Power demand in India shrinks in March thanks to unexpected rains

The Indian Meteorological Department (IMD) reports that India received 37.6 mm of rain in March, the most in the last three years. India received 16.7 mm of rain in March 2021 and 44.7 mm in March 2022.

Peak demand in March, however, was 3% higher, at 209 GW, compared to 202 in March 2022. In addition, power prices fell by 33% year on year in March. But, in January and February, there was a sharp uptick in the prices owing to the cold wave.

"The fourth quarter of fiscal 2023 saw a 13% increase in day-ahead market (DAM) prices over the same period last year," CRISIL said in a statement. Lower power generation relieved strain on India's hydro and thermal power generation.

"Hydro generation fell 27% in March 2023, and its share of overall generation fell 167 basis points (bps), preventing water levels in hydro plants from falling further," it said. The quarterly figures, however, remained elevated due to higher demand in January and February.

Power demand increased by 7% year on year in Q4FY23, owing primarily to increases of 13.7% and 10% in January and February, respectively, due to higher heating requirements in winter months and robust economic activity. Increased winter demand also resulted in 13% and 9% higher generation across all fuels in January and February, respectively.

Power demand is expected to increase by 4% in the current quarter, which ends in June 2023. "Soaring temperatures and resilient economic activity are expected to keep power demand growing," according to CRISIL.

"Peak electricity demand should reach a record high in FY24, given predictions of heat waves that will increase usage of air conditioners, fans, and refrigeration units." India's peak power demand is expected to grow to 230 GW in the first quarter of fiscal 2024, rising 6.5 per cent YoY," it added.

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