At the end of August, India’s coal-fired power plants had an average of four days’ worth of fuel. More than half of the plants are on high alert in case of a power loss. Spot power tariffs have risen, as fuel supplies have been shifted away from critical users.
Coal-fired power plant owners are in a pickle. They can bid at domestic auctions for high premiums to secure any available local supply, or they can enter the seaborne coal market. The administration of the country is drafting guidelines in case it needs to restart idle power plants. In September, average spot power costs increased by more than 63 percent to 4.4 rupees ($0.06) per kilowatt-hour.
The energy crisis serves as a reminder of how important coal is to India’s economy. Due to the impact of extended rains, supplies to power plants are currently short by 60,000 to 80,000 tonnes per day. Last month’s heavy rains in Dhanbad, a major coal-mining center in the country’s east, exacerbated the problem. India is one of the world’s largest emitters of greenhouse gases and has yet to set a goal to achieve carbon neutrality.