Utilities Sector Update : Production of coal continues to rise, registering 12.1% YoY growth to 428MT in YTDFY24 By JM Financial Institutional Securities
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Power demand witnessed a strong growth (+13% YoY) in 2QFY24. With the daily demand of 4.5-5.2BU, the average peak demand was 210/221GW in Sep’23/Aug’23 leading to higher merchant power tariff (INR 6.8/kWh in Oct’23 v/s INR 3.8/kWh in Oct’22). Polysilicon and module prices after a long downward trajectory showing signs of consolidation whereas the tariffs for RE projects are increasing which bodes well for solar capacity additions. International coal prices post consolidation are inching up on the back of increasing thermal demand and supply constraints. A total of 56/8/15GW of Solar, Wind and SW Hybrid; and 8/18/27GW of Nuclear/Hydro/Thermal projects are under construction. Here, we present a collection of 45 charts/exhibits representing important data points that help us track energy transition in India.
* Power demand: The power demand continued to remain strong in Sep’23. Monthly peak demand recorded 20% YoY growth whereas the energy demand grew by 9% YoY. AllIndia peak demand reached 239.98GW on 1 st Sep’23; it breached the previous high of 237GW and 223GW in Aug’23 and Jun’23 resp. The shortage in power supply rose by 60% YoY to 499MU in Sep'23 against 311MU in Sep'22.
* Power generation: Total power generation improved by 8% YoY to 148BU during Sep’23 as compared to 137BU in Sep’22. The share of RE in total generation continues to grow, stood at 12.7% in Sep’23.
* Renewables: With a lot of policy actions, declining input costs and the upswing in tariffs (INR 2.7/kWh in CY23 from INR 2.4/kWh in CY21), the pace of solar project execution is expected to further pick up in ensuing months. Wind capacity installations in India rose 19% YOY to 1,552MW during the YTDFY24. We expect this momentum to increase going forward as the monsoon retreats.
* Merchant Tariff: Average merchant tariff in the day-ahead spot power market increased to INR 6.8/kWh in Oct’23 (INR 3.8/kWh in Oct’22) primarily on the back of increasing peak demand deficit.
* PLF: With rising demand, utilisation (PLF) of coal-fired power plants continues to improve; it stood at 69.8% in Sep’23 against 60.3% in Sep’22.
* Generation capacity: During Apr-Sep’23, 5,001MW of Solar, 1,552MW of Wind, 2,024MW of thermal and 700MW of nuclear capacities have been added. With this, the installed capacity (as of Sep’23) in the country stands at 425GW with non-fossil /RE contributing 186/132GW to the total base (72GW – solar; 44GW – Wind). A total of 56/8/15GW of Solar, Wind and SW Hybrid; and 8/18/26.7GW of Nuclear/Hydro/Thermal projects are under construction. Of the 26.7GW thermal plants under construction, 6-8 GW capacity is expected to commission in rest of FY24.
* Coal: Production of coal continues to rise, registering 12.1% YoY growth to 428MT in YTDFY24. Coal India (CIL) surpassed its target of 700MT in FY23 and is now targeting to produce 780MT in FY24. Indonesian coal prices (5,900kcal/kg) post consolidation have started inching up gradually. It stood at $89/MT in Sep’23 (+2% MoM). Similarly, the South African coal and Australian coal prices have on an average, increased by 8-9% MoM in Sep’23 on the back of increased thermal demand.
* Solar input material cost: The prices of solar components, viz., polysilicon, wafers and, cells have declined upto Jun’23 from their highs due to global capacity expansions and systemic oversupply. Polysilicon prices, declined from USD 38.8/kg in Aug’22 to USD 7.8/kg in Jun’23 but have started gradually inching up to USD 9.9/kg in Oct’23. Solar cell prices declined from USD 0.17/piece in Aug’22 to USD 0.07/piece in Oct’23.
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