Energy Demand Shows Recovery Signs Pan India: Ind-Ra

With the gradual lifting of lockdown for certain economic activities and an increase in domestic consumption with extended summer season, the energy demand is showing signs of recovery as the decline in power demand narrowed in June 2020 i.e. down 10.9 per cent, said India Ratings and Research (Ind-Ra), a leading credit rating and research agency.

The energy demand during May 2020 drop 14.9 per cent, while in April 2020 it was down by 22.3 per cent. The energy demand also showed a 2.9 per cent month-on- month improvement over May 2020, said Ind-Ra in its latest report.

According to the report, all-India energy demand contracted 10.9 per cent y-o-y, in June 2020, for the fourth consecutive month to 105.6 billion units, while energy supply also decreased 10.9 per cent yoy, resulting in the energy deficit remaining at 0.4 per cent in June 2019 to 0.5%.

Amidst coronavirus-led lockdown, the power demand declined for June 2020, on account of a decline in commercial and industrial (C&I) demand from major manufacturing states such as Maharashtra down 17.1 per cent, Gujarat down 10.2 per cent and Tamil Nadu down 10.3 per cent, it added.

With contraction in demand, electricity generation, excluding renewable, also declined 11.8 per cent y-o-y to 99.5 billion units in June 2020, in May 2020 down 17.7 per cent, with thermal generation declining 17.7 per cent y-o-y down 21.4 per cent, said the report.

It further added that, thermal PLF declined to 49.5 per cent in June 2020, in May 2020 47.9 per cent, and in June 2019 62.4 per cent due to lower demand. Thermal PLFs were the most impacted due to the decline in the power demand over 1QFY21, given the must-run status of nuclear, hydro and renewables.

Besides, the short-term power price at Indian Energy Exchange (IEX) was down at Rs 2.35 per kWh in June 2020, as compared to Rs 3.32 per kWh during the same period last year, as the difference in buy and sell bid volumes widened to negative 5,502 million units (negative 2,725 million units), Ind-Ra said.

Moreover, the increased power demand in the short-term power market was due to favourable prices on the exchanges for both distribution companies and open access buyers and the gradual lifting of lockdown.

The report also highlighted that, the transmission line addition had been lower over July 2019-June 2020, with 10,645 ckm added (July 2018-June 2019: 20,536 ckm). The length of transmission lines added in June 2020 was also lower at 392 circuit km (June 2019: 659 circuit km), with 99.7 per cent of addition coming from the state sector.