Electricity generation slows down

by Manasi Swamy

Electricity generation from conventional sources fell for the second straight month to 95.3 billion kWh in November 2020 from 107.7 billion kWh in October 2020, as per the tentative data released by the Central Electricity Authority (CEA).

Electricity generation was moderately affected during the lockdown as demand from residential and agricultural segment remained afloat. These segments collectively account for 40 per cent of electricity consumption in India. Demand from the industrial and the commercial segment started improving once the lockdown restrictions were relaxed. Electricity generation returned to its pre-Covid level in June 2020 and started reporting year-on-year (y-o-y) growth from September 2020. The growth rate accelerated from 4.8 per cent in September to 8.9 per cent in October, before receding to 1.7 per cent in November.

Generation fell sequentially in October and November. The month-on-month decline in November was seasonal in nature. November brings in the winter season, thus pulling down aggregate household demand for electricity in India from its October-level every year. Reports from the Indian Meteorological Department (IMD) suggest a harsh winter this year, particularly in the north. Temperatures dipped below minimum in several parts of the country this November.

The northern region witnessed an 11.1 per cent y-o-y fall in electricity generation in November 2020. Besides, coal supplies to thermal power generation plants in Punjab ran dry as movement of the feedstock on railways was disrupted by farmers’ protest against the new farm bills. The state witnessed a steep 63.3 per cent contraction in electricity generation compared to a year ago. Haryana too suffered a steep 37.9 per cent y-o-y contraction in electricity generation. Delhi, on the other hand, reported a robust 20.3 per cent increase in electricity generation over the year-ago month in November 2020.

Electricity generation in the southern region suffered an even steeper y-o-y decline of 12.8 per cent in November 2020. All states in the southern region, but for Kerala suffered a y-o-y contraction in the range of 13 to 17 per cent. Kerala, on the other hand, reported a 10.3 per cent rise in electricity generation in November 2020.

The western region witnessed a smart 15.1 per cent growth in electricity generation in November 2020 compared to the same month a year ago. Maharashtra reported a 10.2 per cent increase, while Madhya Pradesh and Chattisgarh posted robust growth of 25.6 per cent and 20 per cent, respectively. Gujarat lagged behind its neighbouring states, recording a modest four per cent increase in generation in November 2020. This was partially a base effect as Gujarat had seen a 2.3 per cent rise in electricity generation in November 2019, whereas the remaining three western states had suffered a 15-20 per cent fall.

The western and the southern region are industrial hubs of India. Hence, electricity requirement in these regions took a larger beating during the lockdown. As industrial activity gained traction during the festive season, generation in the western region improved. It reported a 16.5 per cent rise during September-November 2020 over its year-ago level. But, generation in the south failed to catch up. It remained 14.1 per cent below its year-ago level during the same period.

The eastern and north eastern region did report a y-o-y growth in electricity generation in November 2020. But, the growth slowed down to 3.2 per cent and 6.9 per cent, respectively, from around 12 per cent in the previous month.

The fuel-wise break-up shows, the slowdown in generation was led by hydroelectricity. In November, hydro power generation fell to 8.4 billion kWh from 13.1 billion kWh in October. While this fall was seasonal, the generation was also lower than its year-ago level of 10 billion kWh by a steep 16.1 per cent. Thermal power generation grew by four per cent y-o-y in November 2020. Nuclear electricity declined by 1.1 per cent, this being its lowest y-o-y fall in the last five months. Total conventional electricity generation in November 2020, at 95.3 billion kWh, was 1.7 per cent higher than its year-ago level.

The first fortnight of November witnessed a 5.2 per cent growth in electricity generation compared to its year-ago level. But, in the second fortnight, generation declined y-o-y by 2.2 per cent. Average daily shortfall declined from 2.4 million kWh in the first fortnight to 2.1 million kWh in the second, thus suggesting that the weakness has stemmed from the demand side post Diwali.

1. https://economicoutlook.cmie.com/kommon/bin/sr.php?kall=wshreport&tabcode=001071005000000000&repnum=63743&frequency=W&colno=1