Promonique
Promonique
Rayzon
Rayzon
EPR Subscription Banner
EPR Subscription Banner
Home » News » Energy demand growth to rise upwards by 8.0 – 8.5 percent

Energy demand growth to rise upwards by 8.0 – 8.5 percent

By October 5, 2021 5:40 pm IST

Energy demand growth to rise upwards by 8.0 – 8.5 percent
.

All-India thermal PLF level is estimated to show a modest improvement to about 58.5-59.0 percent in FY2022, against the earlier estimate of 57.0-58.0 percent.

The all-India electricity demand during the period from April 2021 to September 2021 has increased by 12.7 percent to 707 billion units (BU) on a year-on-year basis supported by a lower base, improvement in economic activity and lower than normal monsoons leading to higher demand from the agriculture segment during July and August 2021. The energy demand in H1 FY2022 also remained higher by 2.9 percent against the same in H1 FY2020 (pre-COVID), led by relatively sharper recovery in the energy demand as reflected from 8.4 percent growth in Q2 FY2022 against Q2 FY2020. 

Commenting further, Girishkumar Kadam, Senior Vice President & Co-Group Head – Corporate ratings, ICRA, said, “Based on the energy demand growth trends seen during last six-month period, the electricity demand growth outlook for FY2022 is revised upwards to 8.0 – 8.5 percent, supported by low base effect in FY2021 and faster than expected recovery in demand post-COVID second wave seen in April and May 2021. Nonetheless, any emergence of potential third COVID wave and consequent lockdown restrictions remains monitorable. In turn, the all-India thermal PLF level is estimated to show a modest improvement to about 58.5-59.0 percent in FY2022, against the earlier estimate of 57.0-58.0 percent.” 

Notwithstanding the recovery in electricity demand, the all India average thermal PLF level is likely to remain subdued, at below 60.0 percent in the current fiscal. Thus, the sector outlook on the thermal power generation segment is negative. This is also because of the lack of visibility in signing of new power purchase agreements (PPAs) for thermal IPPs and an upward pressure on cost of power generation with the strengthening in fuel price levels and tighter environmental compliance requirements. As a result, a sustained improvement in electricity demand growth as well as thermal PLF level (above 60 percent) remain the critical factors to monitor, from the outlook perspective on thermal generation. 

Advertising

EPR Android App Banner

The spot power tariffs on day ahead market of the Indian Energy Exchange witnessed a sharp recovery to ₹3.7 per unit in 6M FY2022 from about ₹2.8 per unit in FY2021 led by better than expected recovery in electricity demand and coal supply constraints witnessed in August and September 2021. With expected normalisation in domestic coal availability, the average spot tariffs are likely to remain at about ₹3.5 per unit in the near term. This is still relatively higher than the historical average level of ₹3.2 per unit over the last 10-year period. Further, spot tariffs remain inherently volatile as seen in the past, depending on the fuel availability, the renewable energy generation and demand level.

Vikram V, Vice President & Sector Head – Corporate Ratings, ICRA, adds, “Delays in tariff determination process by state regulators continues to remain an area of concern given that tariff orders have been issued for utilities in only 19 out of the 28 states for FY2022 so far and the tariff hikes remain modest. Tariff orders have not been issued in the key states such as Rajasthan, Telangana, Tamil Nadu and West Bengal. Given that coal as a fuel contributes about 70 percent of all India energy generation, distribution utilities remain exposed to an upward pressure on cost of power purchase. In case of upward revision in domestic coal price by 10 percent and strengthening in imported coal price seen by about 70 percent since April 2021, the cost of power supply is estimated to increase by about 1.0-1.5 percent for distribution utilities at all India level, depending upon the mix of supply from imported coal-based plants. 

As a result, timely pass-through of fuel and power purchase cost variation through the regulatory framework remains extremely critical for the state utilities. ICRA’s outlook for the distribution segment remains Negative given the continued weakness in financial position of most state distribution utilities amid the operating inefficiencies and inadequate tariffs.” 

For more info: https://www.icra.in/

Cookie Consent

We use cookies to personalize your experience. By continuing to visit this website you agree to our Terms & Conditions, Privacy Policy and Cookie Policy.

Tags: News
Android App
Android App

Events

RenewX
RenewX
Wiretech 2025
Wiretech 2025
Power Gen
Power Gen
India Green Energy Expo
India Green Energy Expo

Our Sponsors

Our Sponsors

Wika
Wika
Ramelex
Ramelex
Rayzon Solar Pvt Ltd
Rayzon Solar Pvt Ltd
Akansha
Akansha
Andritz Hydro Pvt Ltd
Andritz Hydro Pvt Ltd
Vyoma Switchgear
Vyoma Switchgear
Skipper Limited
Skipper Limited
Joint Well
Joint Well
Kp Group
Kp Group
Credence Solar
Credence Solar
Grew Solar
Grew Solar
Nirmal
Nirmal
Meco Instruments Pvt Ltd
Meco Instruments Pvt Ltd
Novasys
Novasys
HPL Electric Power
HPL Electric Power
Sun Bond
Sun Bond
Supremesolar
Supremesolar
Vsole Solar
Vsole Solar
Elev8 Lift
Elev8 Lift
Power trac Group
Power trac Group
Omicron
Omicron
Ganz Electric
Ganz Electric
Eplan
Eplan
Aeron Composite Pvt Ltd
Aeron Composite Pvt Ltd
Eaton
Eaton
A-1 ELECTRICALS
A-1 ELECTRICALS
Ashone Technologies
Ashone Technologies
MENNEKES Electric India
MENNEKES Electric India
PRAMA HIKVISION INDIA
PRAMA HIKVISION INDIA
Motwane Manufacturing
Motwane Manufacturing
Sun Cables
Sun Cables