Lockdown constraints amid second wave of Covid-19 a downside risk for electricity demand: ICRA

The proliferation of lockdown restrictions across many states in the country, amid the second wave of Covid-19 infections, could adversely impact the electricity demand growth prospects in FY2022, rating agency ICRA said.

Based on the data available from POSOCO for April 1 to April 25, 2021, the electricity demand is higher by 40.4 per cent on a YoY basis, considering the favourable base effect, given the impact of the all-India lockdown on electricity demand in April 2020.

However, the average daily demand has slowed down from 4071 MUs (YoY growth of 48 per cent) during the first 10 days of April 2021 to 3923 MUs (YoY growth of 35 per cent) during the subsequent 15 days, considering the rising Covid-19 infections and the consequent restrictions being imposed by various state governments, the agency said.

ICRA group head and senior vice president (corporate ratings) Sabyasachi Majumdar said, “A prolonged second wave of Covid-19 infections and its impact on demand, particularly from the commercial & industrial segment in key industrialised states, remains a key downside risk for our earlier forecast of 6-7 per cent growth in electricity demand in FY2022.

This forecast of demand growth was driven by a favourable base effect, with demand witnessing a YoY decline of 1.1 per cent in FY2021 and the expected recovery in demand from the C&I segments.