By Charles Kennedy – February 20, 2023 12:00 p.m. CST
- India relied on a law that requires maximum output from power plants fueled by imported coal.
- From March 16 to June 15, all power plants must run at maximum capacity and sell to buyers on the exchange.
- India expects record power consumption this summer with peak demand in April of 229 gigawatts.
As India prepares for massive power consumption in the second quarter, the government will implement an emergency law requiring maximum output from power plants fueled by imported coal, Portal reports, citing India’s energy ministry.
The emergency law reflects a situation where power plants that run on more expensive imported coal are struggling to compete cost-effectively with power plants that can run on cheaper domestic coal.
From March 16 to June 15, all power plants must run at maximum capacity and sell to buyers on the exchange regardless of their coal sources or coal prices, Portal quoted an internal ministry memo as saying.
India expects record power consumption this summer with peak demand in April of 229 gigawatts.
India still relies on coal for about 70% of its electricity generation.
Those power plants that import higher-priced coal have been hit by even higher prices since the EU banned Russian coal imports last August, causing global coal prices to spike.
The Indian government projects that coal-fired power plants will consume 8% more coal in the next fiscal year between March 2023 and March 2024 as demand continues to increase due to growing economic activity and unpredictable weather.
Late last year, India’s coal minister said the country has no intention of phasing coal out of its energy mix anytime soon, with coal minister Pralhad Joshi predicting that fossil fuel will continue to play a major role in India until at least 2040.
The invocation of the Emergency Act comes at a difficult time for the Adani Group, the giant Indian conglomerate that controls coal mines, ports and other industries in India, whose shares have fallen sharply amid a short seller report alleging fraud and manipulation.
By Charles Kennedy for Oilprice.com
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