Coal stocks at power plants plunge as hydro, solar output weakens | Economy & Policy News

By Rajesh Kumar Singh

India’s power plants are rapidly exhausting coal inventories as generators ramp up production to offset weak hydro and the evening drop-off in solar output, prompting the government to invoke an emergency rule to boost electricity supplies.

The federal government has mandated companies with captive coal generation capacity of more than 50 megawatts to run the plants at full throttle and sell surplus electricity through exchanges, according to a power ministry notification. The rule applies to companies in sectors such as steel, fertilizers, oil refining and cement that operate in-house plants to power their factories.

The ministry also extended the directive requiring Tata Power Co.’s 4-gigawatt Gujarat plant to operate at full capacity through December. Coal inventories at grid-connected stations have more than halved from a year earlier, plunging to the lowest in almost three years.

The move follows some of India’s worst nighttime power shortages this year, after an El Niño-driven dry monsoon curbed hydropower generation while boosting electricity demand for cooling and irrigation. The shortfalls after sunset, when solar generation fades, reached 7.7 gigawatts this month, surpassing levels seen during this year’s summer heat waves. Coal plants were forced to fill the gap, burning through fuel inventories.

Considering the prevailing demand-supply situation, “it is imperative that entire capacity of all the sources of generating electricity, including the captive generating plants, are utilized to the maximum possible,” the ministry said.

India is on course for its driest monsoon in 17 years as a powerful El Niño curbs rainfall through the June to September season. Precipitation has increased in recent days, narrowing the deficit to 13%, from 15% until middle of last week. 

Heavy rains helped soften peak power demand over the past week and supply shortfalls have largely disappeared as temperatures cooled. But downpours in coal-producing Chhattisgarh, Odisha and Jharkhand have flooded mines and disrupted transportation, keeping pressure on inventories at power plants.

For both captive generators and Tata Power’s Mundra plant, the government invoked Section 11 of the Electricity Act, which allows it to direct power stations to operate in extraordinary circumstances, including natural calamities.