Bid & Tender
TEI - Energy Outlook

Covid-19 Impact on Indian Power Sector

The Covid-19 pandemic has impacted several industries and economies. The power sector has also witnessed significant impact with the demand expected to decline by 5% in 2020, according to the International Energy Agency (IEA).

Global energy demand for the Q1, 2020 fell by more than 3.5% compared to Q1, 2019. With more than half of the global population under restricted lockdown, the energy demand is still expected to be lower in Q2 and Q3 of 2020.

The decrease in the electricity demand has also resulted in driving a major shift towards low-carbon sources of electricity, including wind, solar photovoltaic (PV), hydropower and nuclear. Low-carbon sources are set to lead with 40% of global electricity generation in 2020.

Renewables are set to be the only energy source that will grow in 2020 because of addition in the capacity as a result of recently completed projects, preferential access to grids and low operating costs. Despite facing supply and logistics issues during Q1, 2020, solar PV and wind are expected to increase renewable electricity generation by 5% in 2020 aided by higher output from hydropower.

The International Renewable Energy Agency (IRENA) believes that the pandemic, while threatening global supply chains in the power sector, will not be able to stop the industry from transitioning to net-zero CO2  emissions.

In India, amid the Covid-19 induced lockdown, electricity demand fell steeply due to drop in commercial and industrial activity. The electricity consumption in April 2020 was 18.1% and 15.1% lower than what it was in February and March respectively.

Distribution companies (DISCOMs) were impacted the most. Drop in revenue from the remunerative segments ‘Commercial and Industrial’ and revenue collections declined by over 80%, significantly affecting the financial and liquidity position of players in the sector.

Meanwhile, the Indian electricity load patterns shifted significantly. Renewables came to a bright spot with increase in the relative share in the generation mix. According to the Central Electricity Authority (CEA), in comparison to 2019, the generation in the solar sector saw a change of approximately 130%, 128% and 118% in March, April and May respectively. This push for renewables were said to be seen because of the pollution-free environment and good micro-climatic conditions during the lockdown.

Though the demand has started showing an upward trend as the lockdown eases and the liquidity infusion by the government has eased out the immediate cash stress, but fast implementation of reform measures will be critical at this time to bring back the power sector on track.

Pallavi Agrawal