Power demand in India, the world’s second largest coal consumer, grew at a strong 8.4 per cent y-o-y in 2022 on the back of record high summer temperatures and a strong post pandemic economic recovery.

According to the International Energy Agency (IEA), the robust post-pandemic recovery continued to support strong electricity demand of over 8.4 per cent last year, which was substantially higher than the average annual growth rate of 5.3 per cent seen in 2015-2019 .

“The peak summer season also arrived early in 2022, resulting in the hottest March in over a century. Electricity demand from March to July was 12 per cent higher than the same period in 2021. For the 2023-2025 period, we expect slightly slower growth, averaging 5.6 per cent per year,” the IEA pointed out in its electricity market report 2023.

The IEA has projected that over the next three years, more than 70 per cent of the growth in global electricity demand is set to come from China, India and South east Asia combined.

According to a report by Crisil last month, for FY23, ending March 2023, electricity consumption is slated to grow at a decadal high of 9-10 per cent against 8.2 per cent in FY22.

Peak power demand

The peak power demand rose 6 per cent y-o-y to hit a record 216 GW in April 2022 as North India sizzled under an intense heatwave. This is the highest ever peak power demand met.

The hot season arrived earlier than usual, resulting in the hottest March in over a century. Electricity demand from April to July was 14 per cent higher y-o-y and heat waves led to a record peak power demand of 211 gigawatts (GW) on 10 June 2022, the IEA report said.

The sharp growth in summer demand was primarily met by coal-fired generation, which registered a significant y-o-y growth of 21.3 per cent in April-July 2022, it added.

In December 2022, peak demand rose by a sharp 12 per cent y-o-yand 9 per cent m-o-m to 206 GW because of increased heating requirement following the onset of winter as well as continued momentum in manufacturing activity, which rose to a 25-month high during the month, as signalled by the Purchasing Managers’ Index, Crisil said.

“Coal-fired generation rose by 7.7 per cent in 2022, while gas-fired output fell by 36 per cent in 2022 due to higher imported gas prices. While total coal-fired generation is set to rise to 2025, we expect its share to fall to 69 per cent in the generation mix in 2025, as the share of renewables reaches 25 per cent,” the IEA said.

Electricity prices

In India, despite increased coal stocks, higher electricity consumption resulted in a 10 per cent price rise in H222 over the H221 level. The average wholesale price in H222 was ₹5,000 per MWh. Strong growth of solar PV helped to meet peak loads driven by higher refrigeration and space cooling, the IEA said.

South Asia was similarly affected, with heat waves in India starting exceptionally early in the spring and the worst recorded in 122 years. These extreme weather events led to record-breaking electricity demand for cooling, which was compounded by a fall in hydro power generation and coal supply shortages, it added.