A power outage in India that has resulted in hours-long blackouts, halted production lines, and sparked street protests is expected to last for months, putting further strain on the country's economic recovery.
Electricity outages and restrictions have expanded throughout more than half of the country, and the country's coal-dominated energy grid is projected to be further strained in the coming weeks as power demand reaches a new high.
Despite a brief respite from a scorching heat wave that has brought temperatures as high as 46 degrees Celsius, households and businesses continue to be disrupted as coal inventories at power plants deplete and fuel supplies struggle due to rising prices since the Ukraine crisis.
In an interview, Sumant Sinha, chairman of ReNew Energy Global Plc, an Indian wind and solar power supplier, said, "It's becoming a challenging position." "This summer is going to be a test."
High coal and oil prices threaten to exacerbate inflationary pressures, prompting India's central bank to raise its key policy rate unexpectedly on Wednesday. India's already shaky recovery in industrial production will be harmed by power restrictions.
Coal production, which accounts for more than 70% of India's electrical output, has been unable to keep up with enormous energy demand resulting from the country's post-pandemic industrial resurgence and the country's heat wave. Logistics bottlenecks, such as a scarcity of railway cars to transfer coal from mines to power plants, are exacerbating the shortages.
"Cutting off power to the industrial sector might postpone the manufacturing sector's recovery by at least a quarter," said Aditi Nayar, an analyst with ICRA Ltd.
According to the Institute for Energy Economics and Financial Analysis, coal-fired power plant stockpiles have dropped more than 14% since the beginning of April, leaving around 100 facilities with critical supply levels. Due to increased demand, reserves are expected to drop even more, followed by a rainy season beginning in July.
Last year, monsoon rains precipitated a prior power outage, which also resulted in widespread power outages, when coal mines and roadways were inundated, disrupting production and shipments.
"We're going to have a full-blown power crisis across the country if coal stockpiles continue to dwindle at this rate," said Shailendra Dubey, chairman of the All India Power Engineers Federation, an advocacy group that makes energy policy recommendations.
According to India's power ministry, electricity demand reached a new high of 207.1 gigawatts on Friday and is likely to increase to 220 gigawatts during the next two months. The Indian Energy Exchange's average spot electricity rates have risen to around 10 per kilowatt hour, almost quadruple the average in January, and have been controlled by the industry regulator.
According to Ashok Gehlot, the chief minister of Rajasthan, at least 16 of India's 28 states have been experiencing power disruptions ranging from two to ten hours each day.