Stories
India's Power Sector Faces Recurring Crisis as Fuel Stocks Plummet
- •India's power sector is on the brink again, with 75 out of 190 power plants having critically low fuel inventories as of September 20, a significant increase from previous years.
- •Thermal power plants, which supply most of India's electricity, are operating with only 39% of their normative fuel requirement due to high demand, supply disruptions, and slow refilling by distribution companies.
- •The situation worsened despite early forecasts of a weak monsoon and El Nino, which were expected to increase electricity usage, indicating a lack of proactive measures by state electricity boards.
- •Coal India is expected to benefit from the crisis, with its stock already up, while conventional electricity producers will see improved plant utilization levels.
- •The overall energy demand is projected to rise by 7% in FY27, and companies in the renewable sector are accelerating storage technology development to capitalize on higher merchant power rates during peak hours.
Key Questions Answered
As of September 20, fuel inventories at 75 out of the 190 monitored power plants have dropped to critically low levels. This marks a significant increase from 24 power plants at the start of the fiscal year.
Inventories dropped due to elevated power demand that drove up coal usage, disruptions in fuel supplies, and slow inventory refilling by power distribution companies. Unfavourable weather conditions like weak monsoons and El Nino also drove up temperatures and electricity usage.
Coal India is set to benefit as the country's largest coal supplier, alongside conventional electricity producers experiencing better plant utilisation levels. Additionally, merchant and renewable energy companies focusing on storage technologies are positioned to capitalize on higher spot market rates during peak evening hours.
