Thermal power generation for the month of July 2022 was higher by strong 2.1% to 94.36 BU compared to corresponding previous period. The PLF of thermal power plants (coal and lignite together) was up by 210 bps to 59.3% in July 2022.  Growth in early single digit for thermal power generation for the month was largely due to lower generation from lignite and gas based power plants as well as mid single digit growth in coal based power plants. The generation of coal based power plants was up by just 4.2% to 89.26 BU with PLF of it up by 230 bps to 59.2%. The generation of diesel power plants was up by 35% to 0.01 BU. The generation of lignite based power plant was down by 8.5% to 3.09 BU with its PLF expand by sharp 560 bps to 62.9%. The generation of gas based power plants was down 40.7% to 2.0 BU with its PLF down 740 bps to 10.8%.

The output of hydro power plants for the month was up by 3.8% to 19.47 BU. However the output of nuclear power plant for the month was down by 11.2% to 4.02 BU with its PLF stand declined by 800 bps to 79.6%.

Country's total generation capacity (excluding renewable other than hydro & captive) as end of July 2022 stood at 289.70 GW with the country witness conventional capacity addition (net of capacity retired/rerated) of 0.00 GW for the month of July 2022 and 0.10 GW for YTD. Including renewable power generation capacity the total generation capacity of the country as end of July 2022 stood at 404.13 GW. The country added a renewable generation (other than hydro) capacity of 0.37 GW for the month of July 2022.

The normal power demand in the month of July 2022 registered a growth of 3.64% (to 128689 million units) compared to corresponding previous month. The supply too stood higher by 3.67% (to 128255 million units) compared to corresponding previous period. The normal power deficit for the month stood at 0.3 (434 million units) compared to 0.4% (447 million units) in the corresponding previous month.

Monthly peak power deficit for the month of July 2022 stood at 1.0% compared to 1.2% in corresponding previous month and 0.3% in sequential previous month of June 2022. The monthly peak power demand that eased to 167.2 GW in Nov 2021 is on steady rebound to reach a peak of 215.9 GW in April 2022. However from that record peak it has corrected down to 206 GW in May 2022 and has moved up to 212.3 GW in June 2022 but only to correct to 192.4 GW.

Average tariff declines in August 2022

The average tariffs in the day ahead market (DAM)of Indian Energy Exchange (IEX) reduced to Rs. 5.0 per unit in Aug '22 (as of August 29, 2022) from Rs. 5.4 per unit in Jul '22, with moderation in demand coupled with higher supply from non-thermal sources, like hydro and solar. However, it remains higher against the historical average due to continued supply-side constraints due to tight domestic coal supply and high international coal prices.

MoP revokes its order asking gencos to import coal for blending

The Ministry of Power (MoP) on May 5, 2022 had issued a directive under Section 11 of the Electricity Act, asking gencos to import coal for blending up to 10 per cent at their generating units. State and private gencos were estimated to cumulatively require 38-40 million tonnes of imported coal for blending at 10%.

But on Aug 2, 2022, the MoP has withdrawn the mandatory condition to import coal from abroad for 10% blending in thermal power plants of the country, allowing states and UTs to decide their own blending percentages.

NTPC has imported the highest amount -- 6.25 million tonnes (MT) -- to date and is in the process of importing 15 MT more. The MoP in a separate order directed NTPC as well to bring down imported coal blending to 5% from earlier mandated 10%. NTPC currently has 80% of their normative coal stock available at its plant end.

According to Ministry of Power "The coal stock position has been reviewed. The position of state Gencos now varies significantly. Many states have stocks more than 50 per cent of normative levels whereas many others still have stocks near critical levels. It has been decided that now onwards, states/IPPs and Ministry of Coal may decide blending percentage after assessing the availability of domestic coal supplies,'

Blended coal led to power price increases of 50-70 paisa per unit, which were borne by the customers.

Outlook

The monthly peak power demand after sliding down to touch a low of 167.2 GW in Nov 2021 has rebounded to reach a record peak of 215.9 GW in April 2022 and since then it is volatile. It closed at 192.4 GW in July 2022. The volatility is largely due to easing of heat wave as well as waning of favorable base effect.

However the electricity demand in medium term is to be good given rapid urbanization and stabilization of various schemes undertaken by the Government of India such as ‘Power for All' and ‘24X7 power'. With universal household electrification nearly complete in the country, latent power demand from rural India should also get unlocked. And the normal power demand for Apr-May 2022 was higher by 19.4% albeit on a low base.

On the supply side, incremental capacity additions have been largely driven by the Renewable Energy segment over the last few years. Technological advances and reducing capital costs have progressively made Renewable Energy commercially feasible and attractive. Henceforth, power capacity growth in India is expected to be primarily led by the Renewable Energy segment in near term. However the SEBs are not willing to offer banking of power benefit extended to renewable power to minimize the financial strain the achievement of target of 430 GW renewable power by 2030 by the country has to be seen and largely depend on government incentives.

Rise in domestic coal production and pit head stock along with more coal imports planed the availability of coal will not be an issue. With steady recovery in economic activity including manufacturing activity, the demand for power is to be steady going forward unless any hit by fourth wave of covid.