June Heatwave Drives Power Demand, Short-Term Market Booms, Says Crisil
Peak power consumption touched 245.41 gigawatts in June, following a historic high of 250 GW in May.
India's power demand saw a 22% surge on a yearly basis in June as the mercury hit 5-8 degrees Celsius above normal and people kept up their usage of cooling appliances. Power consumption in the northeastern, eastern and western regions increased 8.3%, 7.8% and 3.5% on-year, respectively, while power demand declined 5.1% in the southern states, according to a Crisil report.
Peak power consumption touched 245.41 gigawatts in June, following a historic high of 250 GW in May.
To keep up with the growing demand for electricity, generators have been increasingly relying on the short-term power market. In June, trading volume rose by 19% as compared to the previous year, reflecting a corresponding increase in power demand.
Specifically, volume in the real-time market (RTM) surged by 20%, highlighting the necessity for immediate power delivery during periods of sudden high demand. Notably, the RTM volume share on the Indian Energy Exchange Ltd. climbed to 30% in June, up from an average of 23% since its establishment in June 2020.
(Source: Crisil)
IEX Trends For June: Key Highlights
Sales volume is up 181% and 17% in the northern and eastern regions, respectively.
Sales volume in the western and southern regions declined by 31% each.
The price increase was limited to 8% in the north due to an increase in supply from coal and gas plants.
The Crisil report also noted that robust electricity demand led to expansion in new orders, output and buying levels, which can be gauged from the fact that the Purchasing Managers Index increased to 58.3 in June from 57.5 in May, led by the commercial and industrial segments.
Power Production Mix
In June, power output is estimated to have grown by 8% year-on-year to reach 160 billion units. Within the generation mix, the share of gas increased from 2% in June 2023 to 2.8% after the government directed gas-based plants to operate at a maximum capacity from May 1 to June 30 in order to meet the rising power demand.
Coal and hydro shares also saw a slight increase, while renewable energy decreased marginally by 0.84% year-on-year, primarily due to a 7% decline in wind generation. However, solar generation experienced a notable 19% increase during the same period.
Crisil expects power demand to remain stable in the second quarter of the fiscal, due to the La Niña effect, but clock 5.5–6.5% growth for the full year.
