Economy

Sluggish economy results in muted power demand in August

Our Bueau Mumbai | Updated on September 25, 2019 Published on September 25, 2019

Power demand in India declined by 1 per cent on a yearly basis due to weakness in the economy.

According to a report from Kotak Institutional Equities, the decline in energy demand was across all regions in August 2019, except Northern India. Power demand in north India grew 1 per cent on a year-on-year basis. Further, renewable power generation was 15.6 BU in July, a decline of 1 per cent yearly.

Western India saw which constitutes 26 per cent of the overall demand, saw the highest decline of 3 per cent on a year-on-year basis, the report said. This also showed up in the PLFs, or Plant Load Factor (which is a measure of how much a plant is being used) for coal-based capacities declined sharply to 51 per cent in August 2019 along with gas-based capabilities operating at a lower utilisation of 21 per cent.

Among southern states, Tamil Nadu and Andhra Pradesh both saw reduced energy demand of 4.2 and 0.3 per cent respectively. However, Karnataka which reported demand growth of 14 per cent and 10 per cent, on a year-on-year basis.

West Bengal, Rajasthan and Gujarat also saw a decline in power demand with 13 and 10 per cent respectively. Bihar reported the highest demand growth of 17.5 per cent on a yearly basis, followed by Uttar Pradesh, where the increasewas 13.7 per cent.

While the demand for power declined in August, overall market has grown at 5 per cent CAGR over the past decade and total generation capacity was 356 GW in March 2019.

Power outages in the country increased to 10 hours per month in August 2019. Karnataka and Chhattisgarh were the worst affected, according to a report by Kotak Institutional Equities.

Further, the volume of power trading went up by more than 10 per cent in June 2019 when compared to last year. Long term Power Purchase Agreements (PPAs) went up from 90,072 units to 100,777 units.

Amongst the key power companies, Adani Power’s generation declined by 5 per cent, NTPC by 8 per cent in August 2019 and Tata Power declined by 7.5 per cent in its Mundra plant. JSW Energy reported a 3 per cent increase in power generation due to a decline in global coal prices.

However, the story was different for Indian coal. Coal India reported a 10.5 per cent decline in dispatches in August 2019 and production volume declined by 10.4 per cent when compared to the same period last year. Also, railways which carry the freight declined to Rs 1.9 per ton kilometre in August.

Published on September 25, 2019
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