India Ratings and Research (Ind-Ra) has published the April 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 lockdowns on account of an increase in Covid 19 cases in various states could impact all-India energy demand growth recovery in 1QFY22, although all-India energy demand is expected to be higher on a yoy basis due to the lower base effect as the country was under a stricter lockdown during the same period last year with subsequent gradual improvement in power demand thereafter. In March 2021, the all-India energy demand was higher by 22.8% yoy at 122 billion units (February 2021: up 0.2%; January 2021: up 5.0%). The early onset of summer season also contributed to the higher demand. The energy demand over FY21 was lower by 0.8% yoy (9MFY21: down 3.9% yoy; 1HFY21: down 8.7% yoy; 1QFY21: down 15.9% yoy).
The short-term power price at Indian Energy Exchange continued its improving trend on a yoy basis (March 2021: INR4.07/unit; March 2020: INR2.46/kWh) with average monthly price in April 2021 at INR3.7/kWh.
The electricity generation increased 23.5% yoy to 118.6 billion units in March 2021 (February 2021: up 0.1%; January 2021: up 5.4%), supported by 29.2% yoy growth in thermal generation (up 1.9% yoy; up 7.1% yoy), although hydro generation fell 7.8% yoy (down 14.0%; down 8.0% yoy). Electricity generation from renewable sources increased 10.1% yoy to 11.9 billion units in March 2021, with solar generation increasing 21% yoy. The renewable generation over FY21 improved 5.8% yoy to 146.4 billion units.
The improvement in energy demand and the reduced generation from hydro and renewables sources have helped the thermal plant load factor (PLF) increase to 66.5% in March 2021 (March 2020: 51.5%; February 2021: 63.3 %). In March 2021, the thermal sector’s PLFs rose on a yoy basis across the central, state and private sectors, increasing to 80.4% (March 2020: 63.5%), 63.2% (45.7%) and 57.9% (46.5%), respectively. Despite the onset of summer season, the imposition of stricter lockdowns in major manufacturing states could impact demand from industrial segment which will impact thermal PLFs. The thermal PLFs over FY21 was lower at 54.5% (FY20: 56%), mainly impacted by a decline in power demand, given the must-run status of nuclear, hydro and renewables.
The coal production by Coal India Limited fell by 3.8% yoy to 81.2mt in March 2021 for the third consecutive month (February 2021: down 6.6%; January 2021: down 4.1%). The gradual recovery in power demand over FY21 led to a gradual rise in coal offtake over the same period (4QFY21: 164.2 mtpa; 3QFY21: 154.4mtpa; 2QFY21: 134.2mtpa; 1QFY21: 120.6mtpa), and coal inventory at thermal power stations on 31 March 2021 fell by 35.8% yoy to 28.9 mtpa , owing to the improved demand and lower coal production.
The transmission line addition picked up substantially in FY21 and improved to 16,750 circuit kilometres (km) over (FY20: 11,664 circuit km) and it was higher at 4,381 circuit km in March 2021 (March 2020: 1,438 circuit km).
