Economy

Power demand, generation decline for the fourth straight quarter

| Updated on January 19, 2020 Published on January 19, 2020

Venkatesh Ganesh, Mumbai, January 19 Power demand and electricity generation in the country declined for a fourth quarter in a row due to continued 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, when compared to the same period last year.

This was similar to the November data when total conventional power generation, which is predominantly 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 in December, according to the report. RE generation increased a mere 3 per cent on a year-on-year basis, even as capacity addition continues to increase. On a year-to-date basis, solar capacity addition went up by 5.5 GW. In December, the capacity addition was 1.2 GW.

This decline in power demand was particularly pronounced in the northern and eastern regions. In both the regions, power demand was down 4 per cent on a year-on-year basis. Coal-based generation declined 4 per cent year-on-year.

Thermal power was down 4.3 per cent in December 2019, when compared to December 2018.

However, hydro and nuclear generation increased 14 per cent and 16 per cent year-on-year , on the back of decline in coal-based generation.

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

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

But this increase in production resulted in higher stocks, as demand was not proportional to this increase. Coal stocks at power plants increased to 18 days in December 2019 when compared to December 2018.

With availability of coal improving, Plant Load Factor (PLF) for NTPC plants is showing signs of improvement post 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 which determines power output. Thermal PLF in December was 51 per cent, a 3.5 per cent reduction when compared on a year-to-date basis.

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

FY 19

FY 18

FY 17

December 19

Conventional power Generation growth (%)

3.6

4.1

4.7

-2.2

All India Peak Demand (GW)

176

161

158

170

RE generation growth (%)

24.5

24.9

24

2.6

Source: MNRE, Motilal Oswal

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Published on January 19, 2020
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