Experts blame mismanagement for spike in spot power prices, coal shortage

NEW DELHI: The sudden spike in power prices in the spot market and shortage of coal at generating stations was due to mismanagement and lack of communication between companies across Indian power sector than a rise in electricity demand, experts said.

The average spot power tariff on the Indian Energy Exchange this week peaked as much as Rs 9.9 per unit as state governments shut their inefficient projects to cut costs and drew power from an exchange. At the same time, some central thermal and nuclear-generating units were under annual maintenance even as hydel generation dipped on low rainfall and wind power capacity dropped due to unfavorable weather conditions. This put pressure on coal-based power plants depleting their coal stocks. In the backdrop of low demand, most power companies have not been maintaining high coal stocks. Flooding in some coal mines added to the woes.

The situation arose even as the country boasts of electricity generation capacity double than its demand and excess coal availability.

A government official said the situation could have been averted if the annual maintenance of thermal units was rescheduled in the wake of dwindling hydro generation and coal stock position monitored in advance. Feedback Consulting head power and oil & gas Rudranil Roysharma said, “It is a core management issue. Every year coal stocks deplete in monsoon and the power demand is up as it is an irrigation season. Coal India has now alerted all its subsidiaries for taking stock of power plants with critical stock.”

“Currently the CEA is responsible for planning and POSOCO for the operation of the electricity grid. However, they depend upon the input from state utilities for the demand prediction, which has not been very scientific. The overall the system still lacks the sophistication to react to situations like a prolonged dry spell related demand spike combined with unscheduled generation outages, as it happened recently.” said Debasish Mishra, a partner at Deloitte Touche Tohmatsu India.

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