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Current Affairs

India’ s coal crisis

Date: 15 October 2021 Tags: Miscellaneous

Issue

The Prime Minister’s office has conducted a review meeting of senior officials to assess the shortage of coal.

 

Background

India’s thermal power plants are facing shortage of coal to generate electricity, threatening the occurrence of blackouts.

 

Details

  • Majority of thermal plants have an average of 4 days worth of coal stock. Many states have even lower due to supply crunch.

  • States such as Rajasthan, Punjab and Delhi have already flagged the inventory shortage that could lead to blackouts in the state.

  • The shortage of coal was observed as a result of sudden increase in power demand owing to economic recovery after the lockdown.

  • The power demand in August 2021 has gone up to 124 billion units from 106 billion units in August 2019.

  • The price of coal has also gone up due to shortage in China. There were also heavy rains in coal bearing areas of the country, leading to production shortages.

 

Thermal power in India

Thermal power consists about 54 per cent of India’s installed power generation capacity but it contributes to 70 per cent of power generated in the country.

 

Measures to control

  • The officials of the government have taken steps to increase the daily shipments of coal to power generators. 

  • The government has also allowed power generators using local coal to use 10 per cent blend of imported coal to boost coal stocks.

  • This however could lead to a 20-22 paise increase in the per unit (kilowatt-hour) cost of power generation. 

 

Consequences

  • The purchase agreements on the India Energy Exchange (IEX) on October 12 were for 430,778 MWh (Megawatt-hours) up from 174,373 MWh a month ago.

  • The average market clearing price has reached Rs 15.85 per unit up from Rs 2.35 per unit that was a month ago.