Demand for electricity in India is expected to grow 6 per cent in 2021-22 as compared to the previous fiscal year, rating agency Icra said on Tuesday.
It has also estimated power generation capacity addition at 17- 18 GW for the ongoing fiscal year.
“ICRA Ratings has estimated the all India electricity demand growth at 6.0 per cent for FY2022 on a year-on-year (YoY) basis, considering the favourable base effect, relatively lesser impact of the second wave on electricity demand and the pick-up in the vaccination programme,” an Icra statement said.
The electricity demand slowed down during the first two months of 2021-22 compared to March 2021 amid lockdowns imposed by state governments to control the second wave of COVID-19, it said.
Nonetheless, with the slowdown in fresh COVID-19 infections from the second half of May 2021, state governments eased lockdown restrictions and this in turn improved the electricity demand growth prospects as seen in June 2021, with a month-on-month growth of 3.9 per cent, it stated.
However, it added that any resurgence in infections leading to lockdown restrictions would remain a key downside risk for the demand.
Further, Icra said it expects the all-India power generation capacity addition to rebound to 17-18 GW in the year, increasing by 45 per cent YoY from 12.8 GW in 2020-21, mainly led by the renewable energy (RE) segment backed by a strong pipeline of 38 GW projects under development.
The RE segment would remain the main driver of capacity addition with a share of more than 60 per cent over the next five years.
While the demand growth prospects remain favourable, the outlook for the thermal generation segment is negative considering the subdued thermal PLFs (Plant Load Factor), lack of visibility in signing of new long-term or medium-term PPAs for thermal IPPs, modest tariffs in short-term power market and continued delays in receiving payments from state distribution utilities,” Girishkumar Kadam, Co-Group Head — Corporate Ratings, Icra, said.
The thermal PLF is expected to remain subdued at 57.0 per cent in 2021-22, despite the expected improvement from 54.5 per cent in 2020-21 led by higher electricity demand, Kadam added.