Higher industrial activity spurs power demand in November: Report

NEW DELHI: After three consecutive months of muted growth, India's power demand is estimated to have increased 4.3 per cent on-year to 125 billion units (BUs) in November with the recovery riding on a pick-up in industrial activity and warmer temperatures, a report said on Monday.

The CRISIL report also states that power generation is estimated to have increased around 5.4 per cent year-on-year to 136 BUs this November, more than meeting the monthly demand.

In a trend reversal, coal generation increased 3.5 per cent on-year in November, after three consecutive months of decline.

Industrial activity picked up pace during the month, as indicated by the Purchasing Managers’ Index (PMI) at 56.5, indicating expansion. Notably, industrial and commercial consumers account for almost half of India’s total power demand.

Additionally, November recorded the second-highest maximum temperature of 29.37 degrees Celsius and the third-highest average temperature of 23.14 degrees Celsius for the month since 1901. For the April-November period, power demand is up by 4.7 per cent on-year. Peak power demand is also estimated to have marginally increased to 207 GW in November from 204 GW a year ago.

Strong economic activity, with estimates pointing to the country’s gross domestic product expanding 6.8 per cent on-year this fiscal, is also seen boosting demand. However, the expectation of a more moderate winter season (December 2024-February 2025), as per the India Meteorological Department, will likely rein in power demand in the fiscal.

During November, power generation is estimated to have increased 5.4 per cent on-year to 136 BUs this November, more than meeting the monthly demand. In a trend reversal, coal generation increased 3.5 per cent on-year in November, after three consecutive months of decline. Generation of hydro, nuclear and renewable energy increased 43 per cent, 8 per cent and 4 per cent, on-year, respectively.

Higher hydro generation also rode on the base effect, considering it had declined 33 per cent in November 2023. Coal remains the key source of electricity generation in India. To ensure uninterrupted generation, dispatch of coal to power plants surged 4.3 per cent on-year over April-November, thereby increasing coal stocks. In November, dispatch increased 2.8 per cent on-year with coal production surging 7.4 per cent on-year post-monsoon.

As on November 30, thermal power plants had 40 million tonnes (MT) of coal as against 27 MT in the same period last year. The situation is better than last year. As on November 30, power plants had 14 days of coal stocks vs 10 days last year. Region-wise, the trend in power demand shows a wide variation. The northern states, which account for 29 per cent of India’s power demand as of fiscal 2024, recorded a 9 per cent rise this November. The western region (the highest share of 32 per cent) saw just a 1 per cent rise, while the southern and eastern regions registered a sub-2 per cent on-year growth. Vagaries of the weather, including severe and prolonged heatwaves in the first quarter and insufficient rainfall in July in northern India, have lifted power demand. With intense weather patterns expected to continue, power demand is expected to remain high.

--IANS

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