India’s power demand surged 12.8% year-on-year to an all-time August high of about 169 billion units (BU), while electricity prices outside solar-generation hours jumped nearly 33% to ₹5.3 per unit from ₹4, signalling tighter supply conditions as weak rainfall pushed up cooling demand. Peak power demand also rose about 12% to 258 GW from 230 GW a year earlier.
The price divergence was sharp. Average market clearing prices during solar hours remained virtually flat at ₹1.62 per unit against ₹1.61 last year, while non-solar-hour prices rose to ₹5.3. Crisil said the increase indicated “heightened demand-supply stress outside daylight hours”, even as solar generation helped prevent a steeper rise in average market prices.
According to Crisil Intelligence, the demand surge was driven by increased use of cooling equipment amid an El Niño-triggered rainfall deficit. Cumulative rainfall across India was 13% below normal between June 1 and August 26. Northwest, central and southern regions saw rainfall deficits of 6%, 14% and 29%, respectively, during August 6-12.
The pressure also spilled into short-term markets. Real-Time Market volumes rose 10.6% to 5,565 million units (MU) from 5,029 MU, while the average market clearing price jumped 30.4% to ₹4.41 per unit. The Day-Ahead Market price increased 22% year-on-year to ₹4.88 per unit.
For April-August, electricity demand increased around 9.5% year-on-year, compared with just 0.3% growth in the corresponding period last fiscal, underscoring the sharp acceleration in consumption this year.
Generation rose broadly in line with demand. Total power generation increased about 12.6% to 180 BU in August. Renewable energy generation jumped nearly 27%, supported by 16.3 GW of renewable capacity additions between April and July, while coal-based generation rose 13%. Coal’s share in total generation increased to 63% from 62% a year earlier.
Hydropower generation, however, declined about 9% amid weak rainfall. Energy content at 31 reservoir-based hydropower projects stood at around 22 BU as of August 30, below about 25 BU a year earlier and the full-reservoir potential of roughly 34 BU.
Higher coal generation also drew down inventories. Thermal plants held 29 million tonnes (MT) of coal as of August 30, down from 50 MT a year earlier. Stock cover fell to nine days from 17 days, while average daily coal requirement increased to 3.10 MT during April-August from 2.97 MT a year ago.
Crisil expects power demand to rise 7.5-8.5% year-on-year to 1,840-1,850 BU this fiscal, driven by stronger cooling demand amid higher temperatures and lower rainfall. “Going forward, the trend in peak demand and the sensitivity of short-term market prices to temperature variations will remain key watchpoints,” it said.