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COVID19: Impact On Indian Power Sector: - A Perspective
COVID19: Impact On Indian Power Sector: - A Perspective
Power Sector
– A Perspective
Introduction
COVID19 pandemic has brought the whole This article is a viewpoint that looks at what
world down to its knees. It has been more than happens to the strategic goals and action plans
a month since most of the countries are in lock- in the current highly uncertain Covid19 scenario.
down condition fighting the pandemic. With An attempt has been made to try and estimate
only essential services allowed to run, the rest of the business impact and possible precautionary
economic activities are at a standstill. Oil prices are measures to stay afloat and still focus on meeting
at their lowest in the history; stock markets have the set goals. However, discussions in this paper
crashed, and an imminent recession and a possible are limited to Power sector and the domestic
depression may be unavoidable in the near future. market alone.
We are all going through a ‘Black Swan’1 event, Government Plan to boost Infrastructure
which is highly uncertain and unpredictable. Most Growth in India
companies would have made their plans based on
business as usual scenario with ambitious growth Hon’ble Prime Minister, in his Independence Day
targets considering the global economy, expected 2019 speech, highlighted that the government is
GDP growth, governments plans (budgets), etc. planning to invest Rs. One hundred lakh crores on
The challenge in front of business leaders (CXOs, infrastructure over the next five years, including
Business Unit Heads, Sales Heads, etc.) today is social and economic infrastructure projects. The
to understand the situation, visualise the future, emphasis of our PM’s national infrastructure vision
consider various risks and take decisions. The 2025 is on ease of living: Safe & Clean drinking
precise task at hand is to steer the organisation water, access to affordable & uninterrupted power,
to stay competitive and achieve the set goals provide healthcare, modern railway stations,
while making sure all stakeholders’ interests are airports, bus terminals and world-class educational
protected. institutes. Figure 1 indicates planned allocations
across various sectors.
12% Energy
Food Processing 0.01
Steel 0.08 24%
Sports 0.08
Roads
Tourism 0.24
School Education 0.38 16%
Agriculture 0.54 Railways
Higher Education 1.18
Airports 1.43
Urban
Atomic Energy 1.54
Health 1.69
Petroleum Natural Gas 1.95 Irrigation and Rural
19%
Ports 2.02 Infrastructure
16%
Industrial Corridors 2.99
Others
Digital Infra 3.20
Drinking Water 3.62 13%
Rural Infra 4.11
Irrigation 7.73
Renewable Energy 9.30
Conventional Power 11.76
2
Figure 1: Planned allocations for
Railways
various sectors 2019-2025 as per
13.69
National Infrastructure Pipeline (NIP) - in Rs Lakh Cr
Urban and Housing 16.29
Roads 19.64
Irrigation, Power (Renewable & Conventional), Railways, Urban & Housing and Roads comprise ~80% of NIP
₹ 1.51 ₹ 1.44
infrastructure requires
capacity addition of ~263 ₹ 0.31
GW to the current installed YF20 (Est) FY21 (P) FY22 (P) FY23 (P) FY24 (P) FY 25 (P)
capacity of 356 GW, thereby Renewables Conventional Power Nuclear
57%
81%
2
Figure 3a: Implementing Agency 2
Figure 3b: Status of Project
2
Source: Finance Minister Smt. Nirmala Sitharaman releases Report of the Task COVID19: Impact on Owners/OEMs in Power Sector 3
Force on National Infrastructure Pipeline for 2019-2025. Posted On: 31 DEC 2019
4:11 pm by PIB Delhi. Task Force for creating National Infrastructure Pipeline
Current COVID19 Scenario
COVID19 pandemic has impacted all sectors. The power sector is an essential service and has the
challenge of maintaining continuous supply even though most of the industrial consumption has
reduced.
During the lock-down, the source of power 2. Running cost of renewable power plants is less
generation has been adapted to compensate for compared to thermal power plants.
the reduced consumption. Most of this decrease
in consumption is taken care of by reduced coal If the electricity demand remains weak, it will harm
power generation. the coal power plants more compared to other
power generation sources. Renewable growth has
As shown in Table 2, coal power generation already brought in the need for flexible power.
decreased from an average of 2,511 MU between The COVID19 situation has highlighted the same
1st March and 24th March to 1,873 MU between even more. Further, with the planned capacity
25th March and 19th April (~25%). As a result, additions in renewable energy as per NIP, flexible
coal power contribution in total power generation power assumes greater importance for the power
decreased from an average of 72.5% to 65.6% industry in India.
between the period 1st March to 19th April.
This swing perhaps is happening due to various
reasons, including:
• It’ll be over soon, • The worst almost • It’ll be over soon, • The worst is yet to
accept the dip in over, but slow accept the dip in come
sales/revenue recovery ahead sales/revenue
• Ineffective
• Containment for • Ineffective • But a second wave lockdown delays,
4 - 6 Weeks lockdown delays, can recur containment for
containment for 3 - 6 months
• Situation returns 2 - 3 months • May lead to lock
to normal and down again for 4 • Some industries
business as usual • Some dependent to 6 weeks may not sustain
industries may or some have
take longer to • Situation returns to reinvent
return to normalcy to Normal and themselves
business as usual
V U W L
3
Normalcy here referred to pre-Covid19, i.e., before declaring it as COVID19: Impact on Owners/OEMs in Power Sector 5
a pandemic by WHO, it assumes the planned GDP growth, social-
economical life before COVID19
COVID19 Impact on NIP
Impact on NIP and specifically on Power Sector Other sectors which are depending on these will
is estimated using the VUWL Scenarios and also be impacted to a certain extent. The overall
keeping in mind each sector’s investment plans, impact can be reasonably assumed to be around
implementing agencies & current status of 25% dip.
projects.
W – Scenario is similar to V Scenario. Here, the
V-Scenario is the very optimistic earliest recovery world wins only a momentary respite, with
scenario; containment of 4-6 weeks would hardly the virus returning in winter. However, most
make any difference and economy, as well as most businesses will be better prepared, slowing the
of businesses, are expected to return to normal. spread of the disease. Growth will drop after the
Also considering the type of projects, stalling initial recovery. But more significant success in
them for few weeks would not have a major dealing with the return of the virus will see growth
impact either, other than the project delivery or recover much faster. Total containment of 10-12
commissioning dates perhaps getting shifted. weeks. The overall impact can be estimated to be
In some cases it is even possible to catch up the somewhere between V & U Scenarios, i.e., ~ 16-
time lost. Hence, we can approximately take 18% dip.
impact to be around 10-12% dip in spending from
State or Central Govt or Private agencies with L-Scenario is the worst-case scenario, wherein
corresponding effect on Owners, OEMs as well as recovery takes a very long time. Perhaps the worst
engineering consultants and other companies/ is not over as yet, and lockdown continues for
suppliers involved in Power Sector. The % dip in more than two quarters before recovery, thereby
sales or commercial impact perhaps can vary from bringing all or most businesses to a complete halt.
company to company and supplier to supplier In this scenario, most companies will struggle in
depending upon their position in the value chain. the survival mode and, many in the end might
However, 10-12% dip is reasonable to assume. collapse as well. It is fair to assume the impact on
spending to be 50% less.
U-Scenario is a slow recovery, with no economic
activities for about 2 to 3 months, thereby demand An estimate of the proposed government
becomes less, resulting in some industries/ spending on Power Sector in each of V, U and L
businesses being unable to sustain. As such Scenario is presented below. W Scenario is not
economy was under stress a couple of quarters explicitly shown as it is between V and U. It should,
pre-COVID19. If slow down continues for 2 to however, be noted that the assumption is the
3 more months then some of these industries government does not make any changes to the
will have to be bailed out (for example, airlines, plan considering excess spending in health and
automobiles, tourism, hotel and restaurants etc.). allied sectors.
• Prepare/update Business Continuity Plan and • Engage with employees at all levels through
communicate the same to all stakeholders in regular meetings and resolve issues if any
the value chain. concerning productivity.
• Continue to operate the plants with social • Monitor the situation continuously and make
distancing guidelines issued by Government as necessary changes to the plans as needed and
Power is an essential service. As the demand communicate the same to all stakeholders as
variation is expected to be not normal, green required.
power is to be utilised and thermal plants to
operate at minimum loads based on demand.
2. Increased use of drones and fixed point photography to reduce the need for manual inspection
• Manage and track engineering drawings and documents across their lifecycles.
• Bring all stakeholders together on the same platform, having built-in quality management
processes.
• Ensure that everyone works on the most up-to-date information with complete traceability.
• Collaborate digitally through electronic reviews, comments, approvals, RFI’s, correspondences and
transmittals
• Work as a team and make sure everyone is held accountable for their responsibilities and action
items.
References
• https://pib.gov.in/PressReleseDetail.aspx?PRID=1598055
• https://hbr.org/1997/11/strategy-under-uncertainty
• https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/strategy-under-uncertainty
• https://energy.economictimes.indiatimes.com/news/renewable/iea-renewables-only-energy-source-resilient-to-steepest-fall-in-demand-
since-ww-ii/75483949
• https://economictimes.indiatimes.com/news/economy/policy/view-how-will-the-economic-recovery-shape-up-likely-scenarios/
articleshow/75523369.cms
• https://www.prsindia.org/theprsblog/impact-covid-19-power-sector
Delivering Aspirations,
Achieving Scale
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offers its customers invaluable expertise – a by-product of
more than five decades of premier service as an integrated
engineering service provider. To date, we have completed
more than 10,000 assignments in over 55 countries.
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4. Resources - Hydrocarbons & Chemicals
Useful Links
1. SOP for Restarting Office post Lockdown
2. SOP for Restarting Construction Sites post Lockdown
Authors:
Gangadhara Siddaiah Dr Rajashekhar Malur
Head of Sales – Power Chief Technology Officer
Tata Consulting Engineers Limited Tata Consulting Engineers Limited
gsiddaiah@tce.co.in | tceconnect@tce.co.in rmalur@tce.co.in | tceconnect@tce.co.in
Tata Consulting Engineers (TCE) has prepared this paper based on research
and analysis of material available in the public domain. The views expressed
herein are considered opinions of subject matter experts. TCE does not make
any representation explicitly or implicitly on the correctness of the contents
in this paper and shall not be responsible for any use of, or reliance on, the
contents herein.
May 2020