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Updated October 11th, 2021 at 19:03 IST

Global Energy Crunch: As power crisis hamstrings nations, why India's situation is better

As nations get hamstrung under the clutches of the global energy crisis, experts have analyzed that India is mainly dealing with a temporary issue.

Reported by: Ananya Varma
Global energy
Image: PTI | Image:self
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The world has been hit by an unprecedented power crunch as energy demand in a post-pandemic world begins to witness a broad-based rebound. The demand-supply mismatch has hiked energy prices across the globe, threatening to stall the revival wheels of the economy. 

Analysts have attributed the rise in global energy prices to several factors. The primary cause is considered to be the bounce-back of consumer demand as economic activity returns to normal after the COVID pandemic. Analysts suggest that energy production has failed to resurrect as quickly, in comparison to the revival of economic activity. Over the last month, this build-up power crisis has worsened and has resulted in supply chain disruptions. Here is how the world is faring amid the global energy crunch and why India is doing better. 

Europe

  • United Kingdom

Since the beginning of 2021, natural gas prices have risen multifold in Europe. As per U.K media reports, fuel pumps in Britain are running dry. The situation has escalated to a point where Britain's military has been kept on standby to prevent violence as panic buying hits fuel supplies. A shortage of truck drivers who ferry fuel to pumps due to Brexit, is said to be another contributing factor to U.K.'s fuel crisis.

  • Germany

An example of local fallout from global coal tightness was witnessed in Germany after it was forced to shut down Bergkamen A-- a 715 MW coal-burning power plant till October 4 in Unna district due to shortage of fuel replenishments. According to media reports, several energy retailers in Europe have gone bust forcing manufacturers to consider temporary plant closures. 

  • Spain

Another component of the multi-faceted coal crisis is the attempt by countries to hit emissions targets. Part of the coal supply crunch is a result of production halts under these ambitious goals. Spain, for instance, shut down half its coal production in 2020 and promised to phase out all coal-fired power plants by 2030, owing to which the price of keeping the lights on in Spain has tripled. This has further avalanched into massive spikes in power bills across the country in recent weeks.

Philippines

Halfway across the world, Philippines is witnessing a spike in coal prices, largely due to the country's massive exports to China. According to Semirara Mining & Power Corp, the average coal sales price has risen by 49% in the first half of 2021 mainly due to higher Chinese demand. Isidro Consunji, chairman of Philippines’s biggest power producer was quoted by the media as saying, “We are maxed out in terms of capacity. The price of coal has gone up four times in the last year. I think nobody in the world expected a situation like that."

Lebanon

For Lebanon, the energy crisis is drastic since the country has no centrally generated electricity after fuel shortages forced its two of its largest power stations-- Zahrani and The Deir Ammar to shut down. The state electricity company has issued a public message saying, "The Lebanese power network completely stopped working at noon today, and it is unlikely that it will work until next Monday, or for several days." With a complete outage, there is no possibility of resuming operations in the meantime. 

China

At the crux of the global energy crisis is China whose industrial output has been dented by near-record high thermal coal prices and electricity shortages. Power rationing has been witnessed across the length and breadth of the country as the government orders several provinces from Liaoning and Jilin in northeast, trading powerhouse Guangdong in the south to Zhejiang in the east to cut production. Goldman Sachs has estimated that as much as 44% of China's industrial activity has been hit by the power shortages which, in turn, has severe repercussions for China’s GDP.

The energy crisis has also hit closer to home for Chinese nationals. Elevators have been turned off, stores' opening hours have shortened, factories have reduced operating days and some provinces have experienced outright blackouts. The blackouts have mainly targeted private residences, sparing factories. This week, Beijing and Shanghai, metropolises home to 48 million people also faced blackouts. Moreover, power rationing in some parts of Northeast China, particularly in residential communities has happened without advance warning, sparking public anger, as per Global Times.

A frustrated user from Liaoning was qouted as saying, “Power cuts eight times a day, four days in a row… I’m speechless... It’s like living in North Korea."

Why India’s situation is better

With nations hamstrung under the clutches of the global energy crisis, experts have analyzed that India, which has also begun to witness blackouts and depletion of coal assets, is mainly dealing with a temporary issue. For starters, India is the second-largest importer, consumer and producer of coal, and has the world's fourth-largest reserves. Apart from monsoons which have inundated coal mines, an increase in the international price of coal is also said to be a cause for its shortage and reduced power generation in India.

However, there is still no threat of a disruption in power supply, as per the Government of India. The country has a sufficient coal stock of 43 million tonnes with Coal India equivalent to 24 days coal demand. The coal stock at power plant end is about 72 Lakh tonnes, sufficient for 4 days requirement.

With the withdrawal of monsoons, which have been attributed as the main cause for the domestic crisis, coal despatches are set to rise in the coming days. In fact, the present coal supply from CIL to power sector has already increased to 15 lakh tonnes and is set to increase to more than 16 lakh tonnes per day by the end of October 2021. 

India's relatively comfortable position amid the crisis is also reflected by the fact that the CIL has been supplying more than 2.5 lakh tonnes (approximately) of coal daily to meet the demand of non-power industries like Aluminium, Cement, Steel etc. along with the supply to thermal plants. In few days, things are expected to be back to normal for India.

 

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Published October 11th, 2021 at 19:03 IST

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