Sustained economic growth continues to drive power demand

According to data from the Ministry of Power, power consumption was 130.57 billion units (BU) in April 2023.

According to the report by Research and Markets, the Indian power sector is undergoing a significant change that has redefined the industry outlook. India’s power industry’s future is bright and sustained economic growth continues to drive electricity demand in the country. The private sector in the power industry in India generates 49 percent of the country’s thermal power, whereas States and the Centre generate 25 percent and 26.0 percent, respectively.

Market Insights

According to data from the Ministry of Power, power consumption stood at 130.57 Billion units (BU) in April 2023. The government has set the electricity generation (including renewable energy) target for the year FY 2024 at 1,750 BU. i.e. growth of around 7.2 percent over an actual generation of 1,624.158 BU for the FY 2023.

The central government has set an ambitious goal of installing 500 GW of non-fossil-fuel energy capacity by 2030. As of September 30, 2023, India has installed 186 GW capacity from non-fossil sources, which accounts for about 43.75 percent of our total installed capacity.

The last nine years have witnessed the fastest growth in the renewable energy sector among all large economies. Installed capacity has more than doubled, and renewable energy generation has also increased significantly. The country has attracted over 80 billion dollars in investment, including substantial FDI.

COVID-19 impact analysis

In 2022, India’s power demand grew about 8 percent or at nearly double the pace of the Asia Pacific region, to more than 149.7 terawatt-hours (TWh) from the previous year. And in the first two months of 2023, demand jumped 10 percent from a year ago. A heatwave and easing of COVID-19 curbs drove power demand higher in the first and second half 2022.

Erratic weather and a jump in agricultural activity were among the most prominent reasons behind the high growth in the second half of last year. In northern Haryana and Telangana in the south, unexpected dry spells contributed to higher demand from agricultural consumers for electricity during November and December 2022, based on assessments by grid operators in different states.

Moreover, higher demand from industry in Andhra Pradesh and tech employees returning to office in India’s Silicon Valley, Bengaluru, increased power use. Furthermore, in Kerala, the live streaming of World Cup matches potentially contributed to a 4.1 percent hike in peak demand.