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Rising demand to keep electricity prices elevated

Rising demand to keep electricity prices elevated

Rising demand to keep electricity prices elevated

New Delhi, Oct 2 Rising demand is expected to keep electricity prices elevated in short-term. According to India Ratings and Research (Ind-Ra), the all-India energy demand continued to recover in August 2021 by 17.8 per cent YoY to 129.4 billion units (BU).

"There was a recovery of demand in all the major manufacturing states such as Maharashtra, Gujarat and Tamil Nadu," Ind-Ra said in a report.

"Additionally, the all-India energy demand increased marginally in the first 20 days of September 2021 to 77BU, indicating a continued recovery. The all-India demand during 5MFY22 surpassed the pre-Covid levels at 597BU."

As per the report, led by continued improvement in demand, the average short-term price at Indian Energy Exchange increased significantly to Rs 5.06 per kWh during August 2021, as the difference in the buy and sell bids turned positive.

"The average short-term price for a day peaked at Rs 9 per kWh during August, and the average short-term price for the first 20 days of September remained high at Rs 4.08 per kWh."

Besides, Ind-Ra cited that with the recovery in demand, electricity generation (excluding renewables) increased 16.8 per cent YoY to 120.8BU in August 2021.

"Given the higher dependency on coal-based power with almost all other sources of power already on must run status, the plant load factor of coal-based power plants improved to 59.27 per cent in August 2021."

"Thermal generation contributed around 80 per cent to the overall power in August 2021."

In addition, the report said that electricity generation from renewable sources improved by 13.6 per cent in August 2021 to 16.4BU, led by a 35 per cent YoY improvement in the solar power generation to 5.24BU, despite a marginal 2 per cent YoY decline in wind power generation to 8.75BU.

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