Why does India have a power crisis?

The increased dependence on coal has pushed India into a deep power crisis that can only be averted by looking for and implementing green energy alternatives.


In the last few years, power cuts have grown from being a rural issue to a perennial problem in Indian cities. It has not spared even the national capital of Delhi. Amid a global energy crunch, India’s growing dependence on coal has pushed it into a deep power crisis. 

While the country has achieved the goal of providing electricity to all its households, offering reliable, quality supply of electricity without interruptions remains a challenge. Despite an increase in power generation in the last four decades, demand has still not been met. 

Image credit: Matthew Henry, Unsplash 

Coal crunch

The country saw the biggest power supply shortage of 12,021 million units in over five years in October 2021 due to the lack of coal stocks in thermal plants. Gujarat, Haryana, Jharkhand, Punjab and Rajasthan were some of the states that suffered the most due to this. 

The limited availability of coal in most of the country’s 135 coal-fired thermal power plants, aggravated the crisis even further. 

"Between April to November, 2021, power plants were not able to maintain sufficient stock as coal-based power generation increased by about 16% as compared to the corresponding period of the preceding year due to revival of economic activities," Power Minister RK Singh said in a written reply to the Lok Sabha. 

In early 2021, the coal-fired power generation in India reached a monthly share of 79%, the highest since early 2019, according to an Electricity Market report by the International Energy Agency (IEA). The last time the average coal stock was near the requirement level was in mid-June. From then on it has only declined rapidly.

Struck by the pandemic

The central government noted that the second wave of COVID-19 impacted the availability of manpower and logistics and made things worse especially between April and June, 2021.

Zohra Chatterji, the former Chief of Coal India Limited, a state-run enterprise responsible for 80% of the nation’s coal supply calls the situation a "wake-up call for India". "Electricity powers everything, so the entire manufacturing sector including cement, steel and construction gets hit once there is a coal shortage,” she told the BBC. 

Image credit: DNA

A slump in local coal output and a spiral in electricity demand was observed when industries restarted after the pandemic curbs were lifted. This is expected to be one of the main reasons for the upheaval.

“Until supplies stabilise completely, we are likely to see power outages in some pockets, while customers elsewhere may be asked to pay more for power,” Pranav Master, Director for Infrastructure Advisory, CRISIL Ltd, told Bloomberg. 

“Because of the cost of importing coal, prices shot through the roof, plants running on domestic coal had to do a lot of heavy-lifting. But, things are expected to get better as the rains abate,” he added.

Power demand eases, coal stocks recover

With winter setting in, the country has seen a seasonal decline in power demand, which has allowed generators a little bit of time to rebuild depleted coal stocks and improve on the grid’s margin of spare capacity. 

This is because drop in temperatures tend to result in the reduced usage of air conditioning, which reduces the strain on the transmission and generation system that would have otherwise caused rolling blackouts.

Coal stocks at power stations have risen to 13.7 million tonnes, up from just 8.1 million during September-end, though it is still far below the level that was reported two years ago of 21.2 million, says Reuters.

Power generators' stocks are now enough for about eight days of consumption, up from four days in September, according to the Central Electricity Authority. However, Reuters reports that stocks are still rated critically low at 63 out of a total of 135 plants. This is still much lower than 116 in mid-October, and those plants account for 75 gigawatts of capacity, down from 142 GW last month.

Green energy corridor

The National Green Energy Corridor programme, which was established in 2011 has been actively supporting the transmission network infrastructure solely dedicated to renewables over the years.

Image credit: American Public Power Association

Today, the country has an installed renewable energy capacity above 100 GW, excluding hydropower, according to the Ministry of New and Renewable Energy (MNRE). This accounts for 26% of the total capacity. A huge chunk of the renewable energy projects are still carried out by the private sector in India. In order to support them, the government has set a transparent bidding process and allowed consumers to obtain power at competitive prices. To invite further investment in these projects, the government also allows 100% Foreign Direct Investment (FDI). Losses incurred on inter-state sale of solar and wind power are also waived off for any renewable project that is commissioned by December 2022.

Most of the renewable energy is generated by Kerala, Tamil Nadu, Karnataka, Rajasthan, Gujarat, Telangana, Madhya Pradesh, Andhra Pradesh and Punjab. And, these renewable energy projects are dominated by wind, but the focus of upcoming projects is solar energy. 

Well, India is on the path towards achieving 175 GW of renewables by 2022 and has announced an ambition to reach 450 GW by 2030, according to the latest NITI Aayog report.

Long-term alternatives

While a seasonal drop in demand has served as a short-term fix for the energy crunch, experts think that the country needs to develop a framework for long-term alternatives to meet the growing domestic demand. 

While India has got out of some of the worst recessions and is looking to grow as the world’s best manufacturing hub, finding a green alternative to electricity is the key to unlocking robust economic growth.


Edited by Roshni Shroff


Some resources to help you understand the power generation and distribution in India:

Challenge for India to ease power shortage

Editor’s review 2021: Energy transitions, biodiversity-climate change links