Electricity generation to remain buoyant

by Madhumita Gokhale

Electricity generation from conventional sources in India amounted to 985 billion kWh during April-December 2021. This was 8.7 per cent higher on a y-o-y basis. India’s power sector remained resilient during the second wave of Covid-19 in the quarter ended June 2021. Growth continued in the September and December 2021 quarters in spite of a coal shortage faced by the country in September and October 2021. We expect power generation to continue growing in the March 2022 quarter. But the magnitude of growth is likely to be lower than in the previous three quarters, at 1.4 per cent.

The first quarter of 2021-22 recorded a dramatic 17.3 per cent y-o-y increase in conventional electricity generation. This growth was primarily a low base effect, as it came after the steep 18.5 per cent contraction faced in the June 2020 quarter. Conventional electricity generated in the June 2021 quarter stood at 326 billion kWh. Power generation continued to grow in the subsequent two quarters. In the September 2021 quarter, India observed a 7.3 per cent y-o-y increase in conventional electricity generation to 345 billion kWh. The December 2021 quarter posted a lower growth of 2.5 per cent. But this growth came on the back of a healthy 5.1 per cent increase seen in the corresponding year-ago quarter.

Growth in India’s conventional electricity generation in the December 2021 quarter was broad-based. Coal-based thermal power generation, which has the largest share in total generation, grew by 1.9 per cent y-o-y in the December 2021 quarter. This was on top of an 8.6 per cent increase seen in the same quarter in 2020. Power generation from coal-fired plants in the December 2021 quarter stood at 249 billion kWh. Hydel and nuclear power plants recorded a sharper y-o-y increase in electricity generation, of 13 per cent and 10 per cent, respectively. Electricity generated from hydel sources amounted to 34 billion kWh, and from nuclear sources to 13 billion kWh in the December 2021 quarter.

Growth in overall generation in the December 2021 quarter was boosted by continued high demand for electricity. During October-November 2021, electricity demand grew by 3.4 per cent y-o-y to 214 billion kWh. Daily frequency data by Power System Operation Corporation shows that December 2021 also recorded a four per cent increase in power demand over the same month in 2020.

We expect conventional electricity generation to grow y-o-y by 1.4 per cent in the March 2022 quarter. The moderation in growth as compared to the previous quarters reflects the expectation of tempered growth in industrial activity during this period. Energy-intensive industries such as iron & steel, aluminium, cement and paper are estimated to face a y-o-y contraction or very low growth in production in the March 2022 quarter. On the other hand, demand from the household sector is likely to remain high, given the tightening of restrictions on mobility due to the spread of the Omicron variant of coronavirus.

Thermal electricity generation is estimated to grow by 0.8 per cent in the March 2022 quarter. The high base of the March 2021 quarter is likely to contribute to this moderation in growth of thermal electricity generation. Thermal power plants do not face any constraint on the capacity front. Plant load factor (PLF) of thermal power plants improved by December 2021 to 58.3 per cent, after dipping to less than 56 per cent during the previous three months. Even after this improvement in PLF, thermal power plants have ample idle capacity to meet an increase in electricity demand.

Hydel and nuclear power plants are likely to see higher growth of 4-5 per cent and 8.8 per cent, respectively, in the March 2022 quarter. This growth will come over a considerable contraction seen in the March 2021 quarter. PLF of nuclear power plants rose to almost 87 per cent by December 2021. We expect completion of NPCIL’s Kakrapar Phase 2 Atomic Power Project, with a capacity of 700 Mw to contribute to the growth in nuclear power generation in the March 2022 quarter.

We expect India’s conventional electricity generation to continue to grow in 2022-23, by 5.2 per cent. This will be over the 6.7 per cent growth estimated for 2021-22. Growth in 2022-23 is likely to be driven by significant growth of 5.2 per cent in thermal power generation. Coal production from Coal India and captive mines is estimated to grow sharply in 2022-23, which is likely to prevent the possibility of coal shortages. We assume the south-west monsoon rainfall to be normal in 2022. This would result in sufficient reservoir levels and will be reflected in four per cent estimated growth in hydel power generation. Nuclear electricity generation is also expected to increase by 11.5 per cent in 2022-23, supported by capacity addition of 500 Mw scheduled during the year.

The sharp growth in generation expected in 2022-23 is likely to be driven by a substantial increase in electricity demand from the industrial sector. Industry accounts for almost one third of electricity sale by utilities in the country. Output of energy-intensive industries including iron & steel, cement and aluminium is estimated to grow substantially in 2022-23, which would boost electricity demand. Electricity demand from the agriculture sector is also expected to be high, driven by the sharp growth in agricultural output expected in 2022-23.

Conventional electricity generation (Y-o-Y % change)
Year Total Thermal electricity Hydro electricity Nuclear electricity
2010-11 5.6 3.8 10.0 40.9
2011-12 8.1 6.6 14.2 22.9
2012-13 4.0 7.3 -12.9 1.8
2013-14 6.0 4.2 18.6 4.1
2014-15 8.4 10.8 -4.2 5.5
2015-16 5.6 7.5 -6.1 3.6
2016-17 4.7 5.3 0.8 1.3
2017-18 4.0 4.3 3.1 1.1
2018-19 3.6 3.4 7.0 -1.4
2019-20 0.1 -2.8 15.5 22.9
2020-21 -1.3 -1.0 -3.5 -7.4
2021-22 (F) 6.7 7.9 0.5 1.8
2022-23 (F) 5.2 5.2 4.0 11.5

CMIE STATISTICS
Unemployment Rate (30-DAY MVG. AVG.)
Per cent
7.0 -0.7
Consumer Sentiments Index
Base September-December 2015
59.9 +1.2
Consumer Expectations Index
Base September-December 2015
61.2 +1.0
Current Economic Conditions Index
Base September-December 2015
57.9 +1.6
Quarterly CapEx Aggregates
(Rs.trillion) Mar 21 Jun 21 Sep 21 Dec 21
New projects 2.36 2.74 2.25 2.51
Completed projects 1.17 0.74 1.18 1.53
Stalled projects 0.28 0.33 0.03 0.03
Revived projects 0.23 0.12 0.28 0.39
Implementation stalled projects 0.34 0.38 0.25 0.65
Updated on: 19 Jan 2022 8:28PM
Quarterly Financials of Listed Companies
(% change) Mar 21 Jun 21 Sep 21 Dec 21
All listed Companies
 Income 15.1 39.2 27.9 17.0
 Expenses 7.4 38.6 27.3 18.0
 Net profit 337.8 142.5 52.7 12.8
 PAT margin (%) 8.8 9.0 9.6 19.4
 Count of Cos. 4,401 4,495 4,546 145
Non-financial Companies
 Income 17.8 56.1 36.1 18.9
 Expenses 10.7 57.1 36.6 22.3
 Net profit 222.4 199.3 59.5 4.9
 PAT margin (%) 9.0 8.5 8.8 17.7
 Net fixed assets 2.3 4.9
 Current assets 4.3 11.0
 Current liabilities 1.2 0.9
 Borrowings -4.5 12.2
 Reserves & surplus 11.7 12.4
 Count of Cos. 3,247 3,301 3,304 104
Numbers are net of P&E
Updated on: 19 Jan 2022 8:28PM
Annual Financials of All Companies
(% change) FY19 FY20 FY21
All Companies
 Income 13.4 0.6 -1.5
 Expenses 13.8 0.4 -4.1
 Net profit 12.7 -6.9 62.0
 PAT margin (%) 2.0 2.1 5.7
 Assets 9.9 8.8 10.7
 Net worth 8.2 4.5 13.3
 RONW (%) 3.6 3.5 8.2
 Count of Cos. 32,530 31,471 11,634
Non-financial Companies
 Income 14.2 -1.2 -3.0
 Expenses 14.3 -0.9 -5.3
 Net profit 22.1 -21.1 49.3
 PAT margin (%) 2.8 2.3 5.3
 Net fixed assets 6.0 11.2 1.5
 Net worth 7.8 2.2 11.0
 RONW (%) 6.3 4.9 9.1
 Debt / Equity (times) 1.0 1.1 0.8
 Interest cover (times) 2.2 1.9 2.8
 Net working capital cycle (days) 74 81 80
 Count of Cos. 25,943 25,015 8,657
Numbers are net of P&E
Updated on: 18 Jan 2022 2:48PM