Looming coal shortage

Coal meets almost half the energy needs of the entire world. It plays a vital role in steel production and the manufacturing of cement. Coal takes thousands of years to form naturally and are not replaceable at the pace they are consumed. Global coal output is likely to reach a plateau by 2025 and thereafter, it is likely to be on a permanent decline, marking the ‘beginning of end’ of the resource. Depletion of conventional energy resources has made conservation of energy and the identification of new and/or renewable energy sources vital.

THE GLOBAL SCENARIO OF COAL

• Increase in price due to growing gap between demand and supply of coal.
• Dependency on other fuels for the generation of electricity. 
• Many established thermal power generation capacities would face the threat of sitting idle and being underutilized in absence of coal.
• All sectors will have to grapple with increasing power cuts or blackouts, leading to shut downs that would impact their production and margins. 
• A coal shortage can have a ripple effect across industries, which will ultimately reflect in the growth rate of economies.
• In India, thermal power accounts for about 65% of the total electricity generated. India is third-largest producer of coal globally, and yet, is also the fourth-largest importer of coal. India imports 30% of its coal needs of which half by power companies.
• Thermal power plants accounts for 88% of water consumed by all industry sectors put together. They also add to the environmental and social burdens. 
• Coal India Limited, the largest coal producer in the world, has not supplied coal as per commitments to power stations and the gap is widening. Much of the coal produced in the country is of a relatively inferior grade. 
• New laws by exporting countries such as Indonesia and Australia increases the cost of the imported coal for India. As power producers are unable to entirely pass on the costs to the consumers, they face increased pressures on their margins.
• In the light of all this, it is prudent to not rely on any nonrenewable resources including coal. Instead, industries and countries should concentrate on increasing productivity and efficiency of the existing technologies. This will also bring down energy costs with minimal interference in processes. 

LOOMING COAL SHORTAGE

• A surge in electricity demand growth and poor coal production by Coal India threaten to accentuate the fuel crisis. At a time when coal prices are on fire in the overseas market and imported fuel-based gencos are idling, Coal India’s production has set alarm bells jangling. The coal production situation might snowball into a crisis.
• An unexpected rise in demand for thermal power triggered a fuel crisis in July 2017. It was initially attributed to a fall in hydel supplies and stronger growth in demand on the back of the rural electrification push.
• The demand surge caught CIL off-guard. The company was in the process of cutting down production due to sluggish demand for almost two years. Excessive production over the previous two years, when demand was flat, had led to a multi-year-high pit-head stock of 68mt. CIL deployed its pit-head stock to cater to the demand, using the improved railway logistics.
• By end of Dec 2017, supplies started easing out, though stocks at power plants were lower than last year.
• Coal production grew 2.6%, 0.7% and 1.3% in Nov, Dec and Jan respectively, taking the 10-month average to 1.6%. CCL and BCCL, reported 11-13% decline in production.
• At the current monthly average of 53 mt, annual production may only touch 550mt against target of 600mt. With pitheads stocks bottoming out to 33mt, CIL cannot push off-take further without matching production growth.
• Meanwhile, electricity demand grew 5.8% in July, up from 2.6% in FY17 and 4.3% in FY16, with UP, MP, Maharashtra, Telengana and Gujarat being major buyers.
• The result is showing in low fuel stock at power plants. As on Feb 1, 2018,  the average inventory at power plants was 9 day's equivalent against desirable 21 day's.

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Read ... Why we must quit coal

Telangana state (TS) has shortage of 2,000 MW at the time of 'AP Re-organisation' in June 2014. Although some thermal generation has been added in the last 4 years, the increased demand due in Hyderabad city, new lift irrigation schemes, tap water to every household and supplying of 24 hours power to all villages and all agriculture pump sets - the demand has gone up exponentially and is slated to touch 10,000 MW in a year or two. Last two years coal position was extremely good and overall demand for power was subdued and was favorable to TS for purchase power on spot basis at low prices. This year with increase in demand, shortages of coal and imported coal becoming very expensive TS might face not only shortages but also power expenses shooting up and that would be painful and politically disastrous for ruling TRS party. In any case dependence on Thermal power needs to be reduced by making investments in solar power, reduction in consumption by increasing efficiency and eliminating wastage.