J.P. Morgan - Know Your Power

Know Your Power Demand yet to show a pickup, while CEA forecasts a 6% increase in supply in FY15

In March, energy demand contracted by 4% yoy; while peak demand was flat. Peak deficit was 3.9% down, 70bps mom and 430bps yoy; 3.6% energy deficit was down 470bps yoy. In FY14, while power demand growth was flat, supply increased by ~5%, translating into a ~4% deficit i.e. almost half of FY13. As per CEA forecasts, power supply is expected to increase by ~6% yoy in FY15 as well, led by the private sector. The generation target implies a thermal PLF target of 65.5%, almost flat compared to FY14, however, on a larger capacity base.

Figure 1: India's Power deficit % Source: CEA. Note: Mar‘14 figures are provisional.

Figure 2: Monthly peak and energy demand growth % Source: CEA. Note: Mar’14 figures are provisional.

In line with the sharp decrease in energy demand, in March, national thermal PLF decreased by 210bps mom and 540bps yoy to 66.8%. State utilities and IPPs reported 60% and 61% PLF respectively, down 210bps and 130bps mom respectively, while Central utilities reported a higher 80% PLF but down 340bps mom.

Figure 3: Sector wise All India PLF (in %)

Source: CEA.

· Domestic coal – mixed trend: Domestic coal based plants of TPWR (75% vs. 69%), Adani (Tiroda 72% +500bps, Kawai 73% vs. 42%), Sterlite’s Jharsuguda (40% vs. 36%) and Lanco’s Anpara (76% vs. 67%) reported improved PLF. NTPC (87.4% vs. 89.9%), JPVL’s Bina (shut down vs. 67% in Feb), CLP (43% vs. 46%) and Lanco’s Amarkantak (flat at 48%) reported a mom decline in / low PLFs in March. The newly commissioned Indiabulls’ Amravati plant reported 90% PLF.

· Imported coal – mom decline in PLFs: JSW’s Ratnagiri (47% vs. 66%), Lanco’s Udupi (80% vs. 86% - asset up for sale, JSW one of the bidders), RPWR’s Rosa (79% vs. 82%), TPWR’s Mundra (73% vs. 86%) and JSW’s Vijaynagar (102% vs. 104%) all reported a decline in PLF. Adani’s Mundra reported a slight mom improvement (77% vs. 75%).

· Captive coal: With the commissioning of Sasan’s 3^rd unit, mom production increased; however, the average PLF declined to 52% vs. 65% in Feb. JSW restarted power production at Barmer with PLF at 11% in March vs. 3% in Feb, impacted by a lack of permission to ramp up lignite production; plant will scale back to full operations in Apr’14. JSPL’s Tamnar plant reported 99% PLF vs. 88% in Feb.

Figure 4: Richards Bay Coal Index (6,000 kcal/kg) Source: Bloomberg.

Figure 5: Indonesia Ecocoal Index (4,200 kcal/kg) Source: Bloomberg.

Figure 6: Coal India: Dispatches and Production Volumes (in MMT) Source: Coal India.

Despite the halt in power demand growth, short term bilateral contract rates have remained stable in FY14. In Feb’14,bilateral prices (~50% of short term volume) declined 0.7% yoy to Rs4.4/unit, down 1.5% yoy in FY14TD. However, UI and exchange traded prices are down sharply i.e. by 20-45% yoy, hence the overall volume weighted average transaction prices are down 15% FYTD to Rs3.4/unit. Based on the forward curve, bilateral rates are expected to decline 5-6% from current levels to ~Rs4.2/unit in April/May’14. Short term power volumes are up only 2.7% YoY FY14TD, despite a ~11% increase in power capacity.

Figure 7: Short Term Power Prices Rs/kwh Source: CERC.

Figure 8: Short Term Power Volumes % Source: CERC.

Figure 9: Forward curve indicate a 5-6% decline Apr/May merchant prices (Rs/kwh)

Source: CERC.

Table 1: India Power Sector: Monthly PLFs

	Production Units (mn units)						PLF
	Oct '13	Nov '13	Dec'13	Jan'14	Feb'14	Mar'14	Oct '13	Nov '13	Dec'13	Jan'14	Feb'14	Mar'14
Torrent Power	434	429	463	449	371	472	35%	36%	38%	37%	34%	39%
AECO (500MW)	228	265	291	277	181	267	61%	74%	78%	74%	54%	72%
Sugen (1147.5MW)	205	164	172	172	190	206	24%	20%	20%	20%	25%	24%
Reliance Power	934	1,064	1,124	946	1,232	1,491	59%	70%	73%	47%	65%	58%
Rosa (1200MW)	762	798	658	552	659	706	85%	92%	74%	62%	82%	79%
Butibori (300MW)	96	-	-	-	-	17	43%	0%	0%	0%	0%	8%
Sasan (1,980MW)	76	265	465	394	573	768	17%	60%	105%	44%	65%	52%
Reliance Infra	396	398	419	288	380	415	69%	72%	73%	50%	74%	73%
Dahanu (500MW)	372	340	352	224	325	364	100%	94%	95%	60%	97%	98%
Goa (48MW)	23	20	8	22	20	22	65%	59%	22%	61%	62%	61%
Samalkot (220MW)	-	38	59	42	34	30	0%	24%	36%	26%	23%	18%
Lanco	1,668	1,477	1,389	1,702	1,644	1,826	57%	53%	48%	59%	63%	63%
Aban (120MW)	69	65	65	65	65	67	77%	75%	73%	73%	81%	75%
Kondapalli 1&2 (716MW)	113	115	45	110	150	145	21%	22%	8%	21%	31%	27%
Amarkantak (600MW)	159	210	216	181	193	215	36%	49%	48%	41%	48%	48%
Udupi (1200MW)	694	465	406	737	690	717	78%	54%	45%	83%	86%	80%
Anpara (1200MW)	620	621	657	609	542	675	69%	72%	74%	68%	67%	76%
Budhil (70MW)	14	1	-	-	3	7	27%	3%	0%	0%	7%	14%
JSW Energy	1,512	1,338	1,595	1,604	1,156	1,164	65%	59%	68%	69%	55%	50%
Vijaynagar (860MW)	636	603	651	617	602	651	99%	97%	102%	96%	104%	102%
Ratnagiri (1200MW)	652	568	571	592	529	424	73%	66%	64%	66%	66%	47%
Barmer (1080MW)	224	167	373	395	25	89	28%	21%	46%	49%	3%	11%
Adani Power	3,936	4,013	4,196	4,735	3,595	4,533	73%	77%	71%	80%	68%	75%
Mundra (4,260MW)	2,747	2,560	2,711	2,803	2,329	2,641	80%	77%	79%	82%	75%	77%
Tiroda (1,980MW)	1,140	1,058	1,060	1,183	897	1,174	77%	74%	72%	80%	67%	72%
Kawai (1,320MW)	49	394	426	749	369	717	10%	83%	43%	76%	42%	73%
GVK	78	80	106	98	87	78	11%	12%	15%	14%	14%	11%
J1 &2 (455MW)	78	80	106	98	87	78	23%	24%	31%	29%	28%	23%
Gautami (464MW)	-	-	-	-	-	-	0%	0%	0%	0%	0%	0%
NTPC (37,042MW)	17,891	19,803	21,429	21,431	19,670	21,519	66%	76%	79%	78%	79%	78%
Coal (33,025MW)	17,053	18,772	20,330	20,422	18,654	20,451	71%	81%	84%	83%	84%	83%
Gas (4,017MW)	838	1,031	1,099	1,010	1,016	1,068	28%	36%	37%	34%	38%	36%
Tata Power	3,587	2,716	3,747	3,681	3,495	3,809	65%	51%	68%	66%	70%	69%
Mumbai License (1,580MW)	635	600	560	483	412	449	54%	53%	48%	41%	39%	38%
Mundra UMPP (4,000MW)	2,041	1,248	2,265	2,310	2,323	2,167	69%	43%	76%	78%	86%	73%
Maithon (1,050MW)	581	544	620	584	485	585	74%	72%	79%	75%	69%	75%
Jojobera (441MW)	196	193	178	173	173	213	60%	61%	54%	53%	58%	65%
Bhira (150MW)	88	74	66	73	52	59	79%	68%	59%	65%	52%	53%
Bhivpuri (75MW)	26	30	33	35	29	315	47%	56%	59%	63%	57%	565%
Khopoli (72MW)	20	26	24	24	22	20	37%	50%	46%	45%	45%	37%
Belgaum (81MW)	-	-	-	-	-	-	0%	0%	0%	0%	0%	0%
JPVL	407	408	444	408	347	149	32%	26%	27%	25%	23%	9%
Vishnuprayag (400MW)	-	-	-	-	-	-	0%	0%	0%	0%	0%	0%
Baspa (300MW)	89	51	41	33	28	30	40%	24%	18%	15%	14%	13%
Karcham Wangtoo (1000MW)	263	170	132	114	95	119	35%	24%	18%	15%	14%	16%
Bina (500MW)	55	187	272	261	225	-	46%	52%	73%	70%	67%	0%
Sterlite	816	597	592	550	582	720	46%	35%	33%	31%	36%	40%
Jharsuguda (SEL 2400MW)	816	597	592	550	582	720	46%	35%	33%	31%	36%	40%
China Light and Power	544	713	761	642	408	421	55%	75%	78%	65%	46%	43%
Jhajjar (1,320MW)	544	713	761	642	408	421	55%	75%	78%	65%	46%	43%
JSPL	729	713	674	498	591	737	98%	99%	91%	67%	88%	99%
Jindal Power (1000MW)	729	713	674	498	591	737	98%	99%	91%	67%	88%	99%
KSK Energy	230	216	239	150	330	433	57%	56%	59%	37%	43%	51%
Wardha Warora (540MW)	230	216	239	150	89	155	57%	56%	59%	37%	24%	39%
Akaltara (600MW)					241	278					60%	62%
ACB	243	301	342	270	277	310	62%	79%	87%	69%	78%	79%
Korba (270MW)	141	191	200	158	167	183	70%	98%	99%	79%	92%	91%
SPGL (208MW)	73	88	128	110	108	107	47%	58%	83%	71%	77%	69%
Ratija (50MW)	28	23	14	3	2	20	76%	63%	38%	7%	5%	55%
Indiabulls Power	122	121	66	116	198	181	61%	62%	33%	58%	48%	45%
Amravati (270MW)	122	121	66	116	191	181	61%	62%	33%	58%	91%	90%
Nasik (270MW)					7	-					4%	0%

Source: CEA, J.P.Morgan. Note: NTPC’s reported PLF defers from our calculated PLF in the table above.

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