India Ratings and Research (Ind-Ra) has published the April 2020 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.
In April 2020, the all-India energy demand decreased 22.3% yoy to 85.6 billion units while energy supply decreased 22.5% yoy, resulting in the energy deficit remaining at 0.5% (April 2019: 0.4%). The power demand declined for April 2020, amid the COVID-19 led lockdown on account of a decline in commercial and industrial demand from major manufacturing states such as Maharashtra (down 17.9%), Gujarat (down 26.1%) and Tamil Nadu (down 28.6%). The decline in demand is expected to narrow due to the relaxation in the lockdown guidelines for certain economic activities and increasing power demand from domestic consumers with the onset of the summer season.
With the decrease in demand, electricity generation (excluding renewables) also decreased 25.4% yoy to 81.5 billion units in April 2020 with thermal generation declining 28.5% yoy. Thermal plant load factor (PLF) declined to 42.4% in April 2020 (March 2020: 52.6%; April 2019: 63.1%) on account of the lower demand. Central, state and private sector PLFs decreased to 49.9% in April 2020 (April 2019: 72.6%), 33.5% (60.7%) and 44.0% (57.9%), respectively. Thermal PLFs were impacted most due to the decline in the power demand over March-April 2020, given the must-run status of nuclear, hydro and renewables Thermal PLFs are expected to remain low, on account of the extension of lockdown.
The short-term power price at Indian Energy Exchange was lower at INR2.41/kWh in April 2020 (April 2019: INR3.22/kWh), as the difference in buy and sell bid volumes widened to negative 5,378 million units (MU; negative 2,835MU). The traded volume on short-term power market decreased 7.9% yoy to 3,692MU on account of the contraction in commercial demand due to the COVID-19 lockdown.
The coal production by Coal India Limited decreased 10.9% yoy to 40.4mt in April 2020 after increasing for four consecutive months yoy, owing to lower production at its key subsidiaries – Mahanadi Coalfields Limited (down 1.8% yoy), South Eastern Coalfields Limited (down 16.2% yoy) and Western Coalfields (down 18.3% yoy) due to the lower demand leading to high coal inventory. The coal inventory at thermal power stations rose 61.1% yoy to 50.9mtpa, due to continued coal production, as coal is an essential service despite the lower demand. Coal availability at pithead and non-pithead plants on 30 April 2020 remained at 20 days and 35 days, respectively.
Transmission line addition had been lower in FY20, with 11,664 circuit kilometres (km) added (FY19: 22,437 circuit km), however the length of transmission lines added in April 2020 was higher at 509 circuit km (April 2019: 474 circuit km), with 59.3% of addition coming from the state sector.