India’s Electricity Generation Falls For Second Straight Month In September

India’s electricity generation fell for the second consecutive month in September at a time when the country’s economic growth slowed to a six-year low.

Power generation declined 4.5 percent year-on-year to 113.6 billion units, according to data from the Central Electricity Authority’s website. That includes conventional and non-conventional sources of energy, including thermal, hydro-electric and solar power plants.

The decline in power generation over last year is on the back of a drop in thermal power production although it was offset by higher hydel generation to some extent, Girish Kadam, vice president and sector head (corporate ratings) at ICRA, told BloombergQuint over the phone.

“Coal-based generation’s decline in September is about 11 percent year-on-year basis due to a mix of factors like the extended monsoon moderating demand, lower production of coal from Coal India as well as higher renewable generation, including hydro and nuclear, affecting coal-based generation,” he said.

According to Emkay Global, India’s electricity generation—excluding renewables— remained largely flat at 318.6 billion units in the second quarter of the ongoing fiscal, primarily due to weak demand, driven by “peak monsoon”.

Power generation in the coal segment decreased 3.0 percent year-on-year, while it rose 8.9 percent in the hydro segment, 4.9 percent in the gas segment and 38.2 percent in the nuclear segment, the brokerage said, adding major capacity addition in the quarter was from NTPC which added 2.8 gigawatts.

Spot Prices Slump

The reduced demand has affected the spot power market as well, with average per-unit market clearing prices falling to a two-year low, according to the India Energy Exchange Ltd.

Spot power prices—at Rs 2.77 per unit on average—were nearly 16 percent lesser over last month and 40 percent lesser year-on-year, the energy exchange said in a statement today.

It attributed the low prices to reduced demand, improved coal supply, extended monsoon and improved hydel power generation.

At 8,570 million units, the electricity in total monthly sell bids in the Exchange Day Ahead market—the trading market for delivery on the following day—was nearly twice that for buy bids amounting to 4,066 MU in September.