in Sikkim. The reservoir levels in Northern, Eastern and Southern regions are less compared to the previous year as on October 9, 2023, which has resulted in lower reservoir energy content at pan-India level. This has put an additional burden on coal-based thermal generation,” the ministry said.

On October 5, Moneycontrol was the first to report that at least three hydropower projects totalling 2.21 GW (2,210 MW) were affected due to the glacial lake outburst floods (GLOF) in Sikkim.

Coal transportation continues to be a pain point

According to the Ministry of Coal, pan-India coal stocks at thermal power plants, in transit and mine pitheads have grown by more than 18 percent year on year to 71.35 MT as on October 21, 2023.

The CEA data showed that most thermal power plants were having low coal stocks due to the “low availability of railway rakes”. At some plants, rakes were being diverted by NTPC to increase their availability. Other logistical reasons also included sluggishness on the part of the power generator in lifting coal either from a port or through the usual road-cum-rail mode.