India Ratings and Research (Ind-Ra) has published the May 2021 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 the recent rating actions by Ind-Ra.
Ind-Ra estimates the all-India energy demand would decline in May 2021 on a month-on-month basis, despite the peak summer season, and to remain below pre-pandemic levels. This is on account of the continuation of COVID 19 led restrictions put out by certain states till 31 May 2021.
With COVID cases peaking in May and announcements by certain states to open up from June, Ind-Ra 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% yoy at 118.4 billion units (March 2021: up 22.8%) due to the lower base effect and the early onset of summer contributing to the higher demand.
The short-term power price at Indian Energy Exchange remained high at INR3.70/kWh in April 2021 (March 2021: INR4.07/unit; April 2020: INR2.41/kWh) on account of a high demand from the short-term power market.
The electricity generation increased 42.5% yoy to 115.5 billion units in April 2021 (March 2021: up 23.5%), supported by 55.4% yoy growth in thermal generation (up 29.2% yoy), although hydro generation fell 18.4% yoy (down 7.8% yoy). Electricity generation from renewable sources increased 17.9% yoy to 11.7 billion units in April 2021, with solar generation increasing 41.5% yoy.
The improvement in energy demand and the reduced generation from hydro generation have helped the thermal plant load factor (PLF) increase to 66.7% in April 2021 (April 2020: 42.2%; March 2021: 66.5 %). In April 2021, the thermal sector’s PLFs rose on a yoy basis across the central, state and private sectors, increasing to 78.4% (April 2020: 52.0%), 60.3% (33.5%) and 62.0% (41.6%), respectively.
The coal production by Coal India Limited improved marginally by 3.8% yoy to 41.9 million tonne in April 2021, after falling for three consecutive months (March 2021: down 3.8%; February 2021: down 6.6%; January 2021: down 4.1%). The gradual recovery in power demand over June 2020-April 2021 led to a gradual rise in coal offtake over the same period, and coal inventory at thermal power stations on 31 April 2021 fell by 53.5% yoy to 23.9mtpa, owing to the improved demand and lower coal production. Although as per technical criteria the number of coal-based power plants with critical or subcritical levels was nil on 30 April 2021, there were 38 plants with less than 7 days of coal stock.
