Energy demand declined in March and is expected to do so in April as well led by the national lockdown that shuttered all businesses barring essential services following the novel coronavirus outbreak.
Demand for electricity fell 8.9 percent over the previous year to 98.8 billion units in March while supply decreased 9.2 percent year-on-year to 99.4 billion units, with the energy deficit remaining at 0.4 percent, according to data provided by the Central Electrical Authority. The contraction in demand comes after three consecutive months of growth till February.
Shreyas Vaidya, analyst at India Ratings and Research, wrote in a note that demand recovery remains uncertain due to the uncertainty around relaxation of lockdown period timelines amid rising Covid-19 cases and its impact on economic growth.
Thermal plant load factors—a metric for capacity utilisation—are expected to remain low on account of the extension of lockdown, he said. Coal-fired plants account for more than 70 percent of India's electricity demand.
Power generation fell by 8.2 percent over the previous year to 107.4 billion units in March as peak demand declined 23-25 percent during the lockdown in the country, Central Electrical Authority data showed. Generation in April, according to Emkay Global Research, is expected to decline by 32.2 percent.
Anuj Upadhyay, analyst at Emkay Global Research, said in a report that the national lockdown led to a 23-25 percent decline in power demand and generation as offtake from commercial and industrial consumers that account for 40 percent of the total demand was very low. Demand, however, is expected to witness a gradual pick-up in the coming weeks with the onset of peak summers and some relaxations in the green zone areas, Upadhyay said.
The Union Power Ministry made a proposal to PFC/REC to provide special loans to distribution companies to help them clear power generators' outstanding bills amounting to Rs 90,600 crore. Falling power demand has led to discoms not purchasing much of power, thereby increasing the dues.
The BSE Power Index has fallen by nearly a fourth this year, while the S&P BSE Sensex declined by 23 percent.
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