The lockdown restrictions over many states in the country between the second wave of Covid-19 infections may negatively impact the electricity demand growth prospects in FY2022. According to the Power System Operation Corporation Limited (POSOCO) data for April 1-25, the electricity demand is higher by 40.4% on a Y-o-Y basis, viewing the favorable base effect, because of the all-India lockdown impact on electricity demand in April 2020.

 

shineprojects-Power-plant-blog178

 

Nevertheless, the average daily demand has decreased down from 4,071 million units (MUs) having a Y-o-Y growth of 48% during the first 10 days of April 2021 to 3,923 MUs having a Y-o-Y growth of 35% during the succeeding 15 days, analyzing the surge in Covid cases and consequent restrictions that were imposed by various state governments, Sabyasachi Majumdar, Group Head & Senior Vice-President, Corporate ratings, ICRA, says that the lengthened second wave of Covid-19 infections and its impact on demand, especially from the commercial & industrial segment in key industrialized states, continues to be a key downside risk for the previous forecast of 6-7% growth in electricity demand in FY2022. The impact of lower demand growth will be more pronounced on the thermal generation and distribution segments. The all-India thermal PLF declined to 54.5% in FY2021 from 56.0% in FY2020 due to the slump in electricity demand. While the PLF was assumed to grow to 58.0% in FY2022 with the recovery in demand growth, the PLF levels remain subdued. Moreover, a large part of the private IPP capacity of 20 GW is open to volume and pricing risks in the short-term market. While the spot power tariffs on the Indian Energy Exchange observed a recovery reaching ₹4.1 per unit in March 2021 from less than ₹3.0 per unit in March FY2021, the prices have slightly moderated to ₹3.7 per unit in April 2021. The spot power tariffs are expected to continue in the range of ₹.3.0 – 3.5 per unit in the near term.

Given the subdued thermal PLFs, lack of visibility in the signing of new power purchase agreements (PPAs) for thermal IPPs and modest tariffs in the short-term power market, the credit outlook for the private thermal power segment continues to be negative. On the other hand, the impact is expected to be comparatively low for the renewable IPPs, given the must-run status for these plants.

  •   
  •   
  •   
  •