India Ratings and Research (Fitch Group): Energy Demand Slows Due to Winters; Power Prices Soften
Ind-Ra-New Delhi: India Ratings and Research (Ind-Ra) has published the December 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 recent rating actions.
In November 2018, short-term power prices declined to INR3.59/kWh compared to the last two months and increased marginally from INR3.55/kWh in November 2017. The decline in the prices was on account of the ongoing winter season, leading to a lower electricity demand.
In November 2018, all-India energy requirements increased 4.9% yoy and available energy increased 5.2% yoy, leaving a power deficit of 0.5% (November 2017: 0.7%). The power supply in November 2018 was met through higher hydro and thermal generation. Although generation from renewables also increased 16.0% yoy on account of an increase in installed capacity, Ind-Ra estimates an overall decline in the combined plant load factor (PLF) of solar and wind capacities, leading to lower generation. The total power generation increased 5.8% yoy in November 2018.
Higher power demand and coal production led to thermal PLFs improving to 61.6% in November 2018 (November 2017: 59.5%). While the central and state sector PLFs improved year-on-year in November 2018, PLFs for the private sector declined as the sector remained exposed to fuel supply availability risks.
Thermal generation in November 2018 was supported by an increase in monthly coal production by Coal India Limited (up 1.6% yoy) to 52.1mt. Coal inventory at power stations improved 26.2% yoy, driven by higher production and lower seasonal electricity demand. Although coal production and total inventory levels improved, the number of power plants with subcritical level of coal inventory increased to 23 in November 2018 (November 2017: 15), on account of the uneven distribution of coal across power stations and prioritised coal supply to central and state power stations.
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Data Source: Central Electricity Authority, The Indian Energy Exchange and Coal India
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