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India’s FY22 electricity demand expected to rise by 6%

India’s electricity demand is expected to rise by around 6% per cent in FY22, said Fitch Ratings on Friday.

The country’s electricity demand had fallen by 1.2 per cent in FY21, as the lockdown, during the recent pandemic resurgence, was less restrictive and more localised than in 2020.

“The increase in demand is likely to result in higher thermal power plant load factors (PLF) in FY22.”

“Fitch expects coal import volume to increase slightly from rising coal-powered PLFs as we expect a large part of the increased coal demand to be met through rising domestic production.”

According to the rating agency, slow renewable capacity addition is expected during the year due to delays from the pandemic.

“Solar capacity, which has been driving overall renewable capacity additions in the past few years, has been under additional pressure from the recent reluctance of some distribution companies to sign purchase power agreements with the winning bidders after auctions for power generation in anticipation of a further drop in tariffs in future bids.”

As per Fitch, the generation companies’ receivable position is expected to improve gradually in FY22 as disbursements under the Central government’s liquidity scheme progress, although risks remain from the pandemic’s resurgence.

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