India's energy security framework

The Ministry of Power invoking Section 11 of the Electricity Act and mandating all imported coal-based power generating units to operate at full capacity indicates that the country has plunged into an emergency as regards power generation and supply. It also speaks volumes about the gap in the country's energy security and rising demand which policymakers failed to detect and anticipate. Section 11 of the Electricity Act authorizes the Central Government, in an extraordinary situation, to order a generating company to operate or maintain any generating station following the directions issued. Justifying the move, the Power Ministry in its direction highlights that the power demand has gone up by almost 20% in energy terms. The supply of domestic coal has increased but the increase in the supply is not sufficient to meet the increased demand which is leading to load-shedding in different areas. "Because of the mismatch between the daily consumption of coal for power generation and the daily receipt of coal at the power plant, the stocks of coal at the power plant have been declining at a worrisome rate," it states. The Power Ministry has directed all states and generating companies based on domestic coal to import at least 10% of their requirement of coal for blending. The Ministry noted that with the international price of coal touching 140 US dollars a tonne, the imported coal-based generators are not willing to operate the plants as Power Purchase Agreements (PPAs) do not have adequate provision of pass-through of the entire increase in international coal price and supply of power at the existing PPA rates will result in generating companies incurring loss for sale of power at PPA rates. To ensure that all power plants based on imported coal start functioning; the states have been advised that the price of coal should be a pass-through. Most states have done that and about 10,000 MW out of 17,600 MW of imported coal-based generation capacity has started operating, but some imported coal-based capacity is still not operating, the official directive states which explained the rationale behind the invocation of Section 11. The rise in power demand is attributed to heatwave gripping large regions of Central and North-Western India. India Meteorological Department has sounded the alert that fresh a spell of a heatwave is likely to commence over Northwest and Central India from Sunday which implies that the demand for power to beat the heat is expected to surge again. The Power Ministry has advised the states to place orders for importing coal for blending purposes so that the additional coal reaches power plants from May 2022 itself. It has also advised the states to increase the output from the captive mines to meet their coal requirements to reduce the burden on the linkage coal. The Ministry has passed the buck to the States by stating that in the event of States not lifting the coal supplied through Rail-cum-Road transportation mode, it would be de-allocated and offered to other states and the states concerned would be responsible for any shortages and consequent power shortages in their States. Instead of indulging in a blame game, a coordinated approach by the Central and State governments is needed to overcome the power shortage and rising international coal prices. Coal India Limited has put on offer 20 of its closed and discontinued coal mines with an estimated 380 million tonnes of the reserve, to the private sector on a revenue-sharing basis for "re-operationalization" to augment coal supply. India has the fifth largest coal reserve in the world and the country has set a target of increasing domestic coal production to 1.2 billion tonnes by 2023-24 to reduce coal imports. Production of coal in the country witnessed 8.55% growth to 777.31 million tonnes in 2021-22 over 716.08 million tonnes in 2020-21. The country imported about 215 million tonnes of coal in 2020-21 and 186 million tonnes till February 2021-22. If the demand for coal for power generation continues to grow in the absence of renewable and hydropower generation, the country's timelines of targets set for reducing dependence on coal for energy needs may need to be reset. Coal accounts for over 51% of the total fossil fuel-based installed power generation capacity of the country. Reducing dependence on coal for energy mix is critical to the country achieving the climate action goals as well as shielding the power generation from shocks of the volatility of international coal price. Switching off electrical equipment when not in use and adopting environment-friendly space cooling or heating solutions like alternative roof cooling or using solar energy to reduce heating needs can significantly cut energy demand during long spells of hot summer or through winters. India's energy security framework must incorporate climate action goals.