Power generation, demand continue to slide for fourth straight quarter

Power demand and generation declined across the country for the fourth quarter in a row because of the slowdown in the economy.

The trend was seen across both conventional and renewable energy (RE). According to a Motilal Oswal report, conventional electricity generation in December declined 2 per cent from the same period last year.

This was similar to the November data when total conventional power generation, which is mainly powered by coal, was down 6 per cent on a year-on-year basis.

Further, on a year-to-date basis, generation was down slightly by 0.1 per cent. Overall power generation was also down by 2 per cent year-on-year for the month of December, according to the report. RE generation increased a mere 3 per cent on a yearly basis, even as capacity addition continues to increase.

Solar power

On a year-to-date basis, solar capacity addition went up by 5.5 GW. In the month of December, the capacity addition was 1.2 GW. This decline in power demand was particularly pronounced in the northern and eastern regions. In both regions, power demand was down 4 per cent on a yearly basis. Coal-based generation declined 4 per cent on a yearly basis.

Thermal power was down 4.3 per cent in December 2019 over the previous year. However, hydro and nuclear generation increased 14 per cent and 16 per cent, respectively, on a yearly basis, on the back of the decline in coal-based generation.

Coal stocks

Coal stocks, which were hit by heavy rains last year, is now seeing signs of revival. Coal production by Coal India in December went up 1.6 per cent but continues to be down 5.8 per cent on a year-to-date basis.

“The pickup in production should improve demand slightly going ahead,” said Rupesh Sankhe, Vice-President, Elara Capital.

But this increase in production resulted in higher stocks, as demand was not proportional to the increase. Coal stocks at power plants increased to 18 days in December over December 2018.

With the availability of coal improving, Plant Load Factor (PLF) for NTPC plants is showing signs of improvement after the heavy monsoon. Some plants of NTPC saw a decline in PLF of 10 percentage points to 66 per cent on a yearly basis. PLF is one of the key metrics that determine power output. Thermal PLF in December was 51 per cent, a 3.5 per cent reduction on a year-to-date basis.

All this will impact discom dues, which has already touched Rs 80,000 crore at a time when India’s GDP has gone down to 4.2 per cent.