Electricity generation stumbles badly in August

Source: LiveMint.com, Sept 08, 2016

Electricity generation growth slowed further in August. After decelerating from 9% in the first six months of the current year to 1.6% in July, growth slipped below 1% to 0.15% in August.That’s the slowest August growth the industry saw in at least seven years. The last time the August reading fell below 1% was in 2008.

Thermal power generation fell 0.8% from the year ago, the first drop in recent months. Even hydro power sector registered a slight drop in production (-0.2%). Nuclear and imports from Bhutan, on the other hand, saw good growth. Contractual obligations may have driven distribution companies to nuclear plants and reduced off-take from the thermal sector.

Even then the overall generation growth of just 0.15% does not speak well of the demand environment. Fall in temperatures and monsoon rains could have reduced demand from air conditioning and agriculture pump-sets. It also implies that the industrial segment is yet to see a meaningful recovery or perhaps that the incremental needs of this sector are increasingly being met by captive power sources.

While the reasons are not watertight, the incoming data portend a dull July-September quarter for thermal and hydro power utilities. For the second consecutive month, the sectors posted subdued generation trends. The thermal power sector’s utilization levels continue to fall and despite the onset of the monsoon season, hydro power is yet to register a growth in electricity production.

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