India Ratings and Research (Ind-Ra) has published the August 2018 edition of its credit news digest on India’s power sector. The report highlights the trends in the power sector, with a focus on capacity addition, generation, transmission, merchant power, deficit, regulatory changes and recent rating actions.
Short-term power prices declined to INR3.46/kWh in July 2018 from INR3.73/kWh in June 2018 owing to a reduction in power demand with the onset of monsoon. The volumes traded at the Indian Energy Exchange declined 19.0% to 4,028 million units in July 2018 from 4,965 million units in June 2018. However, the prices remained high on a year-on-year basis compared with INR2.49/kWh in July 2017 owing to an increase in demand and variable cost of generation due to a rise in imported coal prices.
In July 2018, all-India energy requirements increased 7.4% yoy to 110.3 billion units and available energy increased 7.5% yoy to 109.7 billion units, leaving a power deficit of 0.5% in July 2018 (July 2017: 0.6%).
The increase in power demand was met through higher electricity generation (excluding that from renewable sources), which increased 4.5% yoy to 102.3 billion units in July 2018, supported by a healthy year-on-year rise in generation from all sources, including thermal (4.8%), hydro (2.4%) and nuclear (14.5%). Moreover, the thermal plant load factor (PLF) improved to 55.5% in July 2018 from 53.7% in July 2017.
In June 2018, total renewable generation rose 25.5% yoy to 12.8 billion units, driven by an increase in solar and wind power generation. Solar power generation increased on account of higher capacity. On the other hand, improved wind capacity PLFs were due to improved wind speed.
The monthly coal production of Coal India Limited increased 10.9% yoy to 40.6 million tonnes in July 2018, supporting thermal generation growth. However, coal inventory at power stations remained low on a year-on-year basis owing to higher coal consumption due to higher PLFs of coal-based power stations. The number of power stations with critical and supercritical levels declined to 11 in July 2018 from 15 in June 2018, albeit was higher compared with two in July 2017.
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