India Ratings and Research (Ind-Ra) has published the November 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 October 2020, the all-India energy demand increased 11.5% yoy for the second consecutive month, after declining over March-August 2020 to 109.6 billion units (September 2020: up 4.0%). This was led by an improvement in the demand from the northern region (up 12.9%; September 2020: up 6.2%) and the western region (up 18.3%; up 9.2%), due to the further lifting of lockdown for certain economic activities. Even though the energy demand has been recovering, the demand over April-October 2020 came in 6.0% yoy lower (1QFY21: down 15.9%; 1HFY21: down 8.7%).
Electricity generation (excluding renewables) increased 8.9% yoy to 107.7 billion units in October 2020 (September 2020: up 4.4%), owing to 13.3% yoy growth in thermal generation, although hydro generation was lower 10.3% yoy. Thermal plant load factor (PLF) increased to 55.5% in October 2020 (October 2019: 49.5%; September 2020: 55.2%) on account of the increased demand and sufficient coal supply at power plants. Central, state and private sector PLFs increased to 62.5% in October 2020 (October 2019: 56.4%), 44.2% (41.3%) and 59.5% (50.8%), respectively. The thermal PLF over April-October 2020 was lower at 50.5% (April-October 2020: 56.6%), most impacted by the decline in power demand, given the must-run status of nuclear, hydro and renewables. Electricity generation from renewable sources in October 2020 increased yoy by 36.6% to 10 billion units with a 27% yoy increase in solar and wind capacity In October 2020. The wind generation increased yoy by 75% to 3.6 billion units, after registering a yoy decline over April-September 2020.
The short-term power price at Indian Energy Exchange increased marginally yoy, although continued to be low at INR2.74/kWh in October 2020 (September 2020: INR2.69/kWh; October 2019: INR2.71/kWh) with a 62% yoy increase in the traded volumes witnessed in the day-ahead market. The short-term price increased yoy as the difference in buy and sell bid volumes contracted to negative 3,640 million units (negative 5,848 million units).
The coal production by Coal India Limited (CIL) increased 18.5% yoy to 46.8mt in October 2020 (September 2020: 40.5mt), owing to the higher production at its key subsidiaries – Mahanadi Coalfields Limited (up 44.8% yoy), Central Coalfields Limited (up 33.7% yoy) and South Eastern Coalfields Limited (up 19.7% yoy). The recovery in power demand over April-October 2020 led to a gradual rise in coal offtake over the same period (October 2020: 50.50mtpa; April 2020: 39.06mtpa) and a reduction in coal inventory at thermal power stations (October 2020: 33.9mtpa; April 2020: 50.9mtpa) although it was higher 78.4% yoy. Despite the recovery in demand, CIL’s coal supply to the power sector was lower 6.6% yoy in April-October 2020 at 236.97 million tonnes.
The transmission line addition was lower at 11,921 circuit kilometres (km) over April-October 2020 (April-October 2019: 13,451 circuit km). The length of transmission lines added in October 2020 also lower at 380 circuit km (October 2019: 685 circuit km), with addition coming solely from the state sector.