India’s annual power consumption to grow at 6.5% during 2022-24

Power demand in the country is expected to grow at an annual rate of 6.5 per cent between 2022 and 2024 backed by rising consumption from residential and industrial segments, the International Energy Agency (IEA) has projected. The projection comes as India clocked the highest 10 per cent Y-o-Y growth in power demand during the 2021 calendar year (CY), sharing the stage with China. This was achieved in a year when global consumption registered its largest ever annual increase in absolute terms, of more than 1,500 trillion watt hour (TWh) as well as the largest relative rise since recovery from the financial crisis in 2010. “Over 2022-2024 we expect annual demand growth to remain above pre-pandemic levels at around 6.5 per cent per year,” the IEA said in its latest report on power supply-demand projections. “The majority of supply growth in the years between 2021 and 2024 is expected in China, accounting for around half of the net total increase, followed by India (12 per cent), Europe (7 per cent) and the United States (4 per cent),” the report has projected.

Power consumption

Power consumption in India declined by more than 2 per cent during 2020 as the country faced the Covid-19 pandemic. However, the following year, demand witnessed a rebound with growth of estimated 10 per cent. This took demand to higher than pre-pandemic levels, despite the outbreak of new Covid-19 variants during March-June 2021. “Demand in India declined by 7 per cent between April and May 2021 due to surging Covid-19 cases. Power consumption recovered quickly in June and reached new all-time high in July and August. Temporary coal supply shortages, peaking at the beginning of the fourth quarter of 2021, did not prevent strong annual growth, which is estimated at 10 per cent year-on-year,” the report noted.

Power demand

On the rationale behind the 6.5 per cent annual growth in India’s power demand, the IEA said, “While progress towards universal electricity access in India has long been a main driver for increase in demand (rising from 76 per cent in 2010 to 98 per cent in 2019), we expect current and future demand levels to be driven by growth in the industrial and residential sectors”. The report emphasises that ‘Make in India’ will continue to drive demand in the industrial sector by promoting local manufacturing. Besides, per-capita electricity demand in India is still below the global average and therefore quality of service improvements are expected to drive consumption.

EV adoption

Although electric mobility uptake in India is still nascent, IEA expects the electric vehicle (EV) adoption numbers are expected to increase with policy support. Policy measures such as extending the duration of Faster Adoption and Manufacturing of Electric Vehicles in India (FAME) Phase II by two years to March 2024 and NITI Aayog releasing a handbook to guide EV charging infrastructure will also help accelerate EV adoption. As India’s demand for electricity continues to grow, the expansion of generation capacity also to accelerate from 2022 . While IEA expects 48 per cent of new demand to be met by coal-fired generation, low-carbon sources provide about half of the additional supply. “New records for renewable capacity addition are expected in 2021 and 2022, principally wind and solar PV. Consequently, renewables provide 35 per cent of the incremental demand, with nuclear power generation largely accounting for the remaining. Driven by State and central auctions, as well as a target of 450 GW of installed renewable capacity, renewable generation is expected to increase by 30 per cent by 2024 relative to 2021,” it added.