Power sector on fast-track recovery

Coal Insights Bureau

India’s Power demand is staging a consistent recovery, thanks to the increase in consumption level.

In the first week of October, Central Electricity Authority (CEA) data shows power consumption grew by 13.65 percent over previous year led by close to 14 percent growth in thermal and 42 percent rise in renewable.

This double digit growth comes on the back of 4 percent on year increase in overall power generation in September, while median peak demand recovered, by 26 percent from April lows to 170 GW back to pre lock-down levels of March.

Power consumption in the first week of October at 25.95 billion units (BU) amid buoyancy in industrial and commercial activities, up from 22.83 BU in the same period last year.

Peak power demand met, the highest supply of power in the country in a day, during October 1 to 7 was recorded at 170.04 GW on October 7. In the previous year, peak power demand met for October stood at 164.25 GW.

Gradual revival in demand

Before the pandemic, data showed that electricity consumption grew by 11.73 per cent in February. But then it posted 8.7 percent decline in March. Power demand degrew sharply as lockown was imposed, by 23.2 percent in April.

Power consumption showed improvement after lockdown was eased for economic activities from April and demand shrinkage fell with decline coming down to 14.9 percent in May, then 10.9 percent in June, followed by 3.7 percent in July and 1.7 percent in August.

Consumption reported a growth in September by 5.6 percent at 113.54 BU from 107.51 BU in the same month last year.

Peak power demand in September this year recorded a growth of 1.8 per cent at 176.56 GW, compared to 173.45 GW a year ago, the data showed.

Recovery not broad-based

The improvements in electricity consumption were not broad-based across regions despite the easing of lockdown restriction across the country.

“While it was higher on a monthly basis in the northern, western and eastern regions, the southern and north-eastern regions witnessed a decline. This indicates that economic and business activity continues to be constrained in these regions and raises concerns about the extent and sustainability of the increase in demand,” said Care Ratings in a report.

The western region, which is home to the most industrialised states of the country registered a 13 percent monthly increase in power consumption, affirming to the higher activity here. The northern and eastern regions saw electricity consumption increase by 8 percent and 4 percent respectively from that in August.

The lower power consumption in the southern states (2.4 percent lower than in August) indicates that industrial activity here has been lacklustre despite the easing of the lockdown and restrictions.

Rise in electricity generation

Not only was electricity generation in September higher than in August by 0.4 percent, it was also the first time in 7 months that it surpassed the generation in the same month of last year (3 percent higher than in September of 2019). It, however, continued to be lower than that in July by 1.8 percent.

The improvement in generation seen in September was led by coal-based power which rose to 7 months high.

Coal to power plants

Coal production and despatches to the power sector declined 3.3 percent and 10.1 percent on year, respectively, during July-August due to subdued power demand. However, coal inventory at power stations increased by 88.4 percent on year to 34.3 million tons by the end of Q2FY21.