115 degree heat wave worsens India’s power crisis
An electricity crisis in India that leads to hours-long blackouts, halts manufacturing lines and triggers street protests is set to continue for months, adding pressure to the country’s economic rebound.
Power blackouts and restrictions have spread to more than half of all states and the nation’s coal-dominated energy system is expected to come under further strain as electricity demand hits a recent record high in weeks coming.
Even with a temporary respite from a scorching heatwave that produced temperatures as high as 46 degrees Celsius (115 degrees Fahrenheit), households and businesses face continued disruption as coal inventories dwindle at power plants and that fuel imports are falling on prices that have risen since the war in Ukraine.
“It’s becoming a difficult situation,” Sumant Sinha, chairman of ReNew Energy Global Plc, a wind and solar energy provider in India, said in an interview. “The whole summer will be a test.”
High coal and oil prices threaten to add to inflationary pressures that prompted India’s central bank to take a surprise move on Wednesday to raise its key rate. Energy restrictions will also affect the already hesitant rebound in Indian industrial production.
Coal generation, the fossil fuel that accounts for more than 70% of India’s electricity generation, has failed to keep pace with unprecedented energy demand due to the heat wave and post industrial revival. -pandemic of the country. Logistical difficulties, including a lack of wagons to transport fuel from mines to power plants, are compounding the shortages.
“If the power supply to the industrial sector is reduced, it could delay the recovery of the manufacturing sector by at least a further quarter,” said Aditi Nayar, economist at ICRA Ltd.
Inventories at coal-fired plants have fallen more than 14% since early April, leaving about 100 plants with critical supply levels, according to the Institute for Energy Economics and Financial Analysis. Supplies are expected to decline further due to high demand, and this will be followed by a monsoon season from July.
Monsoon rains triggered a previous power crisis last year – which also caused widespread power cuts – when coal mines and roads were flooded, hampering production and shipments .
“If coal stocks continue to run out at this rate, we are going to see a widespread power crisis across the country,” said Shailendra Dubey, chairman of the All India Power Engineers Federation, an advocacy body that produces energy policy suggestions.
Electricity demand hit a record 207.1 gigawatts on Friday and is expected to hit 220 gigawatts in the next two months, according to India’s power ministry. Average spot electricity prices on the Indian Energy Exchange jumped to around 10 rupees (13 cents) per kilowatt-hour, almost triple the January average, and were capped by the sector regulator.
At least 16 of India’s 28 states are grappling with power outages of two to 10 hours a day, Ashok Gehlot, Rajasthan’s chief minister, said in a Twitter post on Monday, before conditions improved in some regions.
The Western Desert state, a hub for metal smelters and textile factories, last week ordered power supplies for some industries cut in half. Citizens should limit their use of appliances such as air conditioners and coolers in homes and workplaces, Gehlot said.
Maharashtra, home to the country’s financial capital, Mumbai, is grappling with worsening power cuts, said S. Maheshkumar, secretary general of the Maharashtra Industrial and Economic Development Association. “Industries are worried about having to cut production and refuse export and domestic orders,” he said by telephone.
Anger over uneven power supplies sparked protests across Punjab state, India’s biggest grain producer, over the weekend, with farmers blocking roads as they demanded a minimum of eight hours of electricity per day for agricultural purposes. There are already concerns over power supply during a paddy planting season from mid-June, Kamaljeet Singh Hayer, a farmer from Ferozepur district in the state, said by telephone.
In the coal states of Jharkhand and Chhattisgarh, many industries are cutting production or running backup generators on expensive diesel. “If we are to operate like this, we will all soon be in the red,” said Philip Mathew, chairman of the Jharkhand Small Industries Association.
Members of the opposition party marched through the streets of Jammu on Saturday, protesting the daily six-hour blackouts. Power cuts have hit key population centers including Uttar Pradesh, and even where supply is slowly improving, such as Karnataka and Kerala, 24-hour connections are still not guaranteed.
With Prime Minister Narendra Modi’s government yet to face major new dissent, India’s economy is under pressure from high energy prices, rising inflation and the impacts of the coronavirus pandemic. Covid, including low employment, said Shumita Deveshwar, senior director of India research at TS Lombard.
“These have the potential to become bigger political issues in the longer term,” Deveshwar said. “If the coal crisis continues for an extended period, it will add to the pressure.”
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