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BW Businessworld

Fuel Shortage Brings Power Plants To A Halt

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As the temperature continues to rise, so does the demand for energy in the country, adding to the woes of both consumers and utilities. Making matters worse for both is capacity shutdown: it was 36,903 MW as on 24 June, up from 34,387 MW on 24 May. What is alarming is that this shutdown constitutes more than 20 per cent of the total installed capacity monitored by the Central Electricity Authority (CEA). Out of a total capacity of 1,78,571 MW, 36,903 MW is listed under power outage. Of this, only 8,248 MW is listed as planned outage, while 26,300 MW is under forced outage on account of either equipment failure or fuel shortage. And the rest, 2,355 MW, is listed under ‘other reasons'.

The eastern region is the worst hit, with 32 per cent of its capacity shut down and most of it under forced outage. The western region has 20 per cent of its capacity lying unused owing to outages, while the southern, northern and north-eastern regions have outages of 18 per cent, 15 per cent and 12 per cent, respectively. States such as Haryana and Uttar Pradesh in the north; Maharashtra and Chhattisgarh in the west; Karnataka and Tamil Nadu in the south and Orissa, Bihar and Jharkhand in the east are among the worst off.

"Capacity under outage should not cross 10 per cent of the total installed capacity. The current outage is quite high. This is mainly due to fuel shortage, because of which many plants are operating at sub-optimal capacities or not operating at all," says Ashok Khurana, director-general at Association of Power Producers.

The situation is expected to worsen, as the number of plants with critical stock levels (less than seven days of fuel) has gone up in the last few weeks. In May, as many as 27 thermal power stations (TPS) were listed as having critical stock levels and 13 stations as having super critical levels (less than four days); in June, their number  rose to 31 and 18, respectively.

"Coal-based power generation has faced acute fuel shortages in the recent past. Estimates of capacities without fuel supplies is in the range of 20,000 MW. The demand-supply gap has been due to large capacity additions in the past three years; in the same period, coal production improved only marginally. Fuel supplies have become the most critical factor in capacity utilisation of power plants. They also constitute one of the most challenging hurdles to investments in new plants," says Dipesh Dipu, director-consulting (mining), Deloitte Touche Tohmatsu India.

However, the current capacity shutdown cannot be blamed for  long hours of load shedding, which happens largely due to the lack of proper planning by discoms as well as the poor state of their finances. 

"In the last fortnight, there have been more sell bids — rather than purchase bids — at the power exchanges," says Khurana. "This is because of the poor financial state of state power utilities, which prefer denying power to consumers and are loath to purchasing power."The consumers end up suffering the most. "Due to load shedding, consumers are forced to buy power generated through diesel gensets that cost Rs 13-15 (per unit), while cheaper power at Rs 3-5 is available at the exchanges," says Jayant Deo, MD and CEO, Indian Energy Exchange.

(This story was published in Businessworld Issue Dated 09-07-2012)