'India should have strategic fuel reserves to manage demand shocks'

The union secretary of power, Alok Kumar on Thursday said, India should consider having strategic fuel reserves for coal, gas and oil in order to tackle any demand supply mismatch.

“Let us start thinking about keeping strategic reserves of these fuels - coal, gas, oil, so that economies are able to adjust and tide over any supply shortfall for about a month or so. That would be a small cost vis-a-vis the cost of disruption and uncertainty which these countries face,” Kumar said.

The secretary’s statement comes at a time when the country is barely out of the coal shortage crisis which started in August. Since August, coal stock levels at thermal units have dwindled. Currently, 29 Gw of power generation capacity has one day of coal stock and 22 Gw has less than three days of coal, according to the National Power Portal.

While the Union Ministry of Power and Coal initially denied reports of coal shortage and an electricity supply crisis, the Centre later asked thermal power generators to import coal for at least 10 per cent blending, citing shortage of domestic coal supply.

Kumar, who was speaking at the CII South Asia Power Summit said, the country can never insulate itself from these supply shocks of the imported fuel. “We have 17,000 MW capacity based on imported coal and if imported coal prices go high, that capacity is out. India has 24,000 MW of gas power plants. They are also virtually out. So, the high prices will make energy security very challenging if we don't have a well thought out strategy,” Kumar said.

The secretary had earlier told this paper, the Centre will redesign norms for coal supply and its storage at thermal power plants to avoid a demand-supply mismatch. The Ministries of Coal and Power have jointly decided to draft a monthly coal supply programme for thermal power units to keep a normative 40-million tonne (mt) stock, cumulatively, at power units by end-March.

In order to meet the high coal demand, the union ministry of power even allowed generation units with unrequisitioned power supply to sell in the merchant market. This included imported coal-based power plants, such as Tata and Adani Mundra.

Also read: India considering strategic reserves for natural gas, imported coal

Since last week, the Centre said the supply situation has improved with enhanced supply from Coal India ltd and demand cooling off with rains in several parts of the country and dip in temperature.

CRISIL in its recent report however said, “coal stocks are unlikely to improve to the previous level of 15-18 days inventory anytime soon.” It said availability of rakes and a pick-up in power demand in March-May will be the key monitorables for the coal demand supply situation.

Kumar said fuel supply security is a short-term goal and real relief will come with increased penetration of renewable energy. He said the ministry of power will soon come out with game-changing orders that will completely overhaul the power transmission planning process for renewable energy.

He said energy storage will play a key role in ensuring energy security. “NTPC has floated EoI for 1000 MWh of battery storage. We are planning to have 12 Gw of battery storage in Ladakh with a 10 Gw transmission system. We will have 13 GWh of battery storage along with transmission from Gujarat,” he said.