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Amid coal supply shortfall, Ministry clears generators to sell unrequisitioned power

The country’s thermal power plants are currently facing a severe coal shortage, with a majority of the thermal stations having an average of four days of coal stock against a normative requirement to hold 15-30 days of coal stock based on the distance of the plant from the source of coal.

Written by Karunjit Singh | New Delhi |
Updated: October 10, 2021 8:04:49 am
A government release said that total dispatches of coal reached 1.5 MT (million tonnes) on October 7, helping reduce the gap between consumption and actual supply.

The centre has notified guidelines allowing thermal power plants with idle capacity to sell unrequisitioned power in the spot market.

The country’s thermal power plants are currently facing a severe coal shortage, with a majority of the thermal stations having an average of four days of coal stock against a normative requirement to hold 15-30 days of coal stock based on the distance of the plant from the source of coal.

This also comes in the wake of several states, including Delhi, Punjab, Rajasthan, Tamil Nadu and Gujarat raising concerns about possible blackouts.

“Where the procurer decides not to schedule power for any period, either full or part capacity, from the generating station with which he has signed the PPA (power purchase agreement) … the generator shall be free to sell the un-requisitioned power … in the power exchange,” the government noted in guidelines released on Friday.

Distribution companies have in many cases not scheduled power under certain legacy PPAs, as power sourced under these PPAs has become unviable. The norms free them up to sell on exchanges.

The Centre noted that any unrequisitioned power needs to be despatched “in public interest” where there is a requirement in the grid by other users or consumers.

The key challenge for thermal power plants has been diminishing levels of coal stock as they supply a greater share of India’s power demand.

A sharp increase in demand for power as the economy recovers from the Covid-19 pandemic and heavy rains in coal mine areas in September have led to a shortfall of coal supply, which Power Minister RK Singh had said was going to be uncomfortable for up to six months.

Total power demand in India hit 124 billion units this August, up from 106 billion units in August 2019.

Inadequate procurement of coal by thermal plants during April-June too has played a key role in the current coal shortage.

On October 7, 16 thermal power plants with power generation capacity of 16,680 MW (megawatt) had zero days of coal stock, according to official government data. An additional 48 thermal power plants with generation capacity of 60,795 MW had coal stock only sufficient for up to two days of production.

Coal fired thermal power plants account for 208.8 GW, or 54 per cent, of the country’s total 388 GW installed generation capacity, and have seen an increase in their share in the country’s power mix to 66.4 per cent from 61.9 per cent in 2019.

The government has noted that increasing coal supply from state-owned Coal India Ltd, the key supplier of coal to thermal power plants, was set to help in a gradual build up of coal stocks in the near future.

A government release said that total dispatches of coal reached 1.5 MT (million tonnes) on October 7, helping reduce the gap between consumption and actual supply.

It said that the Coal Ministry and CIL were “making best efforts” to increase dispatches to 16 MT in the next three days and reach 1.7MT of dispatches per day thereafter.

Coal stock falls to average of four days

  • The Centre has notified guidelines allowing thermal power plants with idle capacity to sell unrequisitioned power in the spot market
  • It comes in the wake of states such as Delhi, Punjab, Rajasthan, Tamil Nadu and Gujarat raising concerns about possible blackouts
  • The country’s thermal power plants are currently facing a severe coal shortage, with a majority of the thermal stations having an average of four days of coal stock against a normative requirement to hold 15-30 days of coal stock based on the distance of the plant from the source of coal

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