The Coal Crisis:- Ground Reality | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Introduction:

Coal is the most important and abundant fossil fuel in India. It accounts for 55% of the country’s energy need. The country’s industrial heritage was built upon indigenous coal. Hard coal deposit spread over 27 major coalfields are mainly confined to eastern and south central parts of the country. In the recent period Coal sector in India has grappled with demand-supply imbalances for a variety of reasons: sharp rise in power demand, supply disruptions caused by extended monsoon and reduction in imports on the back of steep rise in international prices. The govt has informed the Parliament that there is no shortage of coal in the country and Coal India Ltd has said that it does not foresee any shortage of dry fuel for power producers till March 2022 as it is focusing on ramping up production to secure a stock of about 70 million tonne by end of the current fiscal.

Importance of Coal to India:

• Coal is the most important and abundant fossil fuel in India. It accounts for 55% of the country’s energy needs. The country’s industrial heritage was built upon indigenous coal.
• Considering the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India’s energy scenario.
• Commercial primary energy consumption in India has grown by about 700% in the last four decades.
• Driven by the rising population, expanding economy and a quest for improved quality of life, energy usage in India is expected to rise.

Coal shortage:

• India is contending with two key challenges: soaring electricity demand as industrial activity rebounds after pandemic curbs were lifted and a slump in local coal output.
• Coal inventories at Indian power plants fell to around 1 million tons at the end of September, about 76% less than a year earlier, according to government data.
• Average spot power prices at the Indian Energy Exchange Ltd. jumped more than 63% in September to 4.4 rupees ($0.06) a kilowatt hour.
• The impact on consumer prices would show up a few months later, when distribution utilities get regulatory approvals to pass on the cost.

Impact of the shortage:

• If industries face electricity shortages it could delay India’s economic reopening.
• Some businesses might downscale production.
• India’s population and underdeveloped energy infrastructure will mean the Power Crisis could hit long and hard

Factors for low coal production

• A sharp uptick in power demand as the economy recovers from the Covid-19 pandemic coupled with supply issues have led to the current coal shortage.
• India consumed 124 billion units of power in August 2021 compared to 106 billion units of power in August 2019 which was not impacted by the pandemic.
• Coal fired thermal power plants have also supplied a higher proportion of the increase in demand leading the share of thermal power in India’s power mix increasing to 66.4% from 61.9% in 2019.
• The country meets around three-quarters of its demand locally, but heavy rains have flooded mines and key transport routes.
• Other key reasons for the supply crunch include lower than normal stock accumulation by thermal power plants in the April-June period and continuous rainfall in coal bearing areas in August and September which led to lower production and fewer despatches of coal from coal mines.
• A consistent move to lower imports coupled with high international prices of coal have also led to plants cutting imports.

Measures being taken by the government

• An inter-ministerial team, including representatives of the Power and Railway Ministries, Coal India Ltd, the Central Electricity Authority and Power System Operation Corporation, is monitoring the supply of coal to thermal power plants.
• The government is pressing thermal plants with captive coal mines to boost their coal output so that they can meet more of their own demand and is also prioritising coal supplies for thermal power plants with low levels of stock.
• The Power Ministry is also trying to increase the supply of coal by expediting the start of production from a number of mines that already have all requisite clearances in place.
• The government has also boosted the number of rakes of coal being transported to thermal power plants daily with 263 rakes (248 before) of coal dispatched from coal mines.

Way forward

• Optimal Energy Mix in Power Generation: Power is generated through various sources of energy such as coal, hydro, natural gas, and renewables (solar, wind). This gains tremendous importance as the future generation capacity mix should be cost effective as well as environmentally friendly.
• Cost Effective Solar Plants: The average cost of coal-fired projects is Rs.4 per unit and generally sees an upward escalation, whereas new solar power plants are being bid out at less than Rs.3 per unit.
• New Technologies for Coal Based Units: The government has commissioned more efficient supercritical coal based units and old and inefficient coal based capacity is being retired. A range of new technologies (like Coal gasification, Coal beneficiation, etc.) can be deployed to make coal-fired power plants more environmentally compatible.