Coal supplies: Losing ground

India has celebrated its moment under the sun when a few months back the then power minister announced that it has turned surplus in power supply. Though the statement has its share of ifs and buts, significant improvement in coal production was the reason for this. That way the erstwhile power minister Piyush Goyal has fulfilled his April 2015 promise to a great extent when domestic coal sector ramped up to supply sufficient coal to all the power plants, except the coastal ones designed for imported coal. Much before that the government has started curtailing import of coal. And coal production has increased so substantially that it has resulted in savings of Rs.25,900 crore in foreign exchange.

The going was good for coal supplies and consequently to the power sector till the spot prices suddenly hit a three-year peak average of Rs.9.90/kWh for a week in September. That means the distribution companies (discoms) had to shell out over three times what they were paying (Rs.2.2-3/kWh) earlier.

Given the precarious condition of discom health, that is considered to be too heavy a burden.

Looking at the reasons, it was found that hydropower generation dipped 12 per cent on low rainfall and wind power capacity dropped 36 per cent due to unfavourable weather conditions, both for natural reasons, shifting the onus of power supply to thermal plants. Meanwhile, several central thermal and nuclear-generating units were under annual maintenance, which can be termed 'wrong timing'. Many state generation companies have long closed their inefficient plants, with discoms started buying electricity at lower prices in the spot market. Actually, this mix of events should have kept the coal-based power plants elated, but for emerging coal shortage at their plants. This exposes the lacunae in management of situations in an efficient manner or coordination between various agencies involved in the power sector.

Juxtapose this with the conditions prevailed in February 2016, when off-peak prices on the exchanges were below `one/kWh in areas with excess power generation. This was due to less than anticipated demand for power, excess coal at thermal power plants and restrictions imposed by the National Load Dispatch Centre for long-distance transmission during wintry season. These two scenarios prove one point for sure - Markets are great levellers, between generators and buyers here. Another thing is, whoever goes wrong or fails in performing their duties, the impact will be felt by the industry as a whole.

So, the first lesson from this pass of events is that come what may, different agencies should strive to keep their house in order. At a time when we are talking about shifting to emerging technologies like smart grid and smart meters and applying analytics for sifting data arsing from various sources in the power transmission chain for improving quality and efficiency of the supply on a real-time basis, this kind of lacunae proves that the Indian power sector has to go a long way in achieving global benchmarks. Everybody in the power supply chain have to pull up their socks for the benefit of the industry and economy, power being their critical input.

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