New Delhi: After two months of decline, India’s power demand logged a slight increase of approximately 0.4% on-year, reaching an estimated 140 billion units (BUs) in October, according to CRISIL Market Intelligence & Analytics. This uptick in demand, observed after the southwest monsoon’s withdrawal, aligns with an annual rise of 4.7% over the April-October period, driven by increased industrial activity and preparations for the festival season.
The resurgence in demand was fueled by a rise in manufacturing, with the Purchasing Managers’ Index (PMI) climbing from 58.3 in September to 58.6 in October, reflecting growth in industrial output. This sector accounts for nearly 50% of India’s total electricity consumption. “A pickup in industrial activity as the festival season approaches has supported power demand during the month,” the report stated, noting that industrial and commercial sectors remain key drivers.
However, certain factors moderated demand. Construction activities, which typically slow down during this period, and reduced irrigation needs post-sowing led to a dip in agricultural electricity consumption. The report noted that these seasonal patterns, alongside easing temperatures, are tempering further increases in electricity demand.
Regionally, the demand pattern varied widely. Northern and eastern states experienced significant increases, with power consumption rising by 13% and 4% on-year, respectively, while the southern states saw a decline of 10% due to the northeast monsoon, which generally reduces electricity requirements.
Power generation in October was estimated to have risen by 2.4% on-year to around 152 BUs, surpassing demand growth. This increase was primarily supported by a 43% surge in hydroelectric power generation due to favorable water availability, marking a recovery from a low base last October. The generation from nuclear and renewable energy sources also grew by 6% and 1%, respectively, while coal and natural gas-based power saw marginal declines of 1% and 27% on-year, respectively.
Coal stock levels have improved, with thermal power plants holding about 35 million tonnes (MT) as of October 31, up from 21 MT a year ago. This is attributed to steady coal dispatches and increased imports. With the government mandating that imported coal-based plants run at full capacity until mid-October, coal imports by power plants surged by 29% on-year in the first half of the fiscal, boosting stockpiles for both imported and domestic coal plants.
CRISIL forecasts that India’s power demand will track economic growth, with a projected 6-7% on-year rise for the fiscal year, driven by strong GDP growth and anticipated post-monsoon heatwaves.
