Power demand shows signs of recovery as total generation rises by 11%

Feb recorded second straight month of demand uptick across the country

The country’s power sector is on the recovery trajectory following the second straight month of demand uptick in February after four successive months of decline.

Conventional electricity generation rose 11 per cent year-on-year (y-o-y) in February.

“The demand uptick was broad-based and across states. Coal-based generation increased 10 per cent y-o-y, hydro generation rose 18 per cent while nuclear generation was up eight per cent”, a report by Motilal Oswal noted.

Coal stocks at power plants increased, led by ramp-up in coal production. Output of Coal India Ltd (CIL) was up 14 per cent y-o-y in February. Stocks at power plants stand at 37 million tonnes (mt), corresponding to 21 days of consumption. The coal inventory has shown a marked improvement over 26 mt recorded in the corresponding period of FY19.

Availability at NTPC’s power stations at Sipat and Korba that were grappling with critical coal stocks has recovered after heavy monsoons. However, Plant Load Factor (PLF) at NTPC’s plants remained low at 67 per cent owing to muted power demand.

During April-February period of FY20, the country added fresh capacity of 5,700 Mw in thermal power. This was marked by concomitant retirement of 1,600 Mw of retirement in capacities of obsolete thermal power units.

Coal despatches to the power units inched up two per cent y-o-y in January to 57.3 mt. Coal consumption by the power plants, too, went up four per cent y-o-y in the same period to 54.4 mt.

Recovery in the power sector was manifest in the short-term market as Da Ahead Market (DAM) volumes on the Indian Energy Exchange (IEX) spiked by 53.5 per cent y-o-y in February. Average prices at the exchange increases two per cent month-on-month to Rs 2.92 per unit.