New Delhi, India – As temperatures soar to over 40 degrees Celsius in the village of Hasanganj in northern India’s Uttar Pradesh state, the bananas sold by Ramesh, a fruit vendor known by a name, are rotting faster than normal without fans due to nearly 14-hour power outages in the area to keep them cool. As sales plummet, tempers begin to falter at home, and his children are unable to sleep or study in the scorching heat.
The blackouts have “exacerbated” their problems, Ramesh told Al Jazeera.
When a heatwave swept through parts of northern India from late March to early May, demand for electricity skyrocketed, straining power lines and causing massive outages in several parts of the country as coal-fired power plants ran out.
The spate of events, particularly as summer has arrived earlier and hotter than expected, has reignited the call to mine and import more coal, even as India’s coal production continues to rise. Global coal prices have skyrocketed since the start of the Ukraine war, sending India’s import costs up 50 percent to 100 percent, while the rupee has fallen to record lows, making imports even more expensive.
As a result, on May 7, the Ministry of Environment allowed certain coal mines to expand production up to 50 percent from the current 40 percent without having to obtain the normally required environmental approvals.
#Money Mines that have been expanded by 40% without a public hearing (PH) can now be expanded up to 50% without a public hearing #RRP/EMP and PH.
Justification: #power crisis #coal crisis pic.twitter.com/EPCiANoDmR
— Kanchi Kohli (@kanchikohli) May 10, 2022
A day earlier, the Department of Energy had ordered all power plants that run on imported coal to run at full capacity and allowed power producers to pass on the tariff increase to consumers.
“The short-term answer is that you definitely have to bear the expense of keeping the lights on, especially in the middle of a heatwave that’s going to kill people,” said Tim Buckley, the director of Climate Energy Finance, a think tank in Australia. “But there are enormous, massive costs to the Indian people.”
A basic cost factor that Buckley refers to is the actual price of electricity. While most of India’s thermal and renewable power is sold through long-term contracts, coal-fired power still sees a price differential creeping in, particularly in the 3 to 4 percent traded on exchanges. For example, while domestic coal electricity has recently been selling at 4-5 rupees/kWh (0.05-0.06$), this has risen to 5-8 rupees/kWh (0.05-0.10$) for Electricity from imported coal (and went up to 12 rupees/kwh or $0.15 on the spot market in one day last week). Wind and solar power are now at Rs.3 and Rs.2.5 ($0.03 and $0.04) respectively.
More importantly, Buckley adds, “50 degree heat shows the infrastructure isn’t working. Coal-fired power plants cannot run above 50 degrees. They break exactly when you need them.”
Experts say it’s actually a reminder that India should invest more in its renewable energies to better secure its energy needs.
Indeed, it was late last month when energy companies were scrambling for coal to burn as demand for fans, chillers and air conditioners skyrocketed, it was wind power that came to the rescue as it comes on line from late April and through August is running. Ends mid-September.
“Every unit [of electricity] that wind provides, you generate so much less from coal and that ensures you are no longer in scarcity mode,” says Karthik Ganesan, Fellow and Director for Research Coordination at the Council on Energy, Environment and Water in the New Delhi think tank.
“Basic Problems”
India gets around 74.4 percent of its electricity from coal-fired power plants. Coal shortages are nothing new to the country – it faced a similar shortage last year – and are more likely to be due to poor planning than any other reason. For example, last year the coal, despite being dug out of the ground, lay at the mine’s mouth and was then inundated by rain as demand for it exploded in other parts of the country. Another common problem is the fact that cash-strapped state energy companies often fail to place coal orders in advance, leading to complaints of shortages when demand picks up.
Some of these problems stem from the fact that electricity in India is used as a political asset – political parties have offered voters free or dirt cheap electricity over the decades. But ultimately the cost of doing so will be borne by the distributing companies, as years of unpaid bills mount and they are left with no way to invest in infrastructure upgrades or abandon coal orders, among other things.
“Sooner or later, the government has to solve the more fundamental problems in the system,” Ganesan said. “Everyone coughs up dollars [to import coal] because right now there is no other way and we literally have to throw money at the problem… But instead of fixing the problem, we perpetuate it by throwing good money after bad money.”
However, calling for the end of coal cannot mean stopping investment in coal mining altogether. “We don’t want to switch to renewable energy in a disruptive way by sending people back 30 years… Climate change is a reality and its impacts – high temperatures and the need for air conditioning – are also a reality,” Ganesan added.
India also needs to step up its renewable energy game, especially if it really wants to reduce its reliance on coal. As of April, it had 158.12 GW of installed renewable energy — which is expected to increase to 500 GW by the end of the current decade, a questionable target given that it would need to add about 30 GW of renewable energy annually, double the current rate last year.
For now, it’s the privately held energy companies – the ones who have been allowed to pass tariff increases on to consumers – who are chuckling to the bank, even after factoring in the increased cost of importing the coal.
Tata Power, for example, will operate its 4,000MW ultra-mega power plant at Mundra in Gujarat at full capacity – a power plant that relies entirely on imported coal. Similarly, Adani Power – part of the diversified Adani Group owned by Asia’s richest man Gautam Adani – also owns a 4,620MW power plant in the same region that relies entirely on imported coal. (Both companies have investments in renewable energy, and the latter has commitments of $70 billion or even all of it, but the companies are still expected to grow profits.
None of this matters to Ishmail Mohammad, who runs a welding shop in the village of Hasanganj. The first few years of the COVID-19 pandemic devastated his business as many of the local residents – who made a living working on construction sites in major cities – had no income to pay him to install metal grilles and gates as India had several implemented lockdowns. Now, the nearly 14-hour power outage is only adding to the pain, especially as the price of the diesel, which he also uses to power his generator, has skyrocketed.
“I just can’t work,” he told Al Jazeera. “I can’t even meet my expenses. What should one do?