India Invokes Maximum Energy Output Law from Coal Plants

Editor OilPrice.com
Mon, February 20, 202

With India gearing up for massive power usage in the second quarter, the government will utilize an emergency law that will demand maximum output from power plants running on imported coal, Reuters reports, citing the Indian power ministry.

The emergency law reflects a situation in which power plants running on more expensive imported coal are having a difficult time competing cost-effectively with plants that can operate on cheaper domestic coal.

Beginning on March 16 and ending on June 15, all power plants will have to be running at maximum capacity and selling to buyers on exchanges, regardless of their coal sources or coal prices, Reuters cited an internal ministry memo as saying.

India is expecting a record power usage this summer, with peak demand in April of 229 gigawatts.

India still relies on coal for some 70% of its electricity generation.

Those power plants that import more expensive coal have been hit by even higher prices since the EU banned Russian coal imports last August, causing coal prices to surge globally.

India’s government expects coal-fired power plants to use 8% more coal in the next financial year between March 2023 and March 2024, as demand is set to continue rising thanks to growing economic activity and unpredictable weather.

Late last year, India’s coal minister said that the country had no intention of ditching coal from its energy mix any time soon with Coal Minister Pralhad Joshi projecting that the fossil fuel would continue to play an important role in India until at least 2040.

The invocation of the emergency law comes at a tough time for Adani Group, the massive Indian conglomerate controlling coal mines, ports and other industry sectors in India, which has seen its stocks plummet in the wake of a short-seller report alleging fraud and manipulation.

By Charles Kennedy for Oilprice.com