Energy Demand to Keep Recovering Despite Temporary Covid-19 Blip: Ind-Ra

Shortfall in hydroelectric units behind sharp rise in thermal plant load factor

Energy Demand to Keep Recovering Despite Temporary Covid-19 Blip: Ind-Ra
Energy Demand to Keep Recovering Despite Temporary Covid-19 Blip: Ind-Ra
PTI - 28 May 2021

India Ratings and Research (Ind-Ra), in the May 2021 edition of its credit news digest on India’s power sector, published on Friday, said the recovery in energy demand will continue despite Covid-19 led temporary blip.

The report highlights trends in the power sector, with a focus on capacity addition, generation, transmission, merchant power, deficit, regulatory changes and recent rating actions by Ind-Ra.

As per their statement, Ind-Ra estimates the all-India energy demand to decline in May 2021 on a month-on-month basis, despite peak summer season, and to remain below pre-pandemic levels, on account of the continuation of Covid restrictions in some states till May 31. The agency added it expects energy demand to start recovering from June 2021.

In the first 25 days of May 2021, the all-India energy demand was 88.8 billion units (May 2020: 102.6 billion units; May 2019: 120.7 billion units). In April 2021, the all-India energy demand was higher by 39.3 per cent y-o-y (year-on-year) at 118.4 billion units (March 2021: up 22.8 per cent) due to the lower base effect and early onset of summer contributing to higher demand.

The short-term power price at Indian Energy Exchange remained high at Rs 3.70/kWh in April 2021 (March 2021: Rs 4.07/unit; April 2020: Rs 2.41/kWh) on account of a high demand from the short-term power market.

Electricity generation increased 42.5 per cent y-o-y to 115.5 billion units in April 2021 (March 2021: up 23.5 per cent), supported by 55.4 per cent y-o-y growth in thermal generation (up 29.2 per cent y-o-y), although hydro generation fell 18.4 per cent y-o-y (down 7.8 per cent y-o-y). Electricity generation from renewable sources increased 17.9 per cent y-o-y to 11.7 billion units in April 2021, with solar generation increasing 41.5 per cent y-o-y.

Improvement in energy demand and reduced generation from hydro units have helped thermal plant load factor (PLF) increase to 66.7 per cent in April 2021 (April 2020: 42.2 per cent; March 2021: 66.5 per cent).

In April 2021, the thermal sector’s PLFs rose on a y-o-y basis across the central, state and private sectors, increasing to 78.4 per cent (April 2020: 52.0 per cent), 60.3 per cent (33.5 per cent) and 62.0 per cent (41.6 per cent), respectively, it added.