Renewables Unaffected as Thermal Generation Suffered Amid Lockdown: India Ratings

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The decrease in demand has seen electricity generation from all sources (excluding renewables) take a hit in March 2020 with thermal generation at the front.

According to a new analysis, the power demand in India declined for March and April amid the COVID-19 led lockdown, however, with the decrease in demand, electricity generation from all sources (excluding renewables) also decreased by 8.8 percent yoy to 97.7 BU in March 2020 with thermal generation taking the biggest hit by declining 11.1 percent yoy.

The analysis by India Ratings and Research (Ind-Ra), a credit rating agency under the Fitch Group has revealed that in March 2020, the all-India energy demand decreased 8.9 percent yoy to 98.8 billion units (BU) while energy supply decreased 9.2 percent yoy, resulting in the energy deficit remaining at 0.4 percent (March 2019: 0.4 percent). However, despite a reduction in power demand in March 2020, the energy demand for FY20 was higher by 1.2 percent yoy.

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“A recovery remains uncertain due to the uncertainty around any relaxation of the timelines of the lockdown period amid rising cases and its impact on economic growth,” the analysis covered by Shreyas Vaidya for Ind-Ra stated.

The analysis further stated that the thermal plant load factor (PLF) declined to 52.6 percent in March 2020 (February 2020: 60.4 percent; March 2019: 62.9 percent) on account of the lower demand. Central, state and private sector PLFs decreased to 65.2 percent in March 2020 (March 2019: 77.3 percent), 46.1 percent (58.8 percent) and 47.5 percent (55.6 percent), respectively.

Thermal PLFs were impacted most due to the decline in the power demand in March and April 2020, given the must-run status of renewables, hydro and nuclear. Thermal PLFs are expected to remain low, on account of the extension of lockdown.

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The analysis also added that the short-term power price at Indian Energy Exchange was lower at INR2.46/kWh in March 2020 (March 2019: INR3.12/kWh), as the difference in buy and sell bid volumes widened to negative 7,662 million units (MU; negative 3,321MU). The traded volume on the short-term power market increased 18.3 percent yoy to 3,971MU on account of favourable prices on the exchange for both distribution companies and open access buyers.

At the other end of the spectrum, the coal production by Coal India Limited increased 6.5 percent yoy to 84.4mt in March 2020, owing to higher production at its key subsidiaries – Mahanadi Coalfields Limited (up 6.6 percent yoy), South Eastern Coalfields Limited (up 21.8 percent yoy) and Western Coalfields (up 16.8 percent yoy). The coal inventory at thermal power stations rose 45.4 percent yoy to 45.0 mtpa, due to continued coal production, as coal is an essential service, despite the lower demand. Coal availability at pithead and non-pithead plants on 31 March 2020 remained at 19 days and 32 days, respectively.

Furthermore, transmission line addition has been lower in FY20, with 11,664 circuit kilometres (km) added (FY19: 22,437 circuit km). The length of transmission lines added in March 2020 was also lower at 1,438 circuit km (March 2019: 2,868 circuit km), with 65 percent of addition coming from the central sector.

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