Power demand in India expected to grow 6 pc in FY22: ICRA

On Tuesday, ICRA stated that the demand for power in India is expected to increase by 6% YoY in FY22, at an estimated additional power generation capacity of 17- 18 GW. The market is expected to be driven by favourable base effect, rapid roll out of the vaccination programme, etc.

As per ICRA, the easing government lockdown restrictions contributed to the growth of the electricity demand in June 2021, with a 3.9% month-on-month growth.

It added, all-India power generation capacity addition is expected to recover to 17-18 GW in FY22, an increase of 45% YoY, as compared to 12.8 GW in FY21, primarily driven by the renewable energy (RE) segment supported by a solid pipeline of 38 GW projects under development.

The RE segment is expected to be the key driver for power generation capacity addition with a share of > 60% in the next five years.

With recognition of large payments under the liquidity support scheme in March 2021, there has been an expansion in the liquidity stance of some thermal independent power producers (IPPs).

The credit report of the central thermal power generation utilities is backed by the existence of long-term power purchase agreements (PPAs) under the cost-plus tariff structure.

Mr. Vikram V, Sector Head - Corporate Ratings, ICRA said, “The rapid execution of reforms in the distribution segment is vital for the power sector.”

The government has recently authorised a new scheme for revitalising the distribution sector with an overall outlay of Rs. 3.03 lakh crore (US$ 40.66 billion), including expansion of operational productivities through smart metering, solarisation of agriculture feeders and upgradation of distribution infrastructure.

 

The credit report of various privately-owned discoms continues competently supported by improved operating outputs, encouraging demographic profile and more-timely pass-through of cost modifications to consumers.

As per ICRA, the outlook for the RE segment is stable, driven by supportive government policies, substantial growth potential, the existence of creditworthy central nodal groups as intermediary procurers and tariff effectiveness.

Further, the transmission segment outlook is stable backed by the existence of availability-linked payments and well-timed realisation of payments for the inter-state ventures as the billing and collections are managed by the central transmission efficiency.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.