Power demand to grow slower in FY25

In 7MFY25, energy demand grew by 4.75 per cent and is expected to grow by 5.5 per cent in the current fiscal. This is lower than 7.4 per cent growth in FY24 and 9.7 per cent growth in FY23.

Power demand had also seen high levels of volatility in the past two quarters due to extreme weather conditions. In Q1 FY25 the growth went up to 10.9 per cent and in Q2 FY25 it came down to 0.1 per cent.

In May 2024, peak demand had reached an all-time high of nearly 250GW, up by about 13 per cent due to extreme summer heat. The surge in power demand during the summer of 2024 was met by better coal supply and efforts to make import coal-based thermal plants operate at full capacity and operationalise gas-based power on demand basis.

However, the demand moderated significantly during August-October 2024 with temperatures cooling down following a better monsoon during the year and also due to a moderation in the industrial activity, finds India Ratings.

“Energy requirement moderated during August-October 2024 owing to the excess rainfall during the year, leading to a lower power demand for irrigation purposes and cooling applications; and a moderation in the industrial growth,” said Bharath Kumar Reddy, Associate Director, Infrastructure, Ind-Ra.

In terms of power generation, fossil fuel-based production continues to dominate. However, renewable energy is driving capacity additions. All-India power generation capacity reached about 453GW as of September 2024.

Renewable energy’s share is expected to be 23 per cent in FY25. The incremental capacity addition is expected to be dominated by renewables, with nearly 80GW of under-construction solar, wind and solar-wind hybrid capacities, and another 95GW under various stages of development. In the current fiscal, Ind Ra expects 28-30GW of renewable energy capacity addition and 11GW has been achieved in H1 FY25.