Power generation numbers for December 2024 are out, and while there is the third consecutive month of year-on-year marginal increase – the overall context makes the numbers look rather unimpressive. Here is one piece of context. December of 2017 saw higher power generation than December 2024. On a cumulative basis, the grid power generation at 64.4 billion units during 1HFY25 is the lowest since FY19 and 11 percent shy of the peak in FY22. On a calendar year basis, CY24 generation at 120.8 billion units is erringly similar to that of CY18.
On a 12-month rolling average, 10 billion units are lower than 4 percent year-on-year and 13 percent lower than the peak of 11.6 billion units seen in May 2022. September 2018 was the first time when the 12-month rolling average power generation crossed the 10 billion mark, and December 2024’s value is lower than back then. Mind you, five of the six months in the first half saw a considerable rise in average nationwide temperatures, which makes the overall picture grimmer.
After two months of actual power generation outpacing the reference power generation, it lagged again in December 2024. The most noticeable deviation came from nuclear generation which was more than made up by a similar increase in hydel generation. RLNG-based generation remains the leading fuel source in winter months as the authorities continue to manage the RLNG inflow owing to state-to-state contractual obligations, often putting more efficient and less costly fuel sources on the back burner.
For the sixth month running, monthly Fuel Charges Adjustment (FCA) sought to stay in the negative zone, and expectedly so. It is worth mentioning that reference fuel charges for 1HFY25 are an average of 48 percent higher year-on-year, which came into effect with the base tariff revision in July 2024. Nonetheless, much lower periodic adjustments coupled with lower monthly adjustments have offered some respite to electricity bills. It is another matter that PBS gets it wrong on most occasions and ends up reporting considerably higher respite than what is the case.
As expected, the winter incentive package in place and with the incremental 25 percent consumption priced at marginal cost did not move the needle much on the domestic consumption side, given limited use case scenarios. The provisional numbers put the cumulative impact at an additional 45 million units in December 2024, which can only be termed a failure, at least for the first month of the three. With natural gas for captive power consumption now priced much closer to RLNG and with the IMF conditions of ending captive-based generation in a phased manner still in place, grid generation should, in theory, benefit from the outcome.
There has not been much progress on the policy front in relation to the solar surge, particularly the net metering consumers, which is also one of the reasons for lower demand growth. Discos’ blatant disregard for all procedures in continuing with commercial-based load shedding adds to the collateral damage.
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