India’s energy requirement growth is expected to be around 5.5 per cent Y-o-Y in FY25, compared to 7M FY25 at 4.75 per cent, FY24 (7.4 per cent), FY23 (9.7 per cent), India Ratings and Research (Ind-Ra) said.
Extreme weather conditions witnessed during H1 FY25 led to volatility in energy demand in Q1 FY25 (up 10.9 per cent Y-o-Y) and Q2 FY25 (up nearly 0.1 per cent Y-o-Y).
All-India peak demand reached an all-time high of nearly 250 gigawatts (GW) in May 2024, up about 13 per cent year over year. However, the demand moderated significantly during August-October 2024, with temperatures cooling down following a better monsoon and also due to a moderation in industrial activity.
The surge in power demand during the summer of 2024 was met by a better coal supply and directives to extend notification under Section 11 of the Electricity Act to make import coal-based thermal plants operate at full capacity and operationalise gas-based power on a demand-based basis.
The share of thermal in the overall energy mix remained strong at nearly 73 per cent during 7M FY25 and the thermal plant load factors (PLFs) could reach 69 per cent on a full-year basis, as per Ind-Ra estimates.
While there is a strong pipeline of renewable energy capacity additions (largely solar), the variability and intermittency of these make the need for a firm supply (non-RE capacity or through storage) critical to avoid deficits during peak hours.
Bharath Kumar Reddy, Associate Director Infrastructure at Ind-Ra, said, “Energy requirement moderated during August-October 2024 owing to the excess rainfall during the year, leading to a lower power demand for irrigation purposes and cooling applications and a moderation in industrial growth.”
A large portion of the energy demand is met from fossil fuel sources, and the dependency on thermal power will remain strong in the short-to-medium term, he added.
Renewable energy continues to lead capacity additions and witnessed steady growth in auctions in H1 FY25, with a shift towards storage-linked/hybrid tenders. Execution of these projects remains key, with challenges faced in terms of connectivity and implementation, Reddy said.
As of September 2024, the pan-India power generation capacity reached about 453 GW, with renewables (including large hydro) accounting for 45 per cent of the total.
In terms of power generation, Ind-Ra expects renewable energy’s share to be 23 per cent in FY25. The incremental capacity addition is expected to continue to be dominated by renewables, with nearly 80 GW of under-construction solar, wind, and solar-wind hybrid capacities and another 95 GW in various stages of development.
Ind-Ra expects 28-30 GW of renewable energy capacity addition this fiscal (11 GW achieved in H1 FY25), largely under solar.