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Power demand crosses 200GW milestone

On 7th Jul’21, all-India peak power demand crossed the significant milestone of 200GW between 12-12:45PM. In the past week, power demand has witnessed substantial growth due to a combination of factors including lockdown easing, hot weather conditions in Northern and Eastern regions, agricultural demand and higher supply by state discoms due to availability of low cost power on exchanges. Significantly, demand for thermal power continues to be strong, being consistently >130GW in every 15-min interval (on real-time basis) since 5th Jul’21. Higher thermal demand is expected to further improve growth in coal offtake. Renewable generation is peaking at 30-35GW during solar hours but remains substantially low and erratic during non-solar hours. As a result, load balancing is being done through higher hydro and thermal generation. We expect this high demand phase to sustain until the strengthening of monsoons particularly in North India (mid-July). We expect action in the RE space to pick up soon. Recent 1.8GW SECI solar tender was oversubscribed by >5x, indicating the huge appetite and competition in the RE space. Regulations/policies to improve sector dynamics will continue. NTPC, CESC, PTC India and Coal India remain our top picks.

Power demand crosses 200GW:

On YoY basis, all-India daily/peak demand is higher by an average 18% YoY during FY22-TD (till 6th Jul’21). There has been spectacular growth in Jul’21 in all-India peak as well as daily demand. On an average, while peak demand in Jul’21 is higher by 18%/11%, daily energy demand is higher by 17%/12%, over the same period in Jul’20/Jul’19. On 6th Jul’21, all-India peak/energy demand was 197GW/4,470MU, while on 7th Jul’21, peak demand crossed 200GW between 12PM and 1PM.

Key factors behind surge in demand:

1) Higher temperatures in Northern and Eastern regions, 2) easing of lockdown in most states, 3) agricultural demand (kharif sowing season has commenced), 4) higher residential demand owing to cooling, higher appliance usage during the day as a consequence of work from home, 5) higher power supply by discoms due to availability of low cost power on exchanges, and 6) demand growth from households electrified in the past three years

Daily demand nearing 4,500MU; thermal demand is continuously >130GW over the past two days:

Analysing the daily 15-minute load curve as well, we find that peak power demand has improved from 170-175GW in mid-Jun’21 to over 192GW in the past three days. Further, demand crossed 200GW on 7th Jul’21 during 12PM to 12:45PM period. Average daily demand has improved from 160-165GW during midJun’21 to 185-190GW during the current week. Thermal (coal + lignite) generation remains high during both solar and non-solar hours at 130GW-140GW in the past two days. This trend is expected to continue and push coal offtake growth higher. Renewable generation is higher during solar hours, but remains erratic and unpredictable during non-solar hours. Between 10AM-3PM, renewable generation ranges between 25-35GW, but declines to as low as 5GW late night.

Despite touching all-time high supplies, Northern states face deficits:

In the past 10 days, the states in the Northern region have witnessed supply deficits due to the soaring demand (Chart 30). These include mainly Punjab and UP, which have witnessed peak shortages as high as 1,550MW/620MW, respectively, as agricultural and commercial segment demand have soared, combined with cooling demand. This is despite most states nearing or crossing their all-time high demands.

Expect action in the RE auction space to expedite:

The response to SECI’s recent tender for setting up 1,785MW of solar projects in Rajasthan (Tranche-IV), which was oversubscribed by 9.3GW, indicates the appetite and competition in the RE space. The tender attracted 27 bidders, 16 Indian and 11 foreign. As per Mercom, Q1FY22 witnessed 19% decline in solar tenders by government agencies at 8.5GW. We expect auction activities to expedite since demand is huge.

All-India peak demand crosses 200GW milestone

Key inferences from the charts below:

* On YoY basis, all-India daily/peak demand is higher by an average 18% YoY during FY22-TD (till 6th Jul’21). But comparing with FY20, all-India daily/peak demand is, on an average, 1.5% lower YoY during FY22-TD, despite the impact of the lockdown period on power demand.

* There has been a spectacular growth in Jul’21 in all-India peak as well as daily demand. On an average, while peak demand in Jul’21 is higher by 18%/11%, daily energy demand is higher by 17%/12%, over the same period in Jul’20/Jul’19. On 6th Jul’21, all-India peak/energy demand was 197GW/4,470MU, while on 7th Jul’21, peak demand crossed 200GW between 12PM and 1PM.

* Key reasons for higher demand: 1) Higher temperatures in Northern and Eastern regions, 2) opening up of several sectors by most states post lockdown, 3) agricultural demand (kharif sowing season has commenced), 4) higher residential demand owing to cooling, higher appliance usage during the day as a consequence of work from home, 5) higher power supply by discoms, and 6) demand growth from households electrified in the past three years.

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