Power demand in May likely to hit 142-144 billion units

India’s power consumption is likely to peak this month with electricity demand expected to grow by 4-6 per cent y-o-y to 142-144 billion units (BU), Crisil Research said on Monday.

During May 2022, India consumed 136 BU of electricity, which is higher by 23 per cent y-o-y. The national peak demand stood at over 204 gigawatts (GW), which is again higher by 21 per cent y-o-y

“With power consumption expected to peak in May, Crisil Research expects demand to touch 142-144 BU during the month, with coal meeting 76-78 per cent of the total demand. To address peak demand, thermal power plants will require 77-79 million tonnes (mt) of coal. We expect domestic supply of coal to be 68-70 mtwith a majority coming from Coal India (CIL),” the agency said.

Power demand

Proactive efforts by the Central government and rains in April 2023 have ensured coal availability will be adequate to meet the imminent increase in power demand this summer, amid forecasts of heat waves. Power demand declined 1.1 per cent to 133 BU in April as unseasonal rainfall observed in certain parts of the country further boosted coal stocks, it added.

According to the India Meteorological Department (IMD), the monthly maximum temperature for May 2023 is expected to be above normal over east-central and east India and some parts of Northeast and peninsular India. However, it is likely to be normal to below-normal over the north west and west-central India.

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Most parts of the country are expected to experience normal to below normal minimum temperatures except some parts of north-west and east India where above normal minimum temperatures are likely in some areas, it added.

Sufficient supplies

Coal stock availability at power plants was 13 days at the end of April 2023, while the number of plants having critical levels of stocks came down to 41 in April this year, Crisil Research said.

Coal production rose 12.03 per cent y-o-y to a record high of 107.8 mt in March 2023 and 8.85 per cent higher y-o-y in April 2023 to 73.14 mt.

Overall despatch of coal to end users increased 11.6 per cent y-o-y to 80.35 mt in April 2023. Despatches made to power plants were up 6.6 per cent to 65.41 mt in the same period. The increase in domestic supply and the mandate to blend 6 per cent of requirement with imported coal in the first half of fiscal 2024, has led to adequate buffers at thermal power plants this time.

As on May 7, India’s cumulative coal reserves at its power plants stood at around 35.8 mt, which based on daily consumption is enough to meet the country’s demand for more than 12 days.

The comfort in the market is also evident from softening of short-term prices. Prices in the day ahead and real-time market (which forms around 86 per cent of the overall exchange market) dropped 46 per cent and 48 per cent y-o-y, respectively, in April, it added.

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