India Ratings and Research (Ind-Ra) has published the February 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 short-term power price at Indian Energy Exchange continued its improving trend on a yoy basis (January 2021: INR3.18/kWh; January 2020: INR2.86/kWh) with a 17% yoy increase in the traded volumes witnessed in the day-ahead market. With an improvement in demand, the price in the day-ahead market has increased further to INR3.39/kWh in February 2021 as the difference between buy and sell bids narrowed down to negative 2,121 million units (February 2020: negative 5,138 million units).
The all-India energy demand deficit has been on an improving trend since June 2020 (April 2020 till the first 21 days of February 2021: down 2.9% yoy; 9MFY21: down 3.9%; 1HFY21: down 8.7% yoy; 1QFY21: down 15.9% yoy). In January 2021, the all-India energy demand increased 5.0% yoy to 106.5 billion units (December: up 4.9%; November 2020: up 3.7% yoy), backed by a strong demand from the northern region (up 5.0% yoy) and western region (up 12.1% yoy). In January 2021, the peak power demand reached its all-time high of 190.3GW, backed by a revival in economic activities.
The electricity generation increased 5.4% yoy to 108.4 billion units in January 2021 (December 2020: up 4.6% yoy; November 2020: up 1.9% yoy), supported by 7.1% yoy growth in thermal generation (up 5.8% yoy; up 4.1% yoy), although hydro generation fell 8.0% yoy (down 8.2% yoy; down 17.0% yoy). Electricity generation from renewable sources increased 7.6% yoy to 11.5 billion units in January 2021, with wind and solar generation increasing 7.3% yoy and 5.5% yoy, respectively. The solar generation over 10MFY21 improved 12.4% yoy.
The improvement in energy demand and the reduced generation from hydro and renewables sources have helped the thermal plant load factor (PLF) increase to 61.2% in January 2021 (January 2020: 57.7%; December 2020: 57.1%). In January 2021, the thermal sector’s PLFs rose on a yoy basis across the central, state and private sectors, increasing to 71.2% (January 2020: 66.5%), 55.5% (51.7%) and 58.0% (55.8%), respectively. Despite showing a yoy improvement during September 2020-January 2021, thermal PLFs over 10MFY21 was lower at 52.5% (10MFY20: 56.0%), 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 4.1% yoy to 60.5mt in January 2021, after showing yoy growth between August to December 2020. The recovery in power demand over April-January 2021 led to a gradual rise in coal offtake over the same period (3QFY21: 154.4mtpa; 2QFY21: 134.2mtpa; 1QFY21: 120.6mtpa), and coal inventory at thermal power stations on 31 January 2021 fell by 2.0% yoy to 34.0 mtpa (April 2020: 50.9mtpa), owing to the improved demand and lower coal production in January 2021.
The transmission line addition improved to 9,892 circuit kilometres (km) over 10MFY21 (10MFY20: 9,594 circuit km), though it was lower at 798 circuit km in January 2021 (January 2020: 1,757 circuit km).