Lockdown Analysis - Electricity Demand

Power demand and
supply analytics
Pre and post Covid-19 lockdown
Version 2.0*
15th April 2020
April, 2020
KPMG India Pvt. Ltd.
*To be updated as the COVID
situation progresses
1 Demand trends at pan-India level
2 Supply mix
3 Price trends on the exchange
Agenda
Table of Contents
4 Grid frequency profile
5 Financial analysis
Disclaimer:
This report contains information obtained from the public domain or external
6 Summary conclusions
sources which have not been verified for authenticity, accuracy or completeness.
Our report may make reference to ‘KPMG in India analysis, 2020’; this merely
indicates that we have (where specified) undertaken certain analytical activities on
the underlying data to arrive at the information presented; we do not accept
responsibility for the veracity of the underlying data. By reading the report the
© 2020 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2
reader shall be deemed to have accepted the terms mentioned above.
Demand trend at pan-India Level (1/2)
All India Demand 11th March to 23rd March 2020 ~
Pre Lockdown Janta
Curfew
India’s total electricity consumption was ~3300 MU a week before the lockdown. Demand fell on the Janta curfew day.
Of India’s total electricity consumption (basis Energy Statistics 2019), the domestic, industrial and agricultural consumption
accounts for 24.20%, 41.48%, 18.08% respectively. Commercial electricity consumption accounts for 8.54% while remaining is
attributed to traction, railways and others.
Data source: Vidyut Pravah. Compiled using KPMG’s Power Sale and Purchase Market Intelligence Tool
Demand trend at pan-India Level (1/2)
All India Demand 24th March to 8th April 2020
Start of Lockdown
The total electricity consumption dropped to approx. 2600 MU post lockdown (25th March). The impact of lockdown was visible in
terms of reduction in both the average as well as peak demand
The demand remained constantly low throughout the second week of the lockdown. There wasn’t much deviation in the peak& off-
peak demand during this phase
Average, peak and minimum demand before and after lockdown
All India Demand
Pre Lockdown
Janta-Curfew Post Lockdown
Though both peak and average daily demand demand fell considerably post the lockdown, the peak was impacted more than the
average load (~30% vis-à-vis ~20% respectively), causing the load curve to flatten
Average, peak and minimum demand before and after lockdown
All India Demand
Post Lockdown
The average demand has increased slightly over the course of lockdown due to increase in domestic consumption (mainly weather
driven)
th
Load curve before Lockdown - 16 March
All India Demand Pre Lockdown Load Curve
~ 16th March (as a representative day)
Morning Peak Evening Peak
nd
Load curve on Janta Curfew day – 22 March
All India Demand Load Curve as observed on Janta
Curfew - 22nd March 2020
Peaks and Valleys converged in the load curve on

Janta curfew day
Demand got dropped to roughly 2950 MU on Janta Curfew, as against 3200 MUs on 15th March (exactly a week before)
rd
Load curve after Lockdown - 3 April
All India Demand Post Lockdown Load Curve
~ 3rd April (as a representative
day)
The convergence of peak and valleys continued during the lockdown period, leading to
flattening of the overall load curve.
With industrial and commercial down by over 50% due to the lockdown, the overall demand fell by 25% during this phase.
Data source: Vidyut Pravah (Compiled using KPMG’s Power Sale and Purchase Market Intelligence Tool), Energy Statistics 2019
th
State level demand snapshot for sample states -16 March 2020
Pre Lockdown – 16th March
rd
State level demand snapshot for sample states – 3 April 2020
Post Lockdown – 3rd April
While the electricity consumption decreased in most states like Rajasthan, HP by 30-40% post lockdown, it has increased in certain
states like Uttar Pradesh, Bihar and West Bengal. This may be attributed partly to weather and also to reverse migration in these states
during this period.
Fuel-wise supply trends at pan-India level on representative days
All India Generation
22nd March 2020 24th March 2020
*The supply mix at All India level is derived by adding the generator wise ‘implemented schedules’ for all states from Merit India. These values do not account for the power transacted by states
through Short term Open access, Power Exchanges and DSM. Hence these schedules do not match exactly with the total demand
The data on merit India is sometime updated with a lag. For the dates presented above, the data was found missing for Bihar, Chhattisgarh, Odisha and Haryana
Data source: Merit India. Compiled using KPMG’s Power Sale and Purchase Market Intelligence Tool
30th March 2020 2nd April 2020
3rd April 2020 5th April 2020 10th April 2020
Due to shutting down of marginal thermal generators (a few days after the lockdown), the supply mix
improved slightly in the favor of renewables and hydro, due to their MUST-Run status.
Exchange price trends (IEX) (1/2)
Market Clearing Price
(MCP) on IEX Pre Lockdown Period
The market clearing price (MCP) in the DAM (Day Ahead Market) hovered between Rs 2/KWh to Rs 3/KWh in the first half of March
and slightly rose in the days leading up to Janta curfew and lockdown
Data source: IEX. Compiled using KPMG’s Power Sale and Purchase Market Intelligence Tool
Exchange price trends (IEX) (2/2)
Market Clearing Price Post Lockdown
(MCP) on IEX
Start of Lockdown
Convergence in peak and

off-peak prices
The MCP on IEX dropped right after lockdown owing to drop in national demand. As the peak demand fell at the PAN India level,
the peak prices fell significantly. This led to a convergence in peak and off peak prices
The prices recovered partially in a few days after the lockdown due to adjustments in supply by discoms (as many thermal units
were shut down due to low requisition). With this, the difference in the peak and off peak prices was also restored.
Average and peak prices on IEX before and after lockdown
DAM Prices on IEX
Pre Lockdown
Janta-Curfew till Lockdown

Post Lockdown
Average and peak prices on IEX before and after lockdown
DAM Prices on IEX
Post Lockdown
The volume traded in the market fell initially (just after the lockdown) but recovered within a few days while there has been
decrease in quantum of both purchase and sale bids on the Exchange.
rd
Grid frequency profile - 3 April
In the events of low demand, the grid frequency is being maintained through hydro and gas based
generators that can be ramped up/down faster
Data source: POSOCO
Financial Analysis
Demand scenario (pan-India)
Week 2: Post Lockdown (25th to 31st
Week 1: Pre Lockdown (11th to 17th March) *
March) *
Relevant Statistics Value Relevant Statistics Value
Daily Average Demand (MU) 3300 Daily Average Demand (MU) 2600
Weighted Average Cost of Generation (Rs/Unit) 2.47 Weighted Average Cost of Generation (Rs/Unit) 2.36
* KPMG in India analysis, 2020
There has been no significant change in the demand post ‘Release 1.0’ of this report.
Average demand in the initial lockdown period was 2600 MU (25th March – 31st March) and is now 2650 MU (25th March - 8th April).
This slight increase in demand can be attributed to weather conditions and is expected to increase further as we transition into
summer season.
Data Sources:
• Demand: Vidyut Pravah
• Supply: Implemented Schedules from Merit India
• Cost of Power Generated: Merit India
Cost and revenue implications* – pan-India (price and quantity effect)
Cost Implications * Revenue Implications *
Relevant statistics Value Relevant Statistics Value

Reduction in daily demand (MU) 700 Reduction in daily sales (@88% of reduction in
Reduction in per unit procurement costs - pre 616
0.11 daily demand) (MU)
and post lockdown (Rs / kWh) Increase in sales to domestic customers - loss
Power procurement cost reduction in a day - due 80
201.5 adjusted (MU) 1
to both price and quantity effect (Rs Cr) Total estimated fall in C&I sales (MU) 2 (616+90) = 706
Total power procurement cost reduction in 40- Average Tariff of C&I customers (Rs/ kWh) 6.5
8,060
days Lockdown - estimated (Rs Cr) Average Tariff for domestic customers (Rs/ kWh) 3
Net daily revenue loss (Rs Cr) 459-24 = 435
* This analysis on cost and revenue implications will be updated Total revenue loss in 40-days Lockdown (Rs Cr) ~ 17,400
close to the lockdown end date. Currently, the analysis has been Net revenue loss (revenue loss – cost reduction)
~ 9,340
done using the data for the same dates as was used in ‘Release (Rs Cr)
* KPMG in India analysis, 2020
1.0’
1. 10% increase in domestic consumption over pre-lockdown period is
Data Sources: assumed. Hence, the fall in C&I consumption is more than the overall
• Demand: Vidyut Pravah drop in demand
• Supply: Implemented Schedules from Merit India 2. 80 MU increase in domestic consumption corresponds to ~90 MU
• Cost of Power Generated: Merit India drop in C&I consumption (the difference being differential losses)
• The average net revenue loss to the nation from 40 days Lockdown is approx. Rs 9,340 Cr.
• This does not include any default in customer collections. If a recovery of 75% is assumed (at average sale tariff of Rs. 4 per
kWh) in the period the losses would balloon by another Rs 10,400 Cr or more. Hence net effect would be in the range of Rs.
19,500-20,000 Cr for the 40 day ‘extended-lockdown’ period under these assumptions.
Summary Conclusions
Summary Conclusions
Demand: Fall in demand has been steep and sustained, reflective of the Commercial & Industrial consumption curtailed on account of
1
the lockdown
2 Supply: Has fallen on account of shutting down of expensive plants (mostly state level). Share of renewables has increased
3 Market prices: Have fallen, but recovered to some extent. Reflect the marginal thermal generation costs in the system
4 Effects on Gencos: Uncontracted capacity holders will book steep losses. Contracted ones have heightened risk of payment defaults
Effects on Discoms: Huge impact due to (a) loss of cross subsidies due to C&I sales shortfall and (b) lower cash collections(fallen by
5
80-85%)
Overall there is a massive risk of cash flow stress and financial contagion that may spread through power and associated sectors.
Sector interventions need a cash flow lens rather than an accounting lens.
Thank you
Anish De Nitin Raj
anishde@kpmg.com nitinraj@kpmg.com
Vikas Gaba Suruchi Sawhney

vikasgaba@kpmg.com suruchis@kpmg.com
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of the particular situation.
© 2020 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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Power demand and

15th April 2020

Janta-Curfew Post Lockdown

Morning Peak Evening Peak

Peaks and Valleys converged in the load curve on

Convergence in peak and

Janta-Curfew till Lockdown

Relevant Statistics Value Relevant Statistics Value

* KPMG in India analysis, 2020

Relevant statistics Value Relevant Statistics Value

Vikas Gaba Suruchi Sawhney

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