Electricity Demand to take Lasting 7-17% hit due to COVID-19: TERI

By Ayush Verma/ Updated On Wed, Jul 22nd, 2020

State energy transition study

A new report released by TERI suggests the demand for electricity in India is expected to be 7 – 17 percent lower by 2025 due to the COVID-19 economic shock

A new report released by The Energy Resource Institute (TERI) gives a picture of how electricity demand would be affected by the economic effects of the Coronavirus pandemic in the mid-term to 2025. It details how the demand for electricity in India is expected to be 7 to 17 percent lower by 2025 due to the COVID-19 economic shock than it would have been in a scenario without the COVID-19 shock. The wide range of potential outcomes represents the high degree of uncertainty around the pace of the economic recovery from the shock.

In the central scenario, all of India’s states will be affected by slower demand growth. Electricity demand in India’s 10 largest power consuming states is expected to be 5-15 percent lower than it would have been without the economic shock caused by COVID-19, according to the report ‘Bending the Curve: 2025 Forecasts for Electricity Demand by Sector and State in the Light of the COVID Epidemic’.

The report was launched on July 21, 2020, alongside TERI’s other report the ‘Renewable Power Pathways: Modelling the Integration of Wind and Solar in India by 2030’ by RK Singh, Minister of State (IC) of Power and Renewable Energy.

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The minister said that in his view, there would hardly be any decline in power demand. “Despite the lockdown, we have rebounded and will continue to do so. I don’t see electricity demand suffering in the long term… It will be growing at a slower pace but it will be back,” he said.

Key findings of the report:

The COVID-19 pandemic is likely to lead to a persistent downwards revision in India’s GDP trend, relative to the pre-crisis trend. Over the previous 15 to 20 years, the rate of economic growth has been closely associated with the rate of electricity demand growth. It is, therefore, safe to assume that slower post-COVID economic growth will lead to slower electricity demand growth
According to TERI’s report, in the 10 largest electricity consuming states, expected power demand for 2025 is 5-15 percent lower than it would have been without the COVID-19 shock.
As a result of all this, policy-makers, generators, power distribution companies (Discoms), and investors need to prepare for a future in which the decline in electricity demand growth persists. In particular, the financial health of Discoms and the sustainability of the prevailing cross-subsidy maybe, even more, pressing issues in a mid-term scenario of sustained muted growth in commercial and industrial demand.

Dr. Ajay Mathur, Director General, TERI, said, “Electricity demand would possibly be between 7 and 17 percent less than what was expected till 2025, depending on the kind of economic recovery that takes place. In short, we will see a reduction in demand in the years to come.”