The India Meteorological Department (IMD) on March 1 said that the summer months of March to May are likely to be hotter than usual across most of the country this year. The IMD also predicted El Nino conditions to persist for most of this period, which could, in turn, result in a higher number of heatwave days.

This means India’s electricity demand is also likely to soar, hitting record-breaking numbers again. The government is anticipating a peak power demand of 256.53 GW (256,530 MW) in the coming months. However, on March 4, Central Electricity Authority (CEA) chairperson Ghanshyam Prasad said the peak power demand this year could even hit the 260-GW mark.

For 2023 the CEA had projected a peak power demand of 230 GW, but the demand crossed an unprecedented 240 GW mark. The unusual surge in demand also resulted in an alarming spike in the country's power shortage, recorded at 10.745 GW (10,745 MW) on the same day (September 1).

So, is India ready to meet this year’s summer peak power demand?

The country this year is better placed than last year and in a much better situation than in 2022 and 2021. The main reason is coal stocks. Going by the current trend, thermal power plants will have a dedicated stock of 45 million tonnes (MT) by March-end, which is the highest so far. Last year around this time, coal stocks at thermal power plants were 31-33 MT.

Tracking coal availability for the power sector is important because despite increased penetration of renewable energy generation coal remains the predominant source in India, contributing over 70 percent to the total power generation. This is because renewable energy with storage has not yet taken off in a big way due to higher costs involved and India aims to keep electricity rates affordable and accessible.

For FY25, the power ministry in total has requested 874 MT of coal, which the coal ministry will be able to meet, according to Amrit Lal Meena, Secretary, Ministry of Coal.

What has the government done on the policy front?

Like last year, the power ministry, without any delay this time also, has already issued two significant orders. For one, it asked all domestic coal-based power generators to mandatorily continue blending imported coal at a minimum of 6 percent till June, and two, it extended imposition of section 11 of the Electricity Act, 2002 till June so that all imported coal-based thermal plants generate at their full capacity.

Section 11 of the Electricity Act, 2003 states that under extraordinary circumstances the government can ask power-generating companies to operate and maintain output by the directions given. It also states that an appropriate commission may consider offsetting the adverse financial impact of the directions on any generating company in such a manner as it considers appropriate.

In another regulation, the government has also asked Gencos to mandatorily sell any extra electricity on the power exchanges for needy states to procure.

Has any new power capacity been added?

Thermal: According to the Ministry of Power, thermal power generation capacity across state and central government units has increased this year by at least 10 GW.

Renewable: Capacity addition on the renewable energy front, which will contribute to meeting India's power demand, has been at least 15 GW so far.

Gas-based: Like last year, the Ministry of Power has asked NTPC to run its gas-based capacities to the tune of about 5,000 MW during the “crunch period”, which has been projected to be between March 16 to June 30 this year. Another 4,000 MW of gas-based power is being bought by NTPC Vidyut Vyapar Nigam Ltd (NVVN) through tenders. Private power company Torrent Power Ltd (TPL) has emerged as one of the successful bidders under competitive bidding and received a Letter of Award from NVVN for the same.

What are the challenges?

Logistics: Despite higher coal stocks, it is quite likely that shortages in some thermal power plants will reappear due to legacy transportation issues. Railway lines are congested and the coal and railway ministries together have commissioned at least five new railway corridors, but a lot of projects remain under construction to ease the problem. Railways is also likely to increase its rakes to the power sector by about 7 percent, but if the power demand continues to surge at a CAGR of 8-10 percent, then even an increase in coal production will not help due to logistical constraints.

Night Peak Demand:  Since last year, the problem is not about meeting the daytime power demand, according to Grid-India. “During the day we have more than enough power available since solar generation helps meet at least 40,000 MW (40 GW) of power demand or even more. So, meeting the peak demand is not an issue. The problem is that the night-time peak demand has also touched almost similar levels since the summer of last year. During night electricity from renewable sources is nil. So, all load falls on thermal power generation, which is why we are also relying on 10-12 GW of gas-based power,” said a senior Grid-India official.

Hydro Underperformance: Like last year, hydropower generation is also unlikely to contribute as high as 45-50 GW due to late monsoons, scanty winter rains, and lack of snowfall. In 2023 hydropower generation dropped to less than 40 GW from 45 GW in the previous year due to a below-normal monsoon. This resulted in depleted reservoir levels, especially in the southern region, leading to sub-optimal hydro generation.