MUMBAI: With economic activities slowly picking pace, the all India energy demand improved in June as compared to May, says India Ratings.
The power demand for June was, however, 10.9 percent lower than the corresponding period of 2019.
"The energy demand is showing signs of recovery as the decline in power demand narrowed in June as compared to May and April which was down 14.9 percent and 22.3 percent, respectively, due to the gradual lifting of lockdown for certain economic activities and an increase in domestic consumption with the extended summer season," the agency said.
In June 2020, the all-India energy demand contracted 10.9 percent y-o-y for the fourth consecutive month to 105.6 billion units, while energy supply also decreased 10.9 percent, resulting in the energy deficit remaining at 0.4 percent as compared to June 2019, when it stood at 0.5 percent.
The power demand declined for June 2020, amid the coronavirus-led lockdown, on account of a decline in commercial and industrial demand from major manufacturing states such as Maharashtra, Gujarat, and Tamil Nadu.
With the contraction in demand, electricity generation, excluding renewables, also declined 11.8 percent y-o-y to 99.5 billion units in June 2020 with thermal generation declining 17.7 percent year-on-year (y-o-y).
Thermal PLF (plant load factor) declined to 49.5 percent in June 2020 on account of the lower demand.
"Thermal PLFs were the most impacted due to the decline in the power demand over 1QFY21, given the must-run status of nuclear, hydro, and renewables," it noted.
The short-term power price at Indian Energy Exchange was lower at Rs 2.35 per unit in June 2020 as compared to Rs 3.32 per unit last year, as the difference in buy and sell bid volumes widened to negative 5,502 million units.
"The increased power demand in the short-term power market was on account of favorable prices on the exchanges for both distribution companies and open access buyers and the gradual lifting of lockdown," India noted.
Meanwhile, the coal production by Coal India decreased 12.8 percent y-o-y to 39.2 million tonnes in June for the third consecutive month, owing to lower production at its key subsidiaries - Mahanadi Coalfields, South Eastern Coalfields and Central Coalfields led by the lower demand, also resulting in a high coal inventory.
The coal inventory at thermal power stations rose 77.3 percent y-o-y to 47.2 million tonnes per annum, due to continued coal production, as coal is an essential service despite the lower demand.