India Ratings and Research (Ind-Ra) has published the March 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 the recent rating actions.
In February 2018, all India electricity generation (excluding from renewable sources) grew 2.6% y-o-y to 91.6 billion units (BUs). Improvement in electricity generation is largely attributed to improved generation from coal-based thermal power which improved by 3.7% y-o-y. Increase in coal-based thermal power was accompanied by a y-o-y improvement in the thermal plant load factor to 62.59% in February 2018 from 61.53% in February 2017. The improvement was driven by an increase in demand and better availability of coal.
In February 2018, all India energy requirements increased 6.5% y-o-y to 92.5BUs. Available energy also increased 6.4% y-o-y to 91.9BUs. As a result, power deficit remained low at 0.6% in February 2018 (February 2017: 0.5%).
Further, in February 2018, all India electricity peak demand increased 9.8% y-o-y to 158.3 Giga Watt (GW). Meanwhile, the peak supply improved 9.3% y-o-y to 157.2GW, leaving a peak deficit of about 1.04GW during February 2018.
The increasing power demand is also being met through increasing the generation from renewables. Total renewable generation improved substantially by 30.8% y-o-y to 7.5BUs in February 2018 on account of improved generation from wind and solar sectors due to higher capacities. While growth in the wind capacity addition remained weak at 0.6GW during 9MFY18 owing to unwillingness of the state distribution companies to sign long-term power purchase agreements at a higher feed in tariffs, solar sector witnessed a significant capacity addition of 8.0GW during 9MFY18 due to the competitive bidding prevailing in the sector.
Due to an increase in the power demand, the short-term prices increased to INR3.23/kWh in February 2018. The difference in the total buy (4,325 million units) and sell bids (6,269 million units) at Indian Energy Exchange also declined in February 2018, indicating an improvement in demand for short-term power.
In February 2018, coal production by Coal India Limited rose marginally by 0.3% y-o-y to 54.46 million tonnes. With the increasing coal production, coal stock at 113 power plants saw an upward movement at end-February 2018. Coal stock improved to 15.7 million tonnes (97.7% domestic and 2.3% imported), up 8.3% m-o-m as on 28 February 2018.
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