India's renewable power generation growth races ahead of thermal

But Omicron scare could derail electricity demand recovery

India’s power demand-and-supply metrics stand at the crossroads after navigating two years of the Covid-19 onslaught and staring at uncertainty with fresh fears of Omicron. In comparison to the non-pandemic years (2018 and 2019), there has been significant growth in renewable energy (RE) generation. But for thermal power generation (coal + gas), which forms the backbone of electricity supply, growth has been underwhelming.

For the period April-November 2021, RE generation had grown 29 per cent over the corresponding period in 2018 and 22 per cent over 2019. It had fallen marginally to grow 17 per cent over the same period in 2020.

Thermal generation saw significant growth of 12 per cent in April-November 2021 over the same period last year. This was also when demand fell to a record low due to the first wave of the pandemic. In comparison with non-Covid years, growth has been dismal - barely 1.12 per cent over April-November 2018 and

4.3 per cent over 2019.

The sharp fluctuation in power demand, coupled with rising imported gas prices and dwindling domestic coal stock, hit thermal units in 2021. Gas-based power units are at a three-year low, with 18 per cent plant load factor or operating ratio and barely 26.9 billion units (BU) of power generation in April-November 2021. This is 3 per cent of the total power generation of 878 BU during this period.

Between August and October 2021, coal stocks at a majority of the thermal power plants dwindled to a critical level (less than four days). This was also when peak electricity demand rebounded from the second wave. As demand ebbed, coal reserves were at nominal levels of 10-11 days of stock with thermal power units.

Coal production has witnessed slim growth of 5 per cent over 2020 (April-November) but a minimal rise of 0.24 per cent over 2018. Coal India (CIL), however, is

confident of meeting the increased demand.

In a recent note, the national miner said it is aiming to boost coal stock at thermal power plants to over 45 million tonnes (mt) by the end of the current financial year (2021-22, or FY22).

“With the current indigenous coal stock of around 20 mt at power plants (as on December 14, 2021), a major portion bolstered by CIL, the company is focused on lifting its component to 25 mt by the end of the current month. Gradually, the stock will be scaled up to 45 mt by March-end,” said CIL.

However, demand could play a dampener.

Power units, which were expecting record power demand in the coming peak season starting March, are staring at uncertainty with the rising number of curfews, halt on reopening of offices, and sluggish rise in industrial power demand.

DAM Capital in its recent note on electricity demand analysis said, “Demand in December has been weaker than the nine months of FY22. Overall, we expect FY22 demand to be at 1,380 BU - a growth of 8-9 per cent year-on-year. Demand outlook, however, has worsened with likely lockdowns or reduced efficiency due to Omicron, especially in January.”

On the coal front, senior executives with NTPC said the Ministry of Power has allowed power plants to import coal if domestic supply falls below the critical threshold. But in the export market, the prices could inch up, with Indonesia deciding to ban thermal coal exports for a month.

Currently, the coal stock at thermal units stands at 23 mt, against 7.5 mt in October. The coal ministry, though, is of the view that domestic coal supply will be able to meetany kind of demand scenario. Again, how demand fareswill depend upon the severity of the new variant of the novel coronavirus.