Power Demand Surges due to Extended Summer; Spot Prices Remain Stable as Supply from All Sectors Improves
Mumbai: India Ratings and Research (Fitch Group) has published the July 2019 edition of its credit news digest on India’s power sector. The report highlights the trends in the power sector, with a focus on capacity addition, generation, transmission, merchant power, deficit, regulatory changes and the recent rating actions.
In June 2019, All-India energy demand grew 7.4% yoy and energy supply increased 7.5% yoy, resulting in lower deficit of 0.4%. The All-India thermal plant load factor (PLF) increased to 62.2% in June 2019 (June 2018: 59.4%), due to an improvement in the private and state sectors’ PLF by 660bp and 380bp, respectively. The increase in PLF was driven by extended summer season with increased demand and sufficient coal supply. The central sector PLF further declined to 66.9% in June 2019 (May 2019: 68.5%, April 2019: 74.6%).
The short-term power price at Indian Energy Exchange (IEX) remained stable at INR3.32/KWh in June 2019 (May 2019: INR3.34/KWh) but declined 11.1% yoy due to lower demand in the short-term market. The total power trade at IEX fell 15% yoy to 4,211 million units in June 2019. The fall in short-term demand was on account of improved supply from long-term contracts as the generation improved yoy across all sectors including thermal (8.7%), hydro (7.9%) and renewables (4.7%). The thermal sector, which remains the highest contributor to the overall generation (83%), witnessed an improvement in total generation to 112.8 billion units due to higher yoy availability of both domestic and imported coal. Coal imports increased 28% yoy to 5.7 million tonnes in June 2019 and increased 41% to 18.4 million tonnes in 1QFY20.
While coal inventory at thermal power stations rose 72.4% yoy to 26.6 million tonnes in June 2019, it declined from the peak of 31.6 million tonnes in April 2019 due to higher electricity generation owing to summer season and elections. Subsequently, while the number of thermal power plants with sub-critical level of coal decreased to five in June 2019 from 15 in June 2018, the number increased from zero in March 2019. The coal inventory decreased from 18 days of consumption equivalent on 31 March 2019 to 15 days on 30 June 2019.
Transmission line addition continued to be sluggish with 659 circuit kilometres added in June 2019 (June 2018: 1,905 circuit kilometres) with 98% of addition coming from state sector.
Data Source: Central Electricity Authority, IEX, Infraline, Coal India Limited
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