Teji Mandi Explains: Electricity demand remains strong in April
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Electricity demand remained in strong momentum and grew by 39% YoY in April. However, looking from a pre-COVID-19 perspective, the growth was still flat. On a two-year CAGR basis, it was still at just 2%.

Strong Industrial Demand

Strong demand from industrial states led power demand to beat the trend and managed to remain in surplus despite the COVID-19 wave. As per an Edelweiss report, all regions reported 30% plus growth. Demand from industrial states like Gujarat, Maharashtra, and Tamil Nadu witnessed major growth above ~40% on average.

Overall, electricity generation also grew by 38% with thermal growing at 55%. Thermal continues to be a major source of electricity production in India, with 235 GW of installed capacity out of the overall capacity of 382 GW of electricity generation. The contribution of renewables is also increasing in India's overall energy mix with an installed capacity of 94 GWs. While contributions from other fuel sources like nuclear and hydro have continued to decline.

Falling Over Dues of Discoms: A Temporary Relief?

In a major relief, the overdue of discoms have reduced drastically in the last year, i.e., from Rs 1.02 lakh crore to 69,300 crores. It is mainly on account of the liquidity relief scheme of Rs 79,000 crore till May 21. However, the situation could again go out of the hands if the current restrictions impact the collections of discoms.

The rising cost of coal is also a major concern for the recovery in discoms. International coal prices have increased by 50% in the past four months, impacting the electricity cost.

Strong Demand Anticipated in FY22

The Edelweiss report anticipates power demand to remain strong at least in the April - June quarter of FY22 (April - September 2021) owing to the lower base of last year.

However, demand could see a temporary setback if lockdowns are intensified across states. Overall, it expects power demand to grow at 7.5% for the entire year.

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