There is no denying the fact that the summer of 2024 will be remembered for long! As Severe heatwave gripped several parts of north India and temperature soared to as high as 53 degrees celsius, power demand surged as well. In fact in June, power demand in the region spiked 22 per cent in the region as cooling appliances such as ACs, cooler rose in demand to tackle the high temperature.
Apart from the soaring temperature, improvement in economic activity also contributed to the increased demand for power. At the national level, power demand increased 8 per cent on-year to 152 billion units (BU) in June, following up on a sharper 14 per cent on-year growth in May.
As per a report by CRISIL, the power consumption in the north-eastern, eastern and western regions increased 8.3, 7.8 and 3.5 per cent on-year, respectively. While the rest of the country demanded power, the power demand in southern states interestingly declined 5.1 per cent. It is further expected that the situation is unlikely to improve pan-India despite the fact that southwest monsoon is arriving early this year. Infact, data from 724 districts between June 1 and July 4 shows that 38 per cent of the districts received deficient rainfall.
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Rise in demand of generators
In order to meet the rising demand for power, generators have been increasingly turning to the short-term power market. In line with the on-year increase in power demand, volumes traded in the short-term power market increased 19 per cent on-year in June. Additionally, the real-time market (RTM) volumes surged 20 per cent, indicating the need for immediate delivery during periods of sudden high power requirement. Interestingly, RTM volume share on the Indian Energy Exchange (IEX) increased to 30 per cent in June against the average of 23 per cent since its inception in June 2020.
It further led to expansion in new order, output and buying levels as the purchasing managers index increased to 58.3 in June from 57.5 in May, led by the commercial and industrial segment, which makes up approximately 50 per cent of the country’s power demand. Consequently, peak power consumption touched 245.41 GW in June following 250 GW in May.
Gas, hydro and coal supply
Additionally, the share of gas increased from 2 per cent in June 2023 to 2.8 per cent with the implementation of Section 11 of the Electricity Act, 2003 for gas-based power plants. The share of coal and hydro increased marginally as well, whereas the share of renewable energy declined 0.84 per cent on-year owing to a 7 per cent decline in wind generation. However, solar generation rose 19 per cent.
The dispatch of coal to power plants too increased to 6.7 per cent on-year in Q1 FY25 as it is considered to be the main source of electricity generation. As on June 30, thermal power plants had 47 million tonnes (MT) of coal against 36 MT during this period last year. With an aim to address the increase in coal demand, the government extended the period of necessary blending of imported coal to June 2024 and increased the weightage from 4 to 6 per cent.
Furthermore, it is expected that the power demand will remain stable at in the second quarter of the fiscal year due to the La Niña effect, however it may clock 5.5-6.5 per cent growth for the full year.
From: financialexpress
Financial News
