Electricity demand grows 7.4 pc in July, thermal PLF lower: ICRA

3-Sept-2018

Rating agency ICRA today said electricity demand growth remains strong in July 2018 at 7.4 per cent but thermal plant load factor moderated by pick up in generation from wind and hydro sources. “The all-India electricity demand grew by 7.4 per cent in July 2018 on a year-on-year (Y-o-Y) basis as per the provisional estimates of the Central Electricity Authority (CEA). While the growth moderated from the high of 9.1 per cent reported in June 2018, it continued to remain strong,” a statement said.

However, the ICRA said that the all-India thermal plant load factor (PLF) or capacity utilisation moderated to 55.5 per cent in July 2018 from 60.7 per cent in June 2018, due to higher generation from wind and hydro sources, leading to backing down of thermal units. Nonetheless, the thermal PLF is higher on a Y-o-Y basis against 54.3 per cent in July 2017.

Commenting on the trend, Girishkumar Kadam, Sector Head and Vice President, ICRA Ratings, says, “Apart from a few months in between, the monthly electricity demand growth has remained higher than 5 per cent over the past 15 months, reflecting a sustained recovery in demand. In our view, this demand growth trend is likely to continue, given the focus of the central government on improving rural household electrification. Nonetheless, the thermal PLF remains sensitive to the generation from renewable energy sources and coal supply available from domestic sources.”

According to the statement, the thermal power segment did not witness any capacity addition in the first four months of FY2019, while the hydro and renewable energy segment added 110 MW and 1,742 MW, respectively during this period.

The ICRA expects the capacity addition from the thermal segment to remain subdued and to be mainly driven by the central and state sector. With an improved tariff competitiveness and strong policy thrust, the renewable energy segment would remain a major driver of capacity addition in the power sector in the medium term.

The production and off-take of coal from Coal India Limited (CIL) increased by 10.7 per cent and 8.9 per cent on a Y-o-Y basis in July 2018. Also, the coal production by CIL is up by 14.1 per cent on a Y-o-Y basis for the first four months of FY2019.

However, it said that the average coal stock position across the coal-based power plants in the country continued to remain low at 11 days as on July 31, 2018, against the normative stock level of 22 days, due to rising demand and logistical challenges in increasing the coal off-take.

The average spot power tariff on the Indian Energy Exchange moderated to Rs 3.46 per unit in July 2018 from Rs 3.73 per unit in June 2018, which is lower than average price of Rs 4.76 per unit witnessed in May 2018. This can be attributed to the improved energy availability with pick-up in generation from wind and hydro sources and moderation in absolute energy demand from the levels reported in May 2018, it added.

Source: PTI