India’s power demand that had nosedived in the past two months is now returning to pre-lockdown levels amid the rising temperature and gradual pickup in industrial activity.
The grid operator’s data shows that country’s electricity demand reached its peak of 160 GW (Gigawatts) on Saturday last week.
The strict nationwide lockdown announced on 25 March resulted in domestic industrial activities and businesses coming to a halt. According to the International Energy Agency (IEA), India’ 40-day long national lockdown resulted in a 30% reduction in the country’s energy demand.
The gradual transition
The situation is however reversing as the heatwave since 22 May has led to increased use of coolers and air-conditioners in the households. Also, the recovery in industrial activities due to considerable relaxations in the fourth phase of lockdown (from 18 May) has resulted in a surge in domestic power demand.
During April, India’s peak power demand hovered between 2700-2900 MU (million units) a day and touched an average of 3300 MU/day in the first ten days of May. While it went up to 3600 MU/day during 11 May-20 May period, it is anticipated to be higher in the last week of May.
Support to the coal sector
The power sector is India’s biggest coal-consumer with 70% electricity generation coming from coal-fired plants.
The decline in power demand due to COVID-19 has been reflected in the plunge in Coal India’s dispatch to the power sector in March (7% y-o-y), April (22% y-o-y) and also fall in country’s coal imports.
However, the pickup in power demand has supported the domestic coal consumption, giving hopes to the coal sector which is currently struggling with the rising inventory.
The current stock at pitheads of CIL stands to be at 29 days which used to be at 17 days around the same time last year, CEA data shows. However, with the surge in power demand, the CIL’s coal stock will also go down, thus helping in easing financial pressure.
Outlook
According to the market participants, although the present picture looks comparatively brighter against the past, the overall power demand of the country would remain subdued in FY21 even after the lockdown is relaxed. This can be attributed to under-utilization across the commercial and industrial sectors, a lingering effect of COVID-19.
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