Power generation in the country fell 12.7% year-on-year (y-o-y) in October, recording the third straight month when electricity produced was less than the corresponding year-ago month.
The government has blamed this year’s extended monsoon for the sudden fall in power demand across the country in August-September. “In the month of October there was a decline (in power demand) because the rainfall was 35% above normal in October, 2019 resulting in reduction in demand in agriculture sector and the reduction in cooling requirement in the domestic and commercial sectors,” according to an official statement.
While the government did not cite the recent industrial slowdown as one of the causes of falling power demand, electricity consumption has been falling in these three months in Maharashtra, Tamil Nadu and Odisha, where industrial and commercial users usually account for around 40% of electricity usage. Power demand also declined in high-industrial electricity consuming states such as Gujarat, Jharkhand and Punjab in October.
Power generation in the country fell 12.7% year-on-year (y-o-y) in October, recording the third straight month when electricity produced was less than the corresponding year-ago month. Renewable energy-based plants also decreased their generation by 6.4% y-o-y in the same month, in spite of a 15% rise in its installed capacity, indicating states are backing down power procurement from such sources. Overall electricity consumption in the first 15 months of November has also fallen nearly 8% y-o-y.
The power ministry hopes that with the passage of the monsoon season, thermal power plants would get a chance to improve their utilisation levels as “the generation from hydro and wind has started reducing” and for the rest of the fiscal, “electricity demand will largely be met from thermal power stations”. Utilisation level of coal power plants touched an all-time low in October, with their average plant load factor (PLF) recording 48.9% amid falling electricity usage.
It is difficult to identify the exact areas where power demand is falling because sector wise consumption data is not available on monthly basis while central government agencies grapple with the poor quality data they receive from the states.
A section of the industry feels that the fall in demand could also stem from the Union power ministry mandating financially weak state-owned electricity distribution companies (discoms) to open and maintain adequate letter of credit (LC) as payment security to power plants from August 1.