India Ratings and Research (Ind-Ra) has published the September 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 August 2018, all-India energy requirements increased 6.0% yoy to 112.0 billion units (BUs) and available energy increased 6.2% yoy to 111.4BUs, leaving a power deficit of 0.5% (August 2017: 0.7%). The peak demand deficit also improved to 0.5% in August 2018 (August 2017: 2.0%).
The increase in power demand was met through higher electricity generation (excluding that from renewable sources), which increased 11.7% yoy to 105.7BUs, especially driven by a healthy year-on-year rise in generation from hydro (20.0%) and nuclear (18.1%) while thermal generation remained almost at the same levels. The thermal plant load factor thus declined to 56.4% in August 2018 from 57.9% in August 2017.
The total renewable power generation rose 21.8% yoy to 15.8BUs in July 2018, on account of improved generation from the wind sector due to higher capacities and wind speeds. Solar energy generation increased to 2.6BUs in July 2018 from 1.7BUs in July 2017. Wind power generation increased to 11.4BUs in July 2018 from 9.8BUs in July 2017.
The monthly coal production of Coal India Limited increased 3.1% yoy to 38.8 million tonnes in August 2018, supporting thermal generation growth. Coal inventory at power stations improved 23.7% yoy, unlike the previous months. This was on account of higher generation from hydro and renewables, which led to lower reliance on thermal generation for meeting the incremental demand. The number of power stations with critical and supercritical levels declined to 11 in August 2018 from 12 in August 2017 and remained stable month-on-month.
Short-term power prices continued to decline for the third month since June 2018 to INR3.34/kWh in August 2018, owing to a reduction in power demand with the onset of monsoon and a lower demand from the states impacted by floods. However, prices increased on a year-on-year basis on account of a higher demand and variable cost of generation from thermal power plants. The higher variable cost was due to an increase in imported coal prices.
Data Source: Central Electricity Authority, Indian Energy Exchange and Coal India
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