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Why is India facing its worst power crisis in over six years?

India is facing its worst power crisis in over six years as a heatwave bakes vast swathes of South Asia, causing widespread power outages.

Here is a summary of the factors behind the crunch.

Why is India facing a power crisis?

A surge in air-conditioning demand due to an unrelenting heatwave this year, and an economic recovery due to removing all COVID-related curbs on industrial activity, pushed power demand to record highs in April.

New hybrid work models adopted since COVID-19 struck in 2020 have resulted in millions of Indians working from home, boosting residential daytime power use. The gap between power supplied and consumed has often been wider at night when solar supplies stop and air conditioning demand surges.

Many power plants ran out of fuel due to increasing output aggressively, with average coal stocks held by utilities at the lowest for this time in at least nine years.

Despite record production by state-run Coal India, which accounts for 80% of domestic coal output, many utilities could not replenish stocks due to the Indian Railways’ inability to supply enough trains to Coal India.

What is India doing?

The crisis has pushed India to reverse a policy to slash thermal coal imports to zero and asked utilities to continue importing for three years.

It also invoked an emergency law to start generation at all plants running on imported coal, many of which are currently shut due to high international coal prices.

The low inventories have forced Coal India to divert supplies to utilities at the expense of the non-power sector. State-run Indian Railways has canceled passenger trains to free up tracks for the movement of coal.

India is also planning to reopen more than 100 coal mines previously considered financially unsustainable.

Who is impacted by the crisis?

According to citizen-survey platform LocalCircles, nearly half of its 35,000 respondents from across the country said they faced power outages this month.

Factories in at least three states have been forced to shut down for hours as authorities struggled to handle the demand.

As the supply of coal to power plants operated by energy-intensive industries was restricted, factories started drawing power from the grid, hiking industrial costs and putting further pressure on overworked coal-fired power plants.

Power use by eastern Odisha state, home to the country’s biggest aluminum smelters and steel mills, rose over 30% in October-March, nearly ten times the average national growth.

What’s next?

Officials and analysts expect India to face more power cuts this year due to low coal inventories, and electricity demand is expected to rise at the fastest pace in at least 38 years.

Power generation from coal-fired plants, which account for nearly 75% of India’s annual electricity output, is expected to grow 17.6% this year, the highest rate in over a decade.

Coal India’s production and dispatches by train are likely to be hit during the annual June-September monsoon season.

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