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Electricity generation, as well as trading of power in the exchanges, have dipped in October, reflecting weakness in the Indian economy.
According to a report by brokerage house Motilal Oswal, conventional electricity generation declined 13 per cent on a year-on-year in the month of October. Demand from the western region was significantly down 20 per cent and from the south too mirrored a similar trend with a reduced generation of 14 per cent YoY.
Coal, the essential ingredient used in generating electricity, in October 2019, decreased 19 per cent on a YoY basis. However, nuclear and hydro generation increased by 32 per cent and 22 per cent.
Renewable Energy generation fell 13 per cent YoY in October and on a year to date basis (from April 1 to October 31), renewable energy generation was up 1.3 per cent. This was due to lower wind generation, according to Motilal Oswal. On a YTD, conventional generation was up a mere 1 per cent.
Volumes on Indian Energy Exchange (IEX) decreased 48 per cent YoY to 3.4b kWh. This though comes on a high base of the previous year. On a trailing 12-month basis, volumes were down 14 per cent, and average prices stood at ₹2.71/kWh in the month when compared to ₹2.77/kWh in August 2019.
The sluggishness in demand was also reflected in August and September. SBI had highlighted that electricity demand in India has contracted to an eight- year low in September. This contraction in demand impacts all the stakeholders.
According to a Kotak report, outstanding dues of Discoms have gone up from ₹35,500 crore to ₹74,700 crore. Additionally, 34 thermal power projects, representing 40 GW of capacity, is under stress, thereby exposing ₹1.74 lakh crore in bank loans.
Already, states such as Tamil Nadu and Andhra Pradesh are not paying up. For example, Andhra Pradesh's average payable days to the renewable generators rose to more than 200 by fiscal 2019 from around 100 in 2018, according to a Fitch Rating analysis. Tamil Nadu has overdue payments of ₹9,807 crore. Telangana’s record worsened to more than 280 payable days by fiscal year-end 2019 from under 190 at 2018.
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