Shortage of coal in power plants, drop in the price of electricity on the stock market

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The average market price of electricity traded on the India Energy Exchange Day Ahead Market (IEX DAM) fell to Rs 2.4 per unit (kilowatt hour) on Friday, from a peak of Rs 16.4 per unit on Oct. 11, states rushing to swap to buy power as thermal power plants struggle to meet demand due to low coal stocks.

The average stockpile of coal at the country’s thermal power plants improved to seven days of stockpiling, compared to an average of four days in the first half of October, when a number of states, including the Punjab , Uttar Pradesh and Rajasthan, imposed a load shedding while thermal power plants were running off dry fuel.

Thermal power plants are required to maintain minimum reserves of 15 to 30 days of coal stock depending on the distance between the plant and the coal source.

The total volume of electricity sold on the DAM IEX also fell to 1,47,308 MWh (megawatt-hour), after peaking at 2,81,823 MWh on October 12.

A number of states were forced to buy electricity from the stock exchange at prices of Rs 20 per unit during the coal shortage.

A sharp increase in demand for electricity with the economic recovery from the Covid-19 pandemic, coupled with above-average rainfall in September, affecting the production and supply of coal, had contributed to a reduction in stocks of coal.

Low coal stocks led to an outage of thermal power plants with a capacity of 11 GW (gigawatt) on October 12.

A surge in international coal prices has also forced a number of thermal power plants using imported coal to shut down power generation.


Large contributions from power generation companies (gencos) to Coal India also played a role in the decline in coal stocks, with supply cut to factories with large unpaid contributions. The Gencos have dues of around Rs 16,000 crore owed to Coal India, according to the Department of Energy.

Coal-fired and lignite-fired power plants account for around 54 percent of India’s installed power generation capacity and around 70 percent of current power generation.

China’s daily coal production hits new annual high

Beijing: China has increased its daily coal production to a new annual high of 11.88 million tonnes after concerted efforts to alleviate a supply shortage as winter approaches, the powerful state planner said, and production could increase further.

The Asian giant’s consumption of polluting coal has come under scrutiny this week as nations gathered in Glasgow to discuss additional measures needed to slow global warming. Beijing, by far the largest consumer of coal in the world and also the largest producer of greenhouse gases, has pledged to reduce its consumption of coal, but only after 2025. REUTERS


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