Economy

Covid-19: Lockdown leads to fall in power demand

Venkatesh Ganesh Mumbai | Updated on March 31, 2020 Published on March 31, 2020

Energy consumption declined 21-22% since second week of March

Even as the power demand was rising in the first two months of 2020, the lockdown as a result of the Covid-19 outbreak has reversed the trend.

Energy consumption has declined by 21-22 per cent to 2,628 GWh since the second week of March, when the lockdown was announced, as per a report by brokerage firm Emkay.

The lockdown, which has resulted in bringing economic activity to a standstill, is expected to have greater impact in the coming weeks with more stringent measures being adopted by the government. “This would further bring down industrial and commercial activity in the country,” the report said. The numbers are indicative of the overall power demand; as yet there is no break-up between industrial and consumer power demand.

“A prolonged lockdown could lead to the temporary shutting down of factories, which will be reflected in electricity consumption. There is a slight drop in electricity consumption compared to the same week in 2019. We would wait to see this gap widen to draw any conclusions about an industrial slowdown,” said Anurag Singh from Kotak Institutional Equities. So far, power equipment maker CG Power has announced shutting down of factories.

Capacity addition

The slowdown also coincides with slowdown in capacity addition. According to a monthly power tracker report by Kotak, capacity addition, which stood at 12.7 GW till December 2019 (year-to-date) slowed down in January and February, with only 600 MW being added in those months.

Capacity addition in FY20 is pegged at 13.3 GW, with the all-India capacity at 369.5 GW. This is an increase of 6 per cent when compared on a yearly basis, of which addition from renewables contributed 9 GW of power. In comparison, FY19 saw net capacity addition of 15.6 GW, with 2.2 GW of coal-based capacities being decommissioned, the Kotak report said.

Further, of the 738 MW added in February, renewable capacity contributed 438 MW while hydro contributed the balance 300 MW, and dominated by 12 GW capacity added in the renewable segment.

Initial increase

To put it in perspective, before Covid-19, all-India power demand in February increased by 11 per cent on a yearly basis, as a result of a lower base and an extra day in the leap year.

Increase in energy demand in February was above 10 per cent on a yearly basis, across all regions except the East, where energy demand increased by only 2.9 per cent. The western region has increased the most by 14.4 per cent. Southern and northern regions grew at 11 per cent. Punjab and Madhya Pradesh reported 23 per cent and 20.5 per cent yearly increase in energy demand.

The Plant Load Factor (PLF), a key metric for assessing plant capacity utilisation, improved to 60 per cent in February, along with gas-based capacities reporting a 21 per cent increase in utilisation. However, continued weakness in power demand has had a bearing on dispatches from Coal India, even as coal inventory across plants remain healthy at 21 days.

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Published on March 31, 2020
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