India's Worst Power Crisis In Over 6 Years: 10-Point Guide

A surge in the demand for air-conditioning due to the heat wave and an economic recovery due to removal of Covid restrictions on industrial activity, pushed power demand to record highs in April.

Millions of Indians are working from home with new hybrid work models adopted since COVID-19 struck in 2020, 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 because of increasing output aggressively, with average coal stocks held by utilities at the lowest for this time of the year in at least 9 years.

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

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

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

The low inventories have forced Coal India to divert supplies to utilities at the expense of the non-power sector. The Railways has cancelled passenger trains to free up tracks for the movement of coal. The government is also planning to reopen more than 100 coal mines previously considered financially unsustainable.

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.

Officials and analysts expect India to face more power cuts this year due to low coal inventories and as 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.