UTILITIES WARNED TO PREPARE FOR STRAINED GRIDS
The nation's power utilities have been formally instructed to bolster their readiness for an anticipated surge in electricity demand as the summer months approach. This directive, stemming from a virtual review meeting, emphasizes the need for utilities to meticulously track demand fluctuations, maximize existing generation capacity, and secure power through advance procurement to guarantee a consistent 24/7 supply.
The core signal indicates that while official pronouncements suggest readiness, the underlying reality involves a proactive, almost reactive, push for utilities to secure power and monitor trends, hinting at potential fragilities in the system's ability to self-regulate under peak load conditions.
A significant observation points to a noticeable jump in electricity consumption during the latter part of February, a period not typically associated with peak summer demand. This unexpected spike necessitated the purchase of additional power from exchanges to maintain uninterrupted service. Officials underscored the importance of constant oversight of thermal and renewable energy generation, alongside efficient sourcing from markets like the Day Ahead Market and Real Time Market. Projections indicate minor deficits of approximately 200 to 400 MW could occur during the early morning hours.
PEAK DEMAND PROJECTIONS AND STRATEGIES
This year, the country is being positioned as capable of meeting a peak power demand of up to 270 GW, a step up from the 250 GW peak observed in 2024. Last year, demand projections had hovered around 260 GW. To buttress this capability, the government intends to make it obligatory for thermal power plants, particularly those utilizing imported coal, to operate at full capacity. This mirrors a similar move last year when a specific government directive was invoked to ensure operational capacity and stave off shortages.
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The contribution of gas-based power plants is also on the table, though their cost per unit is noted at Rs 14, with a national capacity of 24 GW. The overall power deficit in the country is currently stated to be minimal, at just 0.1 percent, with expectations of its imminent elimination.
INFRASTRUCTURE AND MARKET MECHANISMS
Further strengthening efforts involve the anticipated addition of 15 GW of thermal capacity by FY26. The current thermal capacity stands at 246 GW. Distribution companies are under pressure to improve their financial standing. A key operational strategy involves mandating that all thermal power stations offer any un-requisitioned or surplus power onto power exchanges.
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Utilities are also being advised to examine "net demand," a figure derived from total demand minus variable renewable energy sources like wind and solar, as a planning tool. A technical minimum load of 55 percent of unit capacity for all coal-based thermal power plants is also part of the operational framework.
HISTORICAL CONTEXT AND WARNING SIGNS
The 2024 summer saw prolonged heatwaves, which demonstrably pushed up electricity demand. Coal generation surged to meet these heatwave-driven needs, raising questions about the sustainability of relying on fossil fuels for escalating demand. In India, coal was the primary source for meeting the increased demand during such periods. The impact of heatwaves on electricity demand was a significant factor in some months, globally.
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This past January, Telangana witnessed a record peak power demand of 15,205 MW, a substantial jump from 13,810 MW in January of the previous year. Within the Southern Discom's area, demand climbed from 8,679 MW to 9,589 MW. The overall peak demand for the region is projected to reach 17,000 MW this year, with specific figures for Southern Discom and Greater Hyderabad. Notably, a demand peak previously seen in March was reached in January this year, indicating an acceleration in consumption patterns.
Coal stocks, which stood at around 13 days in March of the previous year, have now reportedly increased to over 15 days nationwide. Prices for imported coal have also reportedly eased from their peaks. New gas-based capacities are also anticipated to supplement supply, especially given softening gas prices. However, analysts caution that a sudden spike in demand due to increased heatwave days or a weak monsoon could still pose challenges, necessitating further measures to augment coal supplies.
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