According to a new report published by the Energy and Resources Institute, the Covid-19 pandemic will have a lasting impact on India’s electricity demand, which will continue to face significant dents for years to come.
The report said the COVID-19 crisis will lead to a sharp recession in the current year, adding, “The COVID-19 shock will lead to substantially slower electricity demand growth and a lower level of total demand even several years after the shock.”
The report identified three scenarios for the Indian economy up to 2025. The Baseline Scenario sees a sharp 6.4% contraction in Indian GDP in 2020-2021, a rebound in economic growth in 2021-2022 and a return to the pre-COVID trend in economic growth.
The L-Shaped and V-Shaped scenarios are respectively a more pessimistic and optimistic version of the Baseline Scenario. “In the Baseline Scenario, the electricity demand for 2025 is 11 per cent below the level it would have been by then without the COVID-19 shock. In the L-Shaped Scenario, electricity demand is 17 per cent below the level of the counterfactual without the COVID-19 shock,” the report said.
The study recommended that policy makers, generators, DISCOMS and investors should prepare for a future in which the shock to electricity demand continues to grow.
The rate of economic growth in India has been closely linked to the rate of growth in electricity demand over the last 15-20 years. As the economy has followed a generally slowing trend following the 2008-09 global financial crisis, the growth rate of electricity demand has also slowed.
