India's electricity demand slump could last through May

The timing and gradual lifting of the lockdown will shape demand in the near term.

India’s electricity demand is projected to crash 30% through May before progressively improving, as the government extended the nationwide lockdown by 19 days until 3 May, according to a commentary from Wood Mackenzie.

Before the extension, the fall in demand was initially estimated to last until end-March. The slump is expected to affect most sources of generation, although the Ministry of New Renewable Energy has reiterated that all renewables plants are still required to run during lockdown.

With the extended lockdown, thermal coal demand is expected to fall 25-30% YoY through April by a further 9% in Q2.

However, ‘graded relaxations’ that will allow more economic activity to resume will come into effect from 20 April, which may provide some upside to energy demand, according to Wood Mackenzie Asia Pacific vice chair Gavin Thompson.

Multiple risks still remain, and the timing and phasing of the country’s gradual release from lockdown, including the restart of selected manufacturing after 20 April, will be critical in shaping near-term energy demand.

“India’s high population density, low per capita income levels, huge migrant workforce and overburdened public health system all individually pose heightened risks: combined, the potential for economic and social crisis is multiplied,” Thompson noted.

Following the lockdown, national power demand collapsed by almost a third YoY in late March, with thermal coal consumption similarly dropping. A force majeure by port operators has also put energy supplies at risk, although energy is still considered an ‘essential’ service.