This brief analyzes the impact of COVID-19 on the power sector in the State of Karnataka, India. We explore demand scenarios across a range of severities of the COVID shock as well as other exogenous factors—namely, agricultural demand, hydro generation, and power market prices—and assess their impacts on discom revenue and profits. We find a substantial revenue decrease in energy sold of up to INR 3,600 Crore in 2020 (8% reduction), and a more modest effect of INR 1,420 Crore in 2021. Discom costs vary less, as both fixed costs and non-power-purchase costs do not respond to demand shocks. Losses (negative profits) increase significantly, from INR 4,780-5,700 Crore without COVID-19 to 6,429-8,080 Crore in 2020, and from INR 4,080-4,800 Crore to 4,230-6,780 Crore in 2021. We note that increasing agricultural subsidies and/or residential tariffs by about 20% can offset COVID-19 losses in their entirety.
Recommended citation:
Iychettira, K., Hou, X., Davidson, M., & Urpelainen, J. (2020). The impact of COVID-19 on the power sector in Karnataka, India (ISEP Policy Brief). Initiative for Sustainable Energy Policy.