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To avert coal, power crisis in future, India mulls strategic coal & gas reserves

Taking lessons from the coal crisis, India is considering the creation of strategic reserves for coal and gas
A file photo of Power Secretary Alok Kumar
A file photo of Power Secretary Alok Kumar
  • Keeping a strategic reserve of these fuels — gas, oil, imported coal — will allow economies to adjust and tide over these supply shocks for about a month or so, said the Power Secretary
  • High prices have posed challenges for energy security, said the Secretary

New Delhi: Taking lessons from the coal crisis caused due to a sudden spurt in power demand over the past one-and-a-half months, India is considering the creation of strategic reserves for coal and gas. Speaking at a virtual event, Power Secretary Alok Kumar said that in order to insulate the economy from supply shocks caused by imported fuel, India should consider forming a strategic reserve of gas and imported coal, on the lines of the ones that exist for crude oil.

‘India needs strategic reserves of coal and gas’ 

Kumar asserted that all major economies are going to be dependent on fossil fuel supplies for base load and grid balancing for another decade. “At least in the foreseeable 10 years or so, all the countries, especially major economies, will be dependent on fossil fuel supplies for base load and for grid balancing… We will never be able to insulate ourselves from these supply shocks of imported fuel,” said the top bureaucrat, referring to the major supply disruptions caused due to soaring prices of coal, oil and gas.

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“Let us start discussing about keeping a strategic reserve of these fuels — gas, oil, imported coal… so that economies are able to adjust and tide over these supply shocks for about a month or so. That will be a small cost vis-à-vis the cost of these disruptions,” said Kumar. The Power Secretary said that even China, UK, Europe and Singapore had faced supply challenges. While noting that high prices have posed challenges for energy security, Kumar said that around 17,000 MW of power plants, which are based on imported coal, and 24,000 MW of gas-fired power plants in India go offline when global prices rise too high. 

‘Strategic reserves of coal, gas will help us tide over crunch’

“Many countries have started keeping strategic reserves, because when it comes to a crunch, every country will meet its needs first. Russia has curtailed gas supply to Europe because they want more gas to be consumed within their country,” said Kumar while making a case for South Asian countries to build up similar reserves.

The Secretary also urged states to ramp up hydropower generation in order to conserve scarce coal supplies. “For the last one week, we are generating extra hydropower on off-peak days to conserve our coal. We have talked to states and said wherever you have water reservoir, or higher water levels, please generate more hydropower so that we can save coal,” said Kumar.

Background

A surge in global coal prices, coupled with an extended monsoon that affected coal despatch, caused coal stocks at thermal power plants to drop to critical levels. Discoms’ inability to meet the supply and demand gap also led to extended load-shedding of up to 14 hours in some regions. According to the Central Electricity Authority (CEA), thermal power plants in India have an average coal stock of four days. 

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