Covid-19 lockdown effect: Electricity use in August 2.2% lower than July

Lower electricity volumes consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu in FY20 had dragged down the country’s annual demand growth to a six-year low of 1.3%.

Power consumption in the country fell 1.6% year-on-year (y-o-y) to 109.7 billion units (BU) in August as industrial and commercial activities remained muted in the aftermath of the nationwide lockdown imposed to contain the coronavirus outbreak. Electricity consumption in August was even 2.2% lower than July, with the monsoon reducing domestic home-cooling demand.

Power demand in states like Gujarat, Maharashtra, Tamil Nadu and West Bengal — where industrial and commercial consumers comprise more than 40% of electricity usage — were lower by 3.4%, 6.2%, 5.6% and 10.9%, respectively. However, states such as Rajasthan and Madhya Pradesh — where agricultural power consumption is high — recorded annual increases of 9% and 6.4%, respectively. Among states with 40%-plus industrial and commercial consumption, Punjab recorded a growth of 6.3%.

Muted power demand growth can be symptomatic of the industrial slump prevailing much before the onset of the coronavirus disruptions, indicating that it might take more time for electricity consumption to reach pre-Covid levels.

Lower electricity volumes consumed by highly industrialised states like Gujarat, Maharashtra and Tamil Nadu in FY20 had dragged down the country’s annual demand growth to a six-year low of 1.3%.

Since most of the revenues of state-run power distribution companies (discoms) come from industrial and commercial customers, lower usage by these categories means additional pressure on these already-distressed entities. Industrial and commercial consumers use about 40% of the total electricity supplied, but contribute about 50% of the discoms’ revenue share.

Similarly, as reported earlier by FE, consumption of diesel in the first 26 days of August was 14.2% lower than the levels recorded in the same period in July. On an annual basis, diesel sales were down 22.4% to 4 MT in the 26 days of August. While rural agricultural demand is now mainly driving diesel consumption, floods in Bihar and north eastern states has moderated the speed of demand recovery.