Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment Inclusive growth and issues arising from it; Infrastructure: Energy

Key Phrases: Power outages, Power Ministry, Central Electricity Authority (CEA), state power distribution companies (discoms), Coal India Ltd (CIL), Former coal secretary Anil Swarup, Former coal secretary Anil Swarup

Why in News?

• With temperatures rising across many parts of the country with the onset of summer, leading to a rise in the demand for power.
• Recently, multiple instances of power outages have been reported in several states.
• Moreover, the Power Ministry too has raised concerns about the coal shortage in India.

Why is Coal a necessary evil for India?

• Coal is the most important and abundant fossil fuel in India. It accounts for 55% of the country’s energy needs. The country’s industrial heritage was built upon indigenous coal.
• The limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel projects and geo-political perception of nuclear power, coal will continue to occupy centre-stage of India’s energy scenario.
• Coal demand is driven by the rising population, expanding economy and a quest for improved quality of life.
• Currently, India doesn't have a feasible replacement of Coal Based Thermal Energy in near future.

What are the reasons highlighted in the Editorial for Coal demand-supply mismatches?

1. Demand for power has soared:
   • For instance, New Delhi’s peak power demand touched 5,460 megawatts (MW) recently, the highest ever in April’s first fortnight.
   • The national capital’s peak power demand had not crossed this mark in either 2021 or in the previous year.
   • Several states, including Andhra Pradesh, Madhya Pradesh, Punjab, Haryana, Telangana, and Maharashtra, are facing power outages.
   • The coal stock with power generation companies (gencos) is not adequate to meet the rising demand.
2. Lack of coal availability in stock:
   • Normally, a power plant must maintain 26 days of coal stock.
   • However, at present, several power plants are reporting critical levels of coal stock.
   • Data from the Central Electricity Authority (CEA) shows that 97 power plants out of the 173 have critical levels of coal inventory.
   • These have an average of 28% of the stock compared to the normal scenario.
3. Poor logistic facilities and Covid-19 worsen the financial sheet:
   • The lack of railway rakes to transport coal is also a major problem.
   • The state power distribution companies (discoms) have also not been able to clear their dues to power generation companies.
   • The covid-19 pandemic has now weakened the finances of many states, raising doubts about the ability of state-owned discoms to clear their dues.
4. Other factors quoted for coal shortage:
   • The stagnation of production by Coal India Ltd (CIL) after the bumper production in FY15 and FY16.
   • In FY22, however, the production rose 4.4% to 622.6 million tonnes.
   • Former coal secretary Anil Swarup has pointed to the tussle between the Centre and non-Bharatiya Janata Party coal-rich states, which can delay environment and land acquisition clearances.
   • High dues of discoms towards gencos and the eventual delay in gencos paying CIL has complicated the scenario.

What are the steps taken by the Government?

• CIL has made efforts to raise supply to the power sector by reducing its dispatch to other industries.
• Recently, the power ministry said that to avoid long distance transport, ‘tolling’ facilities would be allowed.
• In this system, state gencos can allow other thermal power plants near a coal mine to utilize their coal linkages to generate and transmit power back. This is an easier alternative compared to transportation.
• Further, the states need to ensure that imported coal-based plants operate at reasonable tariffs.
• The Power Ministry is also trying to increase the supply of coal by expediting the start of production from a number of mines that already have all requisite clearances in place.

Conclusion:

• There is a need for increasing production and competition by leveraging higher producing mines to enable more world-scale operations.
• Government should revisit coal grades pricing mechanism from grades based on coal mined to grades based on coal desired for end use.
• With government’s efforts to push renewable energy due to international conventions on climate change, increase in carbon cess and other initiatives for lesser use of coal, there is a need for ‘Vision 2030 for the coal sector’, which takes into account the environmental factors such as reduction of carbon footprint, abatement of global warming, green thermal power plants.

Source: Live-Mint

Mains Question:

Q. Coal use is a necessary evil for the socio-economic development of India. Discuss. Also, highlight the various reasons associated with the Coal demand-supply mismatches and measures taken by the government to address them. (15 marks).