India’s energy demand improves in June 2020; economic activities picking up: India Ratings

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With economic activities slowly picking pace, the all India energy demand improved in June 2020 as compared to May 2020, says India Ratings. The power demand for June was, however, 10.9 per cent lower than the corresponding period of 2019.

“The energy demand is showing signs of recovery as the decline in power demand narrowed in June as compared to May and April which was down 14.9 per cent and 22.3 per cent, respectively, due to the gradual lifting of lockdown for certain economic activities and an increase in domestic consumption with the extended summer season,” the ratings agency said.

In June 2020, the all-India energy demand contracted 10.9 per cent y-o-y for the fourth consecutive month to 105.6 billion units, while energy supply also decreased 10.9 per cent, resulting in the energy deficit remaining at 0.4 per cent as compared to June 2019, when it stood at 0.5 per cent.

The power demand declined for June 2020, amid the coronavirus-led lockdown, on account of a decline in commercial and industrial demand from major manufacturing states such as Maharashtra, Gujarat and Tamil Nadu.

With the contraction in demand, electricity generation, excluding renewables, also declined 11.8 per cent y-o-y to 99.5 billion units in June 2020 with thermal generation declining 17.7 per cent year-on-year (y-o-y).

Thermal PLF (plant-load factor) declined to 49.5 per cent in June 2020 on account of the lower demand. “Thermal PLFs were the most impacted due to the decline in the power demand over 1QFY21, given the must-run status of nuclear, hydro and renewables,” it noted.

The short-term power price at Indian Energy Exchange was lower at Rs 2.35 per unit in June 2020 as compared to Rs 3.32 per unit last year, as the difference in buy and sell bid volumes widened to negative 5,502 million units.

“The increased power demand in the short-term power market was on account of favourable prices on the exchanges for both distribution companies and open access buyers and the gradual lifting of lockdown,” IndRa noted. The coal inventory at thermal power stations rose 77.3 per cent y-o-y to 47.2 million tonnes per annum, due to continued coal production, as coal is an essential service despite the lower demand.

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