The country’s energy demand is showing signs of recovery, as the decline in power demand narrowed in July 2020 (down 4.1 per cent; June 2020: down 10.9 per cent; May 2020: down 14.9 per cent), due to the gradual lifting of lockdown for certain economic activities, according to India Ratings & Research (Ind Ra).
The demand also showed a 6.1 per cent month-on-month improvement in July 2020. In the same month, all-India energy demand contracted 4.1 per cent year-on-year (yoy) for the fifth consecutive month to 112.4 billion units. Energy deficit was low at 0.1 per cent (July 2019: 0.6 per cent) as energy supply remained robust. Power demand declined for July 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 5.6 per cent), Gujarat (down 9.6 per cent) and Tamil Nadu (down 15.5 per cent).
With recovery in demand, electricity generation (excluding renewables) improved slightly 0.1 per cent yoy to 108.5 billion units in July 2020 (June 2020: down 11.8 per cent; May 2020: down 17.7 per cent), due to a 13.2 per cent yoy improvement in hydro generation, while thermal generation declined 2 per cent yoy (down 17.7 per cent). Thermal PLF declined to 52.9 per cent in July 2020 (June 2020: 49.5 per cent; July 2019: 55.6 percent) on account of the lower demand. Central and state sector PLFs declined to 61.9 per cent in July 2020 (July 2019: 64 per cent) and 44.3 per cent (51.6 percent). Thermal PLFs were the most impacted due to the decline in power demand over YTDFY21, given the must-run status of nuclear, hydro and renewables.
The short-term power price at Indian Energy Exchange continued to be low at ₹2.47/kWh in July 2020 (July 2019: ₹3.38/kWh; June 2020: ₹2.35/kWh; May 2020: ₹2.57/kWh), as the difference in buy and sell bid volumes widened to negative 4,534 million units (negative 2,545 million units). The increased power demand in the short-term power market was on account of favourable prices on the exchanges for both distribution companies and open access buyers and the gradual lifting of lockdown.
Coal production by Coal India Limited decreased 3 per cent yoy to 37.4 million tonnes (mt) in July 2020 (June 2020: 39.2 mt; May 2020: 41.4 mt) for the fourth consecutive month, owing to lower production at its key subsidiaries — Western Coalfields Limited (down 8.6 per cent yoy), South Eastern Coalfields Limited (down 8.7 per cent yoy) and Central Coalfields Limited (down 18.1 per cent yoy), led by the lower demand, also resulting in a high coal inventory. The coal inventory at thermal power stations rose 66.6 per cent yoy to 40.6 mtpa, due to continued coal production. Coal India’s coal supply to the power sector declined 21.7 percent yoy in Q1 FY21 to 93.5 million tonnes, the Ind Ra report states.
The transmission line addition had been lower in January-July 2020, with 6,166 circuit kilometres (km) added (January 2019-July 2019: 11,197 circuit km). The length of transmission lines added in July 2020 was also lower at 1,248 circuit km (July 2019: 1,624 circuit km), with 45.4 percent of the addition coming from the central sector.
