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The electricity demand is witnessing a gradual recovery and stood at over 96 per cent of the pre-covid level in July and further improved to close to 98 per cent in August, mainly led by recovery in rural areas.
As per ICRA findings, the electricity demand recovery on all-India level has largely been led by the northern and eastern States with year-on-year (Y-o-Y) increase of 6-13 per cent in demand in July. This was mainly driven by rural consumption, while the demand in large industrial states witnessed a 6- 15.0 per cent decline on a Y-o-Y basis, on back of slower recovery in industrial activity. Also, the recovery in the all India demand in August is on a lower base, considering the demand decline witnessed on a Y-o-Y basis in August 2019.
Girishkumar Kadam, Sector Head & Vice-President, Corporate ratings, ICRA, said, “The imposition of lockdown to control the Covid-19 pandemic led to a decline in the all-India electricity demand by 13.1 per cent in the first four months of FY2021. While the monthly demand recovered from 85 billion units (BUs) in April to 112 BUs in July, it remained lower on a Y-o-Y basis.”
“Also, while the peak demand recovered from 133 GW in April to 171 GW in July, it remained lower by 3.3 per cent compared to July 2019. This was also because of the re-imposition of lockdown restrictions in many parts of the country, due to rise in Covid-19 infections. Given the energy demand trends so far across the key states, ICRA continues to maintain its outlook for about 5-6 per cent decline in the all-India electricity demand in FY2021 over FY2020. The decline in demand is expected to supress the thermal PLF on an all India level to about 50-51per cent in FY2021 against 56 per cent in FY2020.”
The decline in demand has adversely impacted revenues and cash collections for the power distribution utilities (discoms), especially given that the bulk of the consumption decline has come from high tariff paying industrial and commercial consumers. The consequent revenue gap for the discoms at all-India level is estimated to increase by about ₹420-450 billion in FY2021.
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