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Power Price and Consumption.

Power consumption in India has been seeing many ups and downs in the last few months. And so did the power price on the exchange as well as off the exchange in bilateral markets.

 

While Covid wreaked havoc in the social fabric, the economic was not far behind. The second wave was a relentless attack on all walks of life. The poor, the rich and middle class; all fell victim to the virus.

 

It was thought that the youth had a protective gear installed in them against these viruses. But to the dismay of everyone, they too fell victim to the crushing second wave. While the parents vented out their helplessness crying and shouting, the silent government imposed a stronger lock down, planned for the vaccine to reach every corner of the country and from the beginning kept telling people, to stay away from crowds, wear masks and maintain social distance.

 

Anyway, the virus blew with fury stronger than the Yaas cyclone and slowly cooled itself down as any storm would. As I write, India is seeing light at the end of this long tunnel.

 

Power industry was an essential commodity! But most policemen did not know it! They cross checked with their seniors to confirm it is so.

 

Leaving behind the micro issues faced by the power industry, they did have large macro size problems. Already the industry was reeling under a heavy debt crisis, surplus crisis and environmental crisis even before the Covid started by end 2019. More than 14 of the 25 companies listed by RBI for major defaulters were from the power industry, back in 2017. Mind you, not as willful defaulters.

 

Today, with the second wave and lockdowns still continuing, the power consumption which was growing rapidly in the last few months took a dip. Year on year power consumption saw a continuous growth. In March, it grew by 23% over the same period previous year. In April 2021 it grew by 41% while in the month of May, the first two weeks saw a growth of about 19% over the previous year! It continued to slow down in the coming weeks as well.

 

When the consumption goes up, prices go up as well. Opposite is also true. January 2020, consumption started falling and power prices too started taking a nose dive. So is the case in the month of Jan 2021, the power requirement was better than the previous year consumption, and it continued to grow. The prices literally, sky rocketed.

 

From Rs.2.82 per kWh on an average in the month of Dec 2020, the prices started rising with the consumption in the month of Jan 2021. Consumption and price hit a peak in the month of March, reaching a price level of Rs.4.23 as the monthly average. Consumption hit a peak as well of a daily average of nearly 4000 Million Units of power!

 

With the turn of March the consumption as well as the prices started falling. By mid-May, the number of units consumed hit a daily total of 3000 million units nearly. Almost down by a billion units.

The price on the other hand, fell from its peak of Rs.4.23 per kWh to Rs.2.80 per kWh by mid May.

Most of us, expect a spiralling down of the power prices as it happened three years back when it reached a very low average daily price of less than Rs.2.00 per kWh. As a matter of fact, that was one of the major factors that pushed the power companies to the brink of extinction!

It is also important to note that some basic price is needed for these power companies to operate. It is not wise to kill the goose when it is laying its eggs however pushy we might feel to reduce the price.

 

Of course, the generator has to take care of his interests. But there are a few who could be desperate to survive and could help in bringing down the price of the power.


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