Power Shortages: Prepare To Sweat This Summer If You Are In These States
Which states are seeing the widest gap in power demand and supply? BloombergQuint explains.
The summer sun is beating down, temperatures are soaring to record highs, and fans and air conditioners are on full-blast, causing a surge in residential demand for electricity. But domestic coal stocks are running low across power stations and international prices are soaring, making imports unviable.
The result—power shortages and outages.
How likely are you to face hours of no electricity? That depends on where you live. The power shortages differ from state to state, with some worse than others.
Andhra Pradesh saw the maximum peak hour shortages on average between April 1 and 27, according to data collated by BloombergQuint from the Power System Operation Corporation Ltd.—a Government of India enterprise. Uttar Pradesh, Maharashtra, Rajasthan and Haryana followed, seeing high peak hour shortage on an average in April.
Several states across the country are facing coal shortages leading to power shortages, with India entering peak demand season from April to October, Vikram Kasat, head of advisory at stock broker Prabhudas Lilladher, said in an April 26 note. Kasat added that the situation is especially worrisome in Maharashtra, Madhya Pradesh and Andhra Pradesh.
While Posoco does publish monthly data on power deficit and surplus for all times of the day, it comes with a lag and is unavailable for April. However, peak hour shortages give a reasonable indication of whether supply is enough to meet demand.
As a percentage of the maximum demand met during the day, peak hour shortage was the sharpest in Jammu and Kashmir at 8.2% for April, followed by Andhra Pradesh at 4.6%. In Haryana, Uttar Pradesh, Punjab and Rajasthan, the peak hour shortage was 2-3% of the maximum demand met during the day.
Target Vs Actual Power Generation
Another metric that offers a measure of power shortages is programmed or planned power generation compared to actual supply.
This data, collated from the Central Electricity Authority, threw up the sharpest deficits in Gujarat, Tamil Nadu and Chhattisgarh, along with Andhra Pradesh.
However, the actual deficit is likely to be larger than what is measured by the difference between programmed and actual generation, since targets for generation are set as per availability of coal stocks and the state's buying capacity.
Low Supply, High Demand
Amid rising summer temperatures and heat waves, demand for power is near a peak. The maximum all-India power demand met rose to a record high of 201 gigawatts on April 26, according to a press release by the Ministry of power.
Monthly electricity demand in 2022 is expected to peak at around 132 billion kilowatt hours, 15% higher than the January-March average but similar to 2021 and 2019, Fitch Ratings said in estimates published earlier this month. "A commensurate increase in electricity generation to meet the increased demand is unlikely, limited by the availability of coal, which accounts for two-thirds of the power generated in India," Fitch Ratings said.
Data for coal supplies suggests material shortages.
The country has 173 thermal power plants, of which 106 have critical levels of coal reserves, according to a daily update by the Central Electricity Authority. Coal stocks of five to seven days are considered critical depending on the kind of plant.
The share of imported coal may rise in 2022, reversing the share reduction to 5% in 2021 from 9% in 2020 and 11% in 2019, Fitch Ratings said. However, exorbitantly high international coal prices would limit any significant increase in coal imports. Domestic coal supplies could also be affected at the peak of the monsoon between July and September, which may hurt coal mining and transportation.
There are other factors preventing an adequate level of coal stocks at power plants.
Supplies are low at plants due to non-payment of past dues by some states, Kasat said. In addition, erratic rainfall flooded coal pits in the dry season this year, significantly disrupting coal supplies, he said.
These factors are accompanied with a post-pandemic economic recovery that has heightened demand for resources, including power, said Kasat, explaining the current mismatch in supply and demand.
Measures To Ease Shortages
To ensure swift supply of coal across power plants, the Indian Railways has deployed additional trains and rakes, the Ministry of Railways said in an April 25 statement. The movement of coal trains has been prioritised and each and every train is being monitored, it added.
The Government of India has urged states to step up coal imports for the next three years to build up inventories and satisfy demand, Reuters reported on Wednesday. BloombergQuint could not independently verify this.
Still, power production could take two-three months to stabilise, Nitin Bansal, associate director, India Ratings and Research Pvt., said.
Vikram V, vice president for corporate ratings at ICRA Ltd., said that wind and hydro power generation is expected to kick in from next month and should help ease the situation.
If coal supply does not catch up, this would result in more power outages in summer and a diversion of coal from non-power sectors such as aluminium, cement, steel, weighing on industrial output and increasing electricity costs, Sonal Varma and Aurodeep Nandi, India economists at Nomura, wrote in an April 19 note. "This could become another stagflationary shock."