Smooth power supply in summer ensured
India’s power demand is expected to rise by 7-8 per cent yoy in the second quarter of 2024 due to robust industrial activity, strong GDP growth and the Indian Meteorological Department’s (IMD) forecast of abovenormal temperatures during the summer months. However, much of this demand will be met through larger operating capacities, adequate coal inventory and higher utilisation of gas-based plants, which should mean minimal supply disruptions, says Fitch Ratings.
India’s monthly power demand typically peaks in the pre- and post-monsoon months of May or August, as cooling demand picks up with the rise in temperature. IMD has predicted higher than normal maximum temperatures over most parts of the country till June 2024, further increasing demand. At the same time, distribution utilities may work towards minimising supply disruptions due to the ongoing general elections in April and May, given that power supply is a politically sensitive issue.
On the supply side, the Indian Ministry of Power has directed both gas-based and imported-coal-based power stations to maintain availability to meet the anticipated demand. Utilisation of gas-based plants has been low in the past due to higher fuel prices or lack of availability of fuel. However, both spot- and term-market liquefied natural gas prices have fallen by around 30 per cent yoy. The relatively lower price should improve the viability and utilisation of gas-based plants, especially during peak summer months when spot power prices also increase. The price of electricity on shortterm exchanges has already increased to above Rs 5/ kwh from average levels of Rs 3/kwh to Rs /kwh.
Plant load factors (PLFS) of thermal power plants are likely to remain high at around 70 per cent, supported by adequate levels of coal inventory. However, many plants are already operating close to their peak capacity, which should limit a meaningful increase in their PLFS. For example, the coal plants of NTPC, India’s largest and most efficient thermal power producer, achieved 77 per cent average PLFS in the financial year ending March 2024. Average