How much breathing room does your power supply actually have?

Snigdha Sharma (0:00)

India's power demand has been unusually high this September. On some nights, the gap between the electricity that people wanted and what the grid could supply reached almost 8 gigawatts. That's bigger than the shortfall that we experienced during the worst of this year's summer.

Interestingly, just five months ago, India's power ministry was celebrating a record. On the 25th of April, the country met 256 gigawatts of peak electricity demand without a shortage. By May 21st, during a heat wave, the grid was meeting nearly 271 gigawatts. Both the records were set in the afternoon when solar was at full strength, by the way.

The message from the government was fairly straightforward then. India had built enough generation capacity to handle even very high demand.

But then came September. Kerala was among the states that felt it the sharpest. Evening demand in the state repeatedly crossed 5,000 megawatts, and at times only about 4,200 megawatts was available according to reports. The state electricity board restricted power in the evenings and at night. It says that it could not buy its way out because often there was not enough power in the market to buy.

In Bihar, up north, hundreds of villagers blocked a highway after going without electricity for 3 days. These shortages have eased over the last week or so as rain cooled things down. But they have exposed a problem India has seen before and hoped not to see again. Its power plants are running short of coal. By 27th of September, 82 thermal power plants had critically low stocks, meaning less than a quarter of what they are supposed to hold.

Across the country, plants had roughly 7 days of coal. In August last year, they held 50 million tons. And now, it is under 22 The government is clearly worried. Last Friday, the Power Ministry invoked Section 11 of the Electricity Act and ordered about 112 captive coal-fired power plants to operate at maximum available capacity from 1st of October through 31st of December.

All this in a country that has spent years building up its power supply. India added a record number of generating capacity last financial year. And also, its solar power is growing fast. So, how did we still end up here?

Welcome to Daybreak, a business podcast from The Ken. I'm your host, Snigdha Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Varghese and I will come to you with one business story that's worth understanding and worth your time. Today is Thursday, the 1st of October.

A part of the answer is the weather. A strong El Nino has left this year's monsoon about 12% before normal. If that holds, it will be the weakest monsoon since 2015

That hit the power system twice. The dry weather pushed demand up. More ACs were running in the heat, and farmers were relying more on pumps to make up for the rain that never came. At the same time, there was less water in the dams. Hydropower output fell 12% in September. And hydro is particularly useful in the evening when the sun sets and solar generation fades. So more of that evening load landed on the thermal power plants. And then came the twist. While the dams were short of water, it was also raining heavily in India's coal belt. Downpours in Chhattisgarh, Odisha and Jharkhand flooded mines and disrupted transport. The same monsoon was too dry for the dams and too wet for the mines.

Coal India was also digging less coal than it did a year ago. Between April and August, its production fell 4.5%.

In August alone, it fell 5.7% to 47.5 million tonnes. But it sent out 60.6 million tonnes, which is 5.5% more than a year earlier. And here's the catch. It made up for this difference by drawing down on the stockpile that it had built at the mines. So, there was coal at Coal India's mines, about 76 million tonnes. But it just wasn't getting to the power plants fast enough. Which is where September's power crunch gets even more interesting. Because the real question is, how much slack does India's electricity system actually have when many things go wrong at the same time?

On Monday, India's coal minister said that there was no shortage of coal. The problems caused by the monsoon, he said, had now normalized. But the same day, government data showed that the number of thermal power plants with critically low stocks had risen again.

Now, here is the thing. Both of these things can be true. Because they are describing different points in the supply chain. You see, India is not designed to keep months of coal sitting beside every power plant. The system relies on a continuous flow from mines to generators, with each plant required to maintain a certain number of days of stock. In September, that requirement is 12 days for plants which are next to the mines, and 20 days for plants which are further away. The requirement rises after the monsoon. So the system enters September with a relatively lean inventory. This year too, it entered the month with demand running high and coal consumption accelerating.