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India's power demand is estimated to rise 6.5-7.5 per cent year-on-year this fiscal to 1,825-1,835 billion units (BU), driven mainly by higher cooling requirements amid expectations of higher temperatures and lower rainfall due to El Nino conditions, according to a report by Crisil Intelligence.
The report said the rise in temperatures and a possible rainfall deficit are expected to increase the use of cooling equipment, putting further pressure on electricity demand. It said the trend in peak power demand and the sensitivity of short-term electricity market prices to changes in temperature will remain key factors to watch. It stated, "Power demand is estimated to rise 6.5-7.5 per cent on-year this fiscal to 1,825-1,835 BU, driven by an expected rise in cooling demand due to higher temperatures and lower rainfall because of El Nino conditions". The report mentioned that the impact of hotter and drier weather was already visible in July, when India's power demand surged 10.9 per cent year-on-year to around 171 BU, the highest power demand recorded for any month. This was significantly higher than the 2.6 per cent growth recorded in July last year. According to the report, the increase in electricity consumption was driven by a sharp rise in the use of cooling equipment amid a rainfall deficit linked to El Nino conditions. Rainfall remained below normal across several parts of the country. The northwest, central and southern regions received rainfall deficits of 10 per cent, 1 per cent and 26 per cent, respectively, between June 1 and July 29. Overall, the country received 15 per cent below-normal rainfall during the period. The impact was particularly visible in some states. The report added that the rise in demand was accompanied by higher electricity generation. Power generation increased by around 10 per cent year-on-year to 182 BU in July, according to the report. Most major sources of power generation recorded an increase during the month, except gas and hydropower. Renewable energy generation rose around 10 per cent year-on-year, mainly due to an increase in installed capacity. India added 13.2 GW of renewable energy capacity, including small hydro, in the first quarter of this fiscal. However, weaker rainfall had the opposite impact on hydropower generation. Hydropower output declined around 14 per cent year-on-year in July, primarily due to weak rainfall. The report also highlighted lower water availability in reservoirs. The energy content of 31 reservoir-based hydropower projects stood at around 14 BU as of July 31, significantly below their full-reservoir capacity potential of around 34 BU. At the same time last year, the energy content of these reservoirs was around 22 BU. With electricity demand expected to remain closely linked to weather conditions, the report said peak demand trends and the impact of temperature variations on short-term market prices will remain important watchpoints for the power sector this fiscal. (ANI)
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