Power demand falls for the first time in 15 months as August sees 5.3% decline Published 3 months ago By SuperAdmin Peak power demand also witnessed a substantial fall, declining to 217 gigawatts (GW) in August from 238 GW in the same month last year, making it one of the sharpest decreases since the beginning of the fiscal year.New Delhi: India’s electricity demand dropped by 5.3% year-on-year in August 2024, marking the first decline in 15 months, according to provisional data from Grid India and CRISIL MI&A. This comes after a strong 6.7% year-on-year rise in July, leading to a cumulative 7% increase in demand for the April-August 2024 period. The dip in August is primarily attributed to a 7% excess rainfall across the country, which reduced the need for power, particularly for irrigation.August’s power consumption stood at approximately 144 billion units (BUs), down from the 152 BUs recorded in July. This significant drop was in contrast to the broader growth in demand witnessed in the first quarter of fiscal 2025.Peak power demand also witnessed a substantial fall, declining to 217 gigawatts (GW) in August from 238 GW in the same month last year, making it one of the sharpest decreases since the beginning of the fiscal year.Declining power demand driven by rainfallRegions across the country experienced varying impacts. The western and northern parts of India led the decline, with power demand dropping by 10% and 6%, respectively. States such as Madhya Pradesh and Rajasthan, which experienced heavy rainfall of 14% and 44% above average, respectively, saw electricity demand plummet by 13% and 25%.On the other hand, Bihar, another agriculture-heavy state, bucked the trend, recording a 2% increase in power demand, driven by district-level variations in rainfall. Notably, Rohtas district, which saw a 30% deficit in rainfall, registered higher demand due to irrigation needs.Generation follows suit as coal and renewable energy output fallsReflecting the dip in demand, India’s power generation dropped by around 3% year-on-year in August, reaching approximately 155 BUs. This decrease was driven by a decline in coal and renewable energy production, both down by about 3% and 13%, respectively.In contrast, hydropower generation surged by 7.6% following two months of decline, as several regions benefited from ample rainfall. Hydropower’s share in India’s overall power generation increased to 15%, up from 13% a year earlier.Lower market prices reflect reduced demandThe real-time electricity market saw a significant price drop, with the weighted average market clearing price in August 2024 declining by 45% to ₹3.3 per unit, compared to ₹6.0 per unit in August 2023. This sharp reduction in prices reflected the decreased demand across various regions, especially in the western and northern states.Sufficient coal stocks cushion power plantsDespite the lower coal production, which fell by 7.5% year-on-year in August, thermal power plants were well-prepared to meet demand. As of August 30, 2024, plants had accumulated 40 million tonnes of coal stock, up from 30 million tonnes a year earlier. This stock was expected to last for about 14 days, compared to just 10 days in August 2023.To maintain uninterrupted power generation during the monsoon season, the government extended the coal-import blending mandate until October 15, 2024, while reducing the blending ratio from 6% to 4%.Outlook for power demandLooking ahead, CRISIL MI&A expects power demand to grow by 6.5-7.5% in fiscal 2025, supported by economic growth and weather-related factors, including heatwaves and fluctuating rainfall. India’s gross domestic product is forecasted to expand by 6.8% in fiscal 2025, further boosting electricity consumption.The decline in August power demand marked a rare slowdown in an otherwise strong growth trend for India’s electricity sector, largely driven by weather patterns and regional variations in rainfall.
