HomeIndia NewsElectricity price increased like oil

Electricity price increased like oil

Bharat Jhunjhunwala

The immediate cause of the current power crisis is coal shortage but this shortfall is itself due to global warming. Before proceeding further it is necessary to address some of the alleged reasons. The first is the alleged reason that after the Kovid crisis, the economies are picking up speed again, due to which the demand for electricity has increased and the crisis has arisen. This is not valid as the coal produced in our country in April to September 2019 is 11 percent more than that produced in April to September 2021. Domestic production of coal has increased after Kovid, so it is not a cause for crisis. The second alleged reason is being told that China has banned the import of coal from Australia. This is also not valid, as the demand for Australia’s coal has increased.

effect of global warming

China’s non-purchase of coal has not reduced the supply of Australia’s coal in the world market. The third alleged reason is that due to the increasing use of solar and wind power in place of thermal power, the production of coal has diverted the attention of entrepreneurs and created a crisis. This argument also does not hold true. Had this been the reason, the demand for coal would have decreased, the availability of coal would have increased and its price would have fallen. But this is not happening. Therefore all three reasons are not acceptable.

In fact, the present crisis is a combination of increase in consumption with reduction in electricity production due to global warming. Global warming has affected the production of electricity in three ways. First, the flooding of coal mines in India has affected production. Flooding of coal mines in China and Australia has also led to a drop in production. This has led to a fall in the total global production of coal and a rise in prices. The second reason, in the past, there have been severe storms in many parts of the world, especially in the US oil producing states of Louisiana and Texas. Due to which the production of oil there was affected. Third, the weather in China has been dry in the past, due to which the production of hydropower has dropped. Wind speed has also been sluggish in China, due to which the production of wind power has also decreased.

Electricity consumption has also increased due to global warming. Last year, European countries had a prolonged cold season, due to which oil consumption was high and those countries had very little oil reserves. The coming winter is also expected to be prolonged. Therefore, these countries are trying to store more oil, as a result the demand for oil has increased. Therefore, global warming has reduced production due to floods, droughts and reduced wind intensity on the one hand, while on the other hand, energy consumption has increased due to prolonged exposure to cold. The combined result of these effects is that the supply of energy has decreased while the demand is high and crisis has arisen. This is the reason why the price of natural gas in Europe and the price of crude oil and coal on the global star increased drastically. The prices of these three sources are related to each other in the same way as shopkeepers in the market increase the price of goods by looking at each other.

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Coal is heavily used for electricity generation in our country. About 90 percent of this is met from domestic sources and 10 percent from imports. Many thermal power generation plants are based on imported coal. With the increase in the price of imported coal, the price of electricity produced by them has increased and the electricity boards have refused to buy this expensive power. As a result, the production of electricity in the country has fallen and a crisis has arisen. Just as the patient’s condition worsens due to the temperature of the patient being from 104 degrees to 105 degrees, similarly the crisis has arisen in the whole country due to the crisis of 10 percent electricity produced from imported coal.

Looking ahead, due to global warming, such crises will keep on coming. Our special problem is also that we import 10 per cent of our consumption coal and 85 per cent of our fuel oil. We depend on the global market for this raw material. The prices of this raw material keep increasing and decreasing, but the Electricity Regulatory Commission fixes the price of electricity in the country for a long time. Therefore, the price of raw material keeps on fluctuating, while the price of electricity remains constant. For example, the price of raw materials has gone up. Due to non-parallel increase in electricity prices, some power plants have had to stop production and have become a crisis.

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will have to change

The solution is that we have to reduce our energy consumption, for which we will have to increase the prices of energy. Second, the price of electricity will have to keep changing according to the price of raw materials. Just as the prices of petrol and diesel fluctuate daily, in the same way, arrangements will have to be made to change the price of electricity daily, if not daily. At present the price of electricity is Rs 6-8 per unit, which has been fixed for a long time. It cannot be increased simultaneously with the increase in the global price of raw materials. Hence the crisis has arisen. Due to global warming, there will be sharp fluctuations in the price of coal and oil and accordingly the domestic system will have to be changed, then only such crisis will be avoided.

Disclaimer: The views expressed above are those of the author.

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