India Ratings and Research (Ind-Ra) has published the September 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.
The all-India energy demand continued to recover in August 2021 by 17.8% yoy to 129.4 billion units (BU). There was a recovery of demand in all the major manufacturing states such as Maharashtra (21.3%), Gujarat (23.5%) and Tamil Nadu (15.1%). Additionally, the all-India energy demand increased marginally in the first 20 days of September 2021 to 77BU (September 2020: 76BU), indicating a continued recovery. The all-India demand during 5MFY22 surpassed the pre-Covid levels at 597BU (5MFY21: 515BU, 5MFY20: 578BU).
Led by the continued improvement in demand, the average short-term price at Indian Energy Exchange increased significantly to INR 5.06/kWh during August 2021 (August 2020: INR2.43/kWh), as the difference in the buy and sell bids turned positive to 404 million units (August 2020: negative 5,041 million units). The average short-term price for a day peaked at INR 9/kWh during August, and the average short-term price for the first 20 days of September remained high at INR4.08/kWh.
With the recovery in demand, electricity generation (excluding renewables) increased 16.8% yoy to 120.8BU in August 2021 (July 2021: up 4%). Given the higher dependency on coal-based power with almost all other sources of power already on must run status, the plant load factor of coal-based power plants improved to 59.27% in August 2021 (August 2020: 49.01%; July 2021: 56.73%). Thermal generation contributed around 80% to the overall power in August 2021 (August 2020: 77%). The thermal sector’s plant load factor rose on a yoy basis across the central, state and private sectors, increasing to 69.45% (August 2020: 58.47%), 54.38% (38.27%) and 72.94% (51.03%), respectively.
Electricity generation from renewable sources improved by 13.6% in August 2021 to 16.4BU, led by a 35% yoy improvement in the solar power generation to 5.24BU, despite a marginal 2% yoy decline in wind power generation to 8.75BU.
Coal production by Coal India increased by 14.6% yoy to 42.6 million tonne (mt) (July 2021: no change), owing to the higher requirement by thermal power plants. The same led to a 9.6% yoy improvement in coal offtake to 48.6mt. However, the higher offtake has led to a reduction in the coal inventory at thermal power stations by 66.2% yoy to 12.8mt. The speedy recovery in power demand post the second wave of COVID-19 coupled with lower-than-adequate domestic coal production has led to the reduction in coal inventory levels at various power plants, with the coal stock declining to 9.3mt on 20 September 2021. This also increased the numbers of thermal plants with critical or subcritical levels of coal stock as per technical criteria to 99 as on 20 September 2021.
