(Bloomberg) -- India’s coal-fired power plants in August ran at a three-year high amid shortages created by lower generation from hydropower and nuclear.
Plant utilization at coal-fired stations rose to 58 percent last month, compared with 51.6 percent a year ago, power ministry data released this week show. That’s the highest rate for August since 2014, according to data compiled by Bloomberg.
Lower rainfall in southern and western states has led to a decline in hydropower generation, forcing them to buy from other states and pushing up spot power prices, according to Indian Energy Exchange. Hot weather in some parts of the country and a pick-up in economic activity is also boosting demand for electricity, according to Debasish Mishra, a partner at Deloitte Touche Tohmatsu LLP in Mumbai.
“Coal-fired generation has had support from both supply side as well as demand side,” Mishra said. “We expect electricity demand to progress from here, as there are signs of industrial activity increasing.”
Hydropower production last month declined 12 percent from a year ago, according to government data. Nuclear generation dropped 36 percent as a 1 gigawatt reactor at the Kudankulam plant in the southern state of Tamil Nadu was shut for maintenance Aug. 4, the data show. Meanwhile, coal-fired power surged 17 percent.
The nation has also begun mining more coal to meet the rise in demand. Coal India Ltd., the world’s biggest producer of the fuel, reported its first year-on-year rise in output in five months after power plant inventories plunged and the miner’s own stockpiles declined.