India's power demand has remained unimpacted despite the restrictions and curfews in various Indian states. For April 2021, India’s power demand is trending up 42% as compared to April last year. The demand is even higher at 9% from April 2019 levels which were free from the pandemic impact.
Even the most affected states like Gujarat and Maharashtra are reporting strong demand for power. The demand is up 48% and 36% YoY in these states respectively. In fact, power demand has been in a strong uptrend since September 2020 end of the first lockdown, growing by 8% YoY in 2HFY21. It made up for the dull first half and FY21 ended with a decline of only 0.7% YoY in FY21.
IEX Volumes On a Strong Footing
Indian Energy Exchange is reporting strong volumes on its platform. In the first 22 days of April, electricity volumes on IEX are up by 98% YoY. Major demand has come from Andhra Pradesh, Telangana, and Gujarat.
These volumes are likely to go up even further. Gujarat Urja Vikas Nigam Limited, one of the largest buyers on IEX, has recently floated a tender to buy 1,000MW on a medium-term contract. It is an indicator of strong demand for electricity and it will derive the volumes on IEX.
DISCOM Debt Crisis Easing Off
The rising debt of DISCOMs has always been a major concern for power generators, impacting their receivables and weakening their balance sheets.
However, the situation has improved somewhat as funds from the PFC-REC liquidity package have begun to flow. As per the emerging reports, the government has so far disbursed around Rs 76,000 crore under this scheme out of the sanctioned amount of Rs 1.36 lakh crore. It has helped in declining 15% of total overdue from DISCOMs.
Sustaining demand and money flowing through from the PFC-REC-led scheme are the major positives for the power segment.
But, with rising COVID-19 cases, power demand in the coming months remains susceptible to the changing circumstances. If the demand falls, it will also impact the recovery of DISCOMs and they are likely to be back to square one with their debt position.