The report said the COVID-19 crisis will lead to a sharp recession in the current year, adding, “The COVID-19 shock will lead to substantially slower electricity demand growth and a lower level of total demand even several years after the shock.”
The report — authored by Thomas Spencer and titled “Bending the Curve: 2025 Forecasts for Electricity Demand by Sector and State in the Light of the COVID Epidemic” — was released today.
The report developed three scenarios for the Indian economy to 2025. The Baseline Scenario sees a sharp contraction in Indian GDP in 2020-2021 of 6.4 per cent, a rebound of economic growth in 2021-2022 and then a return to the pre-COVID trend rate of economic growth.
The L-Shaped and V-Shaped scenarios represent, respectively, a more pessimistic and optimistic version of the Baseline Scenario. “In the Baseline Scenario, the electricity demand for 2025 is 11 per cent below the level it would have been by then without the COVID-19 shock. In the L-Shaped Scenario, electricity demand is 17 per cent below the level of the counterfactual without the COVID-19 shock,” the report said.
The study recommended policy-makers, generators, DISCOMS, and investors need to prepare for a future in which the shock to electricity demand growth persists.
The rate of economic growth in India has been closely associated with the rate of electricity demand growth over the past 15-20 years. As the economy has followed a generally slowing trend after the global financial crisis of 2008-09, the growth rate of electricity demand has also slowed.