Electricity demand growth estimated at 6.0% and generation capacity addition estimated at 17-18 GW for FY2022: ICRA
ICRA Ratings estimated that India's electricity demand would grow at 6.0% in FY2022, based on year-on-year data (Y-oY). Consider the favorable base effect and the relatively low impact of the second wave upon electricity demand the start-up of the vaccination programme. During the first two months, electricity demand was lower The FY2022 comparison to March 2021 was due to the lockdowns that most state governments imposed to control the Second wave of Covid-19 infection. However, the decrease in new Covid-19 infections has slowed down. Second half of May 2021: The state governments have relaxed the lockdown restrictions, which in turn has The electricity demand growth prospects have improved as shown in June 2021 with a month-on-month growth of 3.9%. Lockdown restrictions and a resurgence of infections would be a major downside risk. Demand. The ratings agency also expects that the all-India power generation capacity will rebound. FY2021, 12.8 GW, FY2021, 17-18 GW. This is mainly due to the renewables The RE segment is supported by a strong pipeline with 38 GW projects in development. The RE segment would With a share of over 60% in the next five-years, they will continue to be the primary driver of capacity expansion.
Further commenting, Mr. Girishkumar Kadam, Co-Group Chief -- Corporate Ratings (ICRA), said that "While the demand growth prospects are still positive, the outlook is negative for the thermal generation segment. Consider the low visibility of PPAs in sign-ups of long-term and medium-term PPAs due to thermal PLFs. Thermal IPPs, moderate tariffs in the short term power market and continuing delays in receiving payments Distribution utilities of state. Despite the fact that the thermal PLF will remain at 57.0% for FY2022, it is expected to remain under control. Higher electricity demand and a 54.5% increase in FY2021 are expected to lead to an improvement of 54% There has been some improvement in the number of households using electricity, but it is still not enough. Improvement in the liquidity situation of some thermal IPPs through the realization of large payments under liquidity Support scheme March 2021. Sustainability of the same remains to been seen, given the ongoing Discom finances are weak. The credit profile of Central thermal power generation, on the other hand, is strong. The presence of long-term PPAs in the cost-plus tariff structure is a support for utilities. Out of sovereign parentage
Due to the low operating efficiency and lack of credit, the credit outlook for distribution remains negative. inadequate tariff revisions, delay in receiving subsidies payments from the state governments, and delays in realising Electricity dues from Government departments The impact of Covid-19 has further increased this effect. The electricity demand and collection in FY2021. The demand for electricity is expected to rise in FY2022, but the discom Due to the lack of or inadequate tariff revisions and high distribution, financial resources will likely remain in pressure. Losses and increasing subsidy dependence. Based on all tariff orders received so far, the median tariff revision FY2022 is below one percent, and the subsidy dependence on discoms at all levels in India is estimated at Rs. 1.3 For FY2022, it will be a staggering lakh crore
Mr. Vikram V, Sector Head, Corporate Ratings, ICRA, adds "The gap between the average cost of supply" The average tariff for state-owned Discoms at the all India level is expected to remain high at 70-75 Paise per Unit FY2022, although it is down from FY2021. The discom loss at the all-India level will remain high, despite a decrease in FY2021. More than Rs. 750 billion Further, the total debt of all state-owned discoms in India is estimated at 750 billion Reach close to Rs. 6 trillion in FY2022. This high level of liabilities (debt plus Gencos dues) is not sustainable. The discoms. This is why it is crucial to implement reforms quickly in the distribution segment. Power sector
Recently, the Government of India approved a new scheme to revive India's distribution sector. It includes an overall Outlay of Rs. 3.03 lakh crores to improve operational efficiency through smart metering. Upgradation of distribution infrastructure, solarization of agricultural feeders. But, it is important to act quickly. Implementation by the state governments and discoms is crucial.
However, credit scores of many privately-owned discoms remain healthy thanks to superior Operating efficiencies, favorable demographic profile, and quicker pass-through of costs variations to Consumers. ICRA's outlook on the RE segment is stable due to factors like continued policy support The Government of India has a large growth potential and the presence of creditworthy Central Nodal agencies. Intermediary procurers and tariff competiveness The outlook for the transmission segment remains stable. The availability-linked payments are available and payments for interstate projects are timely realized. Billing and collection are handled by the Central transmission Utility.