Energy demand dip points to economic pain

The contraction of energy consumption and flatlining of power generation are indicating a slowing down of economic activities in the country.

Petrol, diesel, and LPG consumption regained significantly till June 2020 after the Covid-19lockdowns eased across the country. But diesel consumption contracted again in July 2020, widening the consumption gap between this year and last. This is a significant metric because diesel is the preferred auto fuel for commercial vehicles and accounts for around three-fourth of the transport fuel consumed in the country.

Conventional electricity generation too flatlined in July 2020, being reported at just 0.05 per cent higher than July 2019 levels. This is far behind the estimates of the Ministry of Power.

On an average, the electricity generation target of conventional sources for the year 2020-2021 was fixed as 1,330 Billion Unit (BU), a growth of around 6.33 per cent over actual conventional generation of 1,250.784 BU for the previous year (2019-2020).

A darker India

There is also a tapering of demand for cooking gas that has been registered in July 2020, growing by just 2 per cent, a deviation from the steep 10 per cent plus growth registered in fiscal 2020-2021 till June. A representative from an LPG dealers’ association told BusinessLine that panic buying from consumers had pushed up demand during early lockdowns and now normalcy would be there for cooking gas requirements in the country. The widening of gap between diesel demand during July 2020 and July 2019, compared to the June months, is also an outcome of the extended lockdowns. “While economic activity had begun picking up, it was partially offset by State-level lockdowns, including the weekend lockdowns in States like Uttar Pradesh, Punjab and Haryana that are hampering a faster economic recovery,” an energy sector analyst said.

All this reflects some level of muted growth. According to the World Bank, this economic disruption is visible from outer space too.

“India has become darker over the last four months. While Indian districts are on average getting brighter over time, luminosity in evening hours has declined since March. Night time light intensity can be used to examine the effects of Covid-19 at the district level,” a blog post co-authored by Robert C M Beyer, Economist, World Bank, said.

Fall in PLF

Another metric that reflects lowered electricity demand is the fall in average plant load factor (PLF) of coal and lignite-based power plants in the country. PLF is an estimate of the capacity utilised for power generation from the total installed capacity of the power projects.

Compared to a nationwide average PLF of 55.99 per cent in fiscal 2019-2020, the PLF in 2020-2021 stood at 48.28 per cent till July 2020.

The situation is worse in State government-owned and run power projects, the average PLF for these projects has fallen to 39.49 per cent till July 2020, down from 50.24 per cent in the fiscal 2019-2020.

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