Electricity Sector in India: Coping with Changes in Demand and Supply
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Case Code: ECON087 Case Length: 11 Pages Period: 2018-2020 Pub Date: 2020 Teaching Note: Available |
Price: Rs.300 Organization : Government Agency Industry : Energy Countries : India Themes: Micro Economics, Economic Slowdown, Pricing |
Abstract Case Intro 1 Excerpts
Introduction
On April 02, 2020, India’s electricity power demand dropped by 43 Gigawatts to 125.81 Gigawatts compared to the same day the previous year, amid a nationwide lockdown to contain the Covid-19 1 outbreak in the country. 2 Over the years, India's power sector had undergone significant changes to meet the increasing demand for power after the Government took measures to promote investment in the sector to hike power generation in the country. In 2018, the power demand in the country witnessed the fastest pace of growth since 2013. But it failed to maintain a similar pace in 2019.
While power consumption rose at 1.1% in 2019, it was the slowest pace of growth since 2013. Power demand in the country dropped for the fifth straight month in December 2019. On the supply side, conventional sources of energy witnessed a growth of 1.15% during the seven months of the financial year 2020 (April 2019 to October 2019). The growth was the slowest compared to the previous five years. Power supply continued to fall in December 2019. Analysts said the key indicators of the health of India’s power sector, like demand and supply of power, painted a worrisome picture fueled by the economic slowdown. Some of the factors that impacted the power sector in the country were lower demand from the industrial sector, financial stress in the sector, energy efficiency measures, and the impact of the monsoon.
After months of decline, in 2019, power demand grew by 3.5% and supply by 3.6% year-on-year in January 2020 6 and this continued in February 2020. But the rebound in power demand did not continue for long. India's peak power demand fell in April 2020. Despite the Government's measures through a set of reforms, the lockdown due to Covid-19 had an adverse impact on the sector.
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