India’s electricity demand grew by 21 per cent y-o-y in August 2023 as the world’s third largest energy guzzler’s power consumption rose during the month aided by rising heat and humidity levels, which led to an increase in the number of cooling hours.

Demand in this month (August) is, can you believe it, was 21 per cent more than the corresponding month last year. In July, demand was more than 9 per cent than July last year,” Power Minister R K Singh said on Thursday at the Bloomberg NEF summit.

In April-June, the power demand grew 7.8 per cent y-o-y. The demand in FY23 was 6.3 per cent more compared to FY22 and the demand in FY22 was 6.7 per cent more than the demand in FY21, he added.

“Demand is growing. So, I am in a happy place, from the point of view of making space for renewables. Challenge, yes, because imagine a large country. My maximum demand has hit 234,000 MW and that’s growing at 7 per cent, 8 per cent and 9 per cent. You can imagine how tense the Minister for Power will be,” Singh said.

India’s electricity consumption during peak hours surpassed Power Ministry’s estimate of 229 gigawatts (GW) on August 16, August 17 and August 18, with peak demand met during the day hitting 233 GW, 234.1 GW and 231.6 GW, respectively.

Power deficit

However, a sudden spike in electricity demand during the monsoon months, after witnessing lower than expected demand during the peak summer season, has also come with a widening power deficit.

For instance, the days which registered record high consumption also registered peak shortages. Peak demand met on August 17 was 234.1 GW with a peak shortage of 7.26 GW.

Similarly, on August 16, with a peak demand met of 233 GW, the peak shortage was 5.92 GW and on August 18, when the demand met stood at 231.6 GW, while the shortage was 4.21 GW.

Furthermore, the pan-India generation outage on August 16, August 17 and August 18 stood at 48.94 GW, 52.22 GW and 54.13 GW, respectively.

According to ICICI securities, the peak power deficit in the first five months of FY24 has already hit 4 per cent. For the entire FY23, the peak deficit was 4 per cent.

However, the peak shortage and generation outage fell during August 22 and August 23, which is also due to some rains in North and Central India.

On August 22, the peak power demand met during the day hit 230 GW with a peak shortage of 2.74 GW and outage of 49.62 GW. Similarly on August 23, the demand stood at 216.5 GW against a shortage of 525 megawatts (MW) and outage of 49.58 GW.

Firm capacity addition

“We believe the situation has turned adverse because of inadequate firm capacity addition. It has come as a gentle reminder of the risk of further power deficits in the country,” ICICI Securities said.

Pipeline of firm capacity addition is weak at 25 GW. A smooth energy transition requires adequate assurance from reliable capacity. Till the time storage gets cheap and scalable, India needs to ensure that the pipeline of thermal capacity increases to ensure reliability, the brokerage added.

As the focus of generation capacity addition in India shifted to RE, firm capacity (thermal and nuclear) addition dropped to 1 GW in FY23 (against 23 GW in FY16). As of June 2023, India’s firm capacity stood at 243 GW (including gas-based capacity) and a peak demand at 234 GW.

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