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India Ratings and Research (Ind-Ra) has published the June 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 continue to see a recovery in June 2021 on a yoy basis. However, this will be below the pre-pandemic levels, due to the extension of COVID-19 restrictions, especially in southern states. The southern states saw only a marginal increase of 1.9% yoy of energy requirement during the first 20 days of June due to strong restrictions, given the higher cases than the rest of India. Overall, the all-India energy demand met during the first 20 days of June was 74.4 billion units (June 2020: 69.7 billion units; May 2019: 79.6 billion units). Given the energy deficits remaining close to nil, Ind-Ra estimates power demand to increase by 7%-7.5% yoy in June 2021 (May 2021: 7.5%). Furthermore, the demand increase should improve in July 2021, given the settling down of the second covid wave by end-June 2021 and opening up of commercial establishments by the last week of June 2021.
In May 2021, the all-India energy demand was higher by 7.5% yoy at 110.4 billion units (April 2021: down 6.7%) due to a lower base effect, however lower on a mom basis due to the COVID-19 led restrictions put out by certain states during the month.
The short-term power price at Indian Energy Exchange fell to INR2.83/kWh in May 2021 (April 2021: INR3.70/unit; March 2021: INR4.07/unit; May 2020: INR2.57/kWh) on account of an increased gap in the demand-supply of power in the short-term of negative 4,641MUs (April 2021: negative 1,444 MUs; March 2021: negative 66 MUs; April 2020: negative 4,443MUs)
The electricity generation increased 8% yoy to 103.96 billion units in May 2021 (April 2021: down 10%), supported by 12.8% yoy growth in thermal generation (down 15.6% mom), although hydro generation fell 16% yoy (up 42.8% mom). Electricity generation from renewable sources increased 10.3% yoy to 14.1 billion units in May 2021, with both wind and solar generation increasing 12.4% and 12.6% yoy. The wind generation saw an increase owing to higher wind speeds in western region of the country.
The improvement in energy demand on a yoy basis and the decreased generation from hydro generation have led to the thermal plant load factor to increase to 54.32% in May 2021 (May 2020: 47.9%; April 2021: 66.7 %). During May 2021, the thermal sector’s plant load factor rose across the central, state and private sectors, to 63.8% (May 2020: 55.18%), 45.4% (40.04%) and 53.7% (49%), respectively.
Owing to the higher generation by the thermal sector, the coal production by Coal India Limited improved marginally by 1.6% yoy to 42.1 million tonne (mt) in May 2021. The same allowed for a larger coal offtake, which increased by 38% yoy to 55.1mt and led to a decline in the coal inventory at thermal power stations on 30 May 2021 by 41.9% yoy to 28.8mt. The critical or subcritical levels of coal stock as per technical criteria continued to be nil on 30 May 2021 (30 May 2020: nil; 31 April 2020: nil), however, there were 21 plants with less than 7 days of coal stock.