India’s power generation still far away from normal, says GlobalData

Due to the country-wide COVID-19 lockdown during April and May 2020 in India, electricity generation witnessed a reduction owing to reduced electricity demand. Subsequently, the year-on-year generation saw a reduction of 23.1% and 16.2%, respectively, during these two months. However, with the the lockdown easing out gradually, the year-on-year change has been about 15% lower in June 2020. But, the relaxation in the lockdowns was futile as it could not increase the power demand. As the economic activities are gradually resuming, the electricity generation would take a while to return to the normal levels, says GlobalData, a leading data and analytics company.

With the decline in demand, the focus shifted away from coal-based generation. The plant load factor (PLF) of coal-based generation plants had been seeing a drop from March 2020. In March, the year-on-year PLF dropped by 16.4% which was more than 30% in April.

Somik Das, Senior Power Analyst at GlobalData, comments: “ The utilization rates of coal-based power plants are economically modeled to have a utilization rate of over 70%. However, with the lockdown in place, the utilization rate was almost half of this in April 2020. With the government identifying more than 30 plants to be non-performing assets, the under-utilization rate would mean further coal-based plants stand the likelihood of being delayed.”

As a future outlook, the government is looking at installing 450GW power capacity by 2040. The push for renewables is strong, with renewable tariffs more than 60% lower than the first-year tariffs set for proposed coal plants. This year, more than 70% of the annual additions are likely to be from renewable sources.

Das concludes: “Looking at the future trend, the government would need to phase out coal by 2040 to adhere to the Paris Agreement. This would mean that the percentage of coal in the total generation would need to reduce by 3-4% every year.”

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