Explainer: Why is India facing its worst power crisis in over six years?

EXPLAINERS |
A general view of electricity pylons in Mumbai, India, October 13, 2021. [Reuters]

What is India doing?

The crisis has pushed India to reverse a policy to slash thermal coal imports to zero, and asked utilities to continue importing for three years.

It also invoked an emergency law to start generation at all plants running on imported coal, many of which are currently shut due to high international coal prices.

The low inventories have forced Coal India to divert supplies to utilities at the expense of the non-power sector. State-run Indian Railways has cancelled passenger trains to free up tracks for the movement of coal.

India is also planning to reopen more than 100 coal mines previously considered financially unsustainable.

Who is impacted by the crisis?

According to citizen-survey platform LocalCircles, nearly half of its 35,000 respondents from across the country said they faced power outages this month.

Factories in at least three states have been forced shut for hours as authorities struggled to handle demand.

As the supply of coal to power plants operated by energy intensive industries was restricted, factories started drawing power from the grid, hiking industrial costs and putting further pressure on overworked coal-fired power plants.

Power use by eastern Odisha state, home to the country's biggest aluminium smelters and steel mills, rose over 30% in October-March, nearly ten times the average national growth.

Commuters leave a platform after disembarking from a suburban train in Kolkata, India, January 5, 2022. [Reuters]

What's next?

Officials and analysts expect India to face more power cuts this year due to low coal inventories and as electricity demand is expected to rise at the fastest pace in at least 38 years.

Power generation from coal-fired plants, which account for nearly 75% of India's annual electricity output, is expected to grow 17.6% this year, the highest rate in over a decade.

Coal India's production and dispatches by train are likely to be hit during the annual June-September monsoon season.

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