India's slowing electricity demand eases burden on coal supplies

[NEW DELHI] Torrential rain in India that's flooded coal mines and exacerbated the country's energy crisis is now bringing some relief in the form of cool air.

Temperatures have fallen during the wet weather, reducing the need for air-conditioning and helping electricity consumption plunge by 9 per cent on Monday from the previous week, according to government data. The country's peak power shortfall shrank to 2 gigawatts, compared with 6.9 gigawatts a week earlier, data show.

Coal shortages have left India's power plants with precariously low stockpiles, triggering outages in several states.

Industrial consumers are having to choose between pricey imported fuel or curtailing operations, as domestic supplies become prioritised for power producers.

"Power demand is going to be a critical factor in determining how well we're able to manage this situation," said Rupesh Sankhe, vice president at Elara Capital India in Mumbai. "It's a relief that the tight coal situation is being balanced by softening demand."

To be sure, the rains are still hampering mining operations, threatening to undo a recent recovery in shipments of the fuel, which helps produce about 70 per cent of the nation's electricity. Plants running on domestic coal haven't been able to increase their reserve levels from an average of four days of supplies in recent weeks.

BLOOMBERG