Reports of low coal stocks with several power plants in the country has put the spotlight on coal production in the country. Data from the Coal Ministry indicates that domestic coal production decreased in 2020-21 for the first time in 10 years. Here is a review.
As per the latest update available with Central Electricity Authority (CEA), as of 19 October 2021, 15 power plants with a capacity of 15.08 thousand MW have Coal stocks of zero days.
According to the Daily Coal Report, another 22 power plants with a capacity of 29.64 thousand MW have coal stocks lasting for one day. Overall, as of 19 October 2021, 107 out of the 135 plants monitored by CEA have stocks of less than 7 days. The low level of coal stock with several power plants has raised fears of an imminent shortage of power in many states.
There are many reasons resulting in the power plants running on lower stocks of coal– lower coal production, challenges with the supply, inter-ministry & inter-departmental communications, etc. Against reports of low stock, the Union government has reiterated that there is enough coal stock and there would be no disruption in the power supply.
The fears of power disruption are primarily because 70% of the installed electricity generation in the country is thermal. The trend in coal production has a direct impact on the power supply in the country. In this story, we look at the trend in coal production, demand & supply of coal over the years.
Annual Coal production falls in 2020-21 for the first time in the last 10 years
As per the Monthly Statistical report of the Ministry of Coal for March 2021, the total coal production in the country for 2020-21 (end of March 2021) was 716.01 million tonnes (MT). This is well short of the target of 828.5 MT set for the year 2020-21. The production in 2020-21 is about 15 MT less than the production of 731 MT in 2019-20. As per the Ministry’s Annual Report – 2020-21, the total coal production for 2019-20 was 731 MT against a set target of 810 MT.
While the production of coal fell in 2020-21, the signs of a slowdown were visible even in the earlier year. The production for 2019-20 is only marginally higher compared to 2018-19. The annual increase in the production of coal was comparatively higher in the earlier years. In 2018-19, the production of coal increased by around 53 MT compared to 2017-18, which is the highest annual increase during the 10-year period between 2011and 2021.
As per the latest Monthly Statistical Report for August 2021, the coal production by end of August 2021 for 2021-22, is 263.94 MT. This is lower than the coal production during the same time last year (end of August 2020) when it was 278.5 MT. While the data for September 2021 is not available yet, the trend for the 5-month period in 2021-22 indicates that there could be a further fall in the coal production for 2021-22, unless there is a recovery in the remaining part of the year.
The specific reasons for the fall in coal production are not known yet. While the low production in 2020-21 could be in part attributed to COVID-19, the lower production even in the current fiscal have to do with other reasons.
In 2014, Supreme Court cancelled the allotment of 214 coal blocks. While it did not have an immediate impact on the production of coal, it could be one of the reasons for the Coal production not being stepped up to meet the targets and the demand.
The Actual Supply of coal is less than the estimated Demand
Data from the Ministry’s annual reports indicate that there is a year-on-year increase in the demand for coal i.e., there is an increase in the estimated consumption of coal. However, the overall supply fell short of the demand every year.
In the year 2019-20, the estimated demand for coal consumption was 1000 MT. However, the actual supply was about 95.5% of the demand with 955.3 MT. The supply during 2019-20 was lower than the supply in the previous year when it was 968.03 MT in 2018-19. This bucks the trend of a year-on-year increase in the supply of coal. During the period 2015-16 to 2019-20, the supply of coal was highest in 2018-19 with 969.03 MT. However, even this was around 97.6% of the total demand. The highest proportion of supply with respect to the demand was in 2017-18, where the supply of 898 MT was around 98.8% of the estimated demand of 908.4 MT.
The estimated demand for 2020-21 is the highest with 1085 MT. Conclusive data of the total supply for 2020-21 is not yet available and will be known from the 2021-22 annual report. As per the information available up to December 2020, the supply during the three quarters (April-December) was 602.85 MT. If the trends of production in 2020-21 is an indicator, there could be a fall in the actual supply also for 2020-21.
An increasing proportion of imports in the overall supply
As highlighted earlier, data indicates a shortfall in the supply of coal compared to the estimated demand based on consumption. It has to be noted that not all supply is through indigenous production. For 2019-20, out of the total supply of 955.31 MT, only 706.77 MT is indigenous. The balance of 248.54 MT is met through imports. The proportion of imports in the total supply is around 26%. This share is higher than in the earlier years. In fact, the volume of indigenous supply fell in 2019-20 compared to 2018-19. Meanwhile, there is an increasing trend observed in terms of the import of coal. Except for 2016-17, there has not only been an increase in the volume of coal imports, but its share in the overall supply has also increased.
For 2020-21, out of the 602.85 MT supplies until end of December 2020, the volume of imports is 113.28 MT.
50% increase in the Per-capita electricity consumption over the last 10 years
As per the ‘All India Electricity Statistics – General Review 2020’ report –, published by the Ministry of Power, the per-capita Electricity consumption for the year 2018-19 was 1181 kWh. The trend over the years indicates a consistent increase in the per capita consumption of electricity. In 2005-06 it was 631 kWh, which increased to 672 kWh in 2006-07. By the turn of the decade in 2010-11, it increased to 819 kWh. During the 10 years that ensued, the year-on-year per capita consumption has only increased. The latest information after 2018-19 is not yet available. Between 2009-10 & 2018-19, the per capita consumption has increased by more than 50%.
As indicated earlier in the story, a major portion of the electricity demand in the country is met through thermal plants. The increase in demand for coal is reflected in the increased consumption of electricity.
Fall in production of coal could lead to potential challenges with power supply
The supply of power is dependent on various factors. In addition to production-related challenges, issues in distribution also play an important role in the overall power supply scenario. The Aggregate Technical and Commercial (AT&C) losses in India stand at 21.83% in 2019-20. The AT&C losses include the Transmission and Distribution losses. Though there has been a decrease in AT&C losses over the years, they are still over 20%.
These losses coupled with production issues could exacerbate the power situation in the country. The trend of decrease in coal production that started two years ago before the onset of the pandemic seems to be continuing even in the current year. While the government maintains that we have enough stock to meet the demand, the decrease in indigenous coal production might make us increasingly reliant on imports.
Featured Image: Domestic Coal production