Electricity sector to recovery in FY22 after a dismal Covid year: ICRA

Staging a recovery from FY21, all-India electricity demand is expected to grow at 6%– 7% in FY22, according to a report by credit rating agency ICRA. After the decline of about 2.5% in the current fiscal, the year ahead is expected to benefit from a favourable base effect and likely recovery in demand from the commercial and industrial (C&I) segments.

As a result, the all-India capacity utilisation of thermal power plants is likely to improve to 57%- 58% in FY22 from the estimated level of 53% – 54.0% in FY21, the agency said.

“Given the subdued thermal PLF, (plant load factor), lack of visibility in signing of new power purchase agreements (PPAs) for for power producers and modest tariffs in the short-term power market, the credit outlook on the thermal power segment continues to remain negative,” said Sabyasachi Majumdar, Group Head and Senior Vice President of Corporate ratings, ICRA.