Power demand declines for fourth quarter in a row

Power demand and generation declined for the fourth quarter in a row in the country, indicating a slowdown in the economy.

Total conventional power generation, which is predominantly fuelled by coal, was down 6 per cent on a year-on-year basis in November, according to a report from brokerage firm Motilal Oswal. The decline was broadbased, with power generation down across regions, the report added.

Renewable energy

On a year-to-date basis, conventional energy generation went up a mere 0.2 per cent. Renewable energy output too saw a decline of 6 per cent over the November 2018 figures.

GDP growth has slid continuously in the last six quarters to 4.5 per cent (in the last quarter) as against the 7 per cent, which the government had predicted. This has resulted in a slowdown, impacting the power sector, industry watchers said.

Power demand in the south was down by 4.3 per cent, 4.9 per cent in the west, 3.2 per cent in the north and 4.4 per cent in the east.

“ Industrial demand has been very low and there is no significant pick up as yet,” said Rupesh Sankhe, Vice-President, Elara Capital.

Coal supply disruption

Coal supply to power plants were disrupted following flooding at Coal India’s mines. Approximately, 70 per cent of India’s power requirements are met by coal-based power plants.

At the end of November, coal stocks at power plants were for 15 days, compared with 12 days in October, which reflected the lower thermal generation and demand. Higher demand results in lower stocks. Coal consumption by the power sector was down 17 per cent on a yearly basis to 46.8 million tonnes in October.

Plant load factor (PLF), one of the key metrics that determines power output, declined 46 per cent in November 2019 over the same period last year, the report added. Thermal PLF came in at 52, a 10 per cent decline and coal-based generation came in at 51, a decline of 11 per cent. Hydro and nuclear generation increased 24 per cent and 13 per cent, respectively, in November.

Energy trading

Also, this has impacted energy trading in November. Volumes on the Indian Energy Exchange decreased 0.4 per cent YoY to 3.4b kWh. On a trailing twelve month basis, volumes were down 14 per cent. The average prices came went up marginally to Rs 2.85/kWh in November, in comparison to Rs 2.71/kWh in October.

Net capacity addition of renewables during the last 7 months has come in at 8.8 GW, which is healthy. Production is picking up and demand is expected to improve slightly, Sankhe said.