Depressed electricity demand due to COVID-19 and loss of revenue to Discoms. Where we are heading?
The impact of COVID-19 Has been significant in terms of demand loss and consecutive loss of revenue. The typical electricity demand loss due to COVID-19 has been estimated about 20% and the revenue loss has been estimated as 7.2% bye Recent report of Niti Aayog. The loss of demand is due to reduced power consumption inf the commercial and industrial sectors. Discoms are also stressed due to high burden of cross subsidy surcharge is and it is pressing them hard fo further increase tariffs to the commercial and industrial consumers to manage their revenues. we are getting trapped in a viscious cycle. On one end there is a need to revive the Discoms and at the same time there is a need to keep the electricity tariffs low to avoid undue burden on the C&I sector consumers. Due to depressed electricity demand the Discoms are reluctant to sign the new PPAs. This will inturn affect the Government of India’s targets to achieve 175 GW solar installations by 2022.
The rooftop sagment gets its growth mainly through the C&I sector installations. Due to COVID 19, most of the C&I consumers are not willing to sign the new PPAs with the rooftop solar project developers. Infact many solar developers are facing challange of billing and payment collection from their existing C&I consumers for their installed solar rooftop projects. While the solar projects are facing slowdown due to supply chain issues and Indochina geopolitics, there is an increasing challenge to the solar project developers to manage the off taker risk during the era of COVID-19.
It is important to have a healthy off taker to achieve the targets of solar installation. Most of our Discoms are already suffering losses, There is a requirement to fix it through immediate liquidity support to Discoms.
The government of India has recently announced Rs. 90,000 crore stimulus to Discoms for immediate relief for the Discoms in making the delayed payments to generation companies. Reducing the cost of energy supply is another effort by Discoms and solar being the lowest LCOE resource, there is a need to push the solar developers as well to overcome the COVID 19 crisis.