New Delhi [India], April 25 : Fitch Ratings expects India's power demand to rise by 7-8 per cent year-on-year in second quarter of 2024 due to robust industrial activity, strong GDP growth and the Indian Meteorological Department's (IMD) forecast of above-normal temperatures during the summer months.
However, the rating agency believes much of this demand will be met through larger operating capacities, adequate coal inventory, and higher utilization of gas-based plants.
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 temperature rise.
IMD has predicted higher-than-normal maximum temperatures over most parts of the country till June 2024, further increasing demand.
At the same time, the rating agency expects distribution utilities to work towards minimizing supply disruptions due to India's 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," the rating agency said.
India has experienced strong growth in power demand, averaging 8.5 per cent a year over the last three years after the Covid-19 pandemic. It has met a large part of the increase through thermal power plants' higher plant load factors (PLFs), which have jumped by around 10 per cent to around 69.5 per cent over the last two years.
"Strong power demand bodes well for additions of renewable capacities and associated storage demand as India aims to meet ambitious long-term energy-transition goals," said the rating agency.
At COP26 held in 2021, India committed to an ambitious five-part "Panchamrit" pledge. They included reaching 500 GW of non-fossil electricity capacity, generating half of all energy requirements from renewables, to reducing emissions by 1 billion tonnes by 2030.
India as a whole also aims to reduce the emissions intensity of GDP by 45 per cent. Finally, India commits to net-zero emissions by 2070.
About 44 per cent of India's energy requirements at present come from non-fossil sources and are likely to touch as high as 65 per cent by 2030, much higher than what the country pledged at the COP summit in 2021, Union Minister RK Singh, who handles power and renewable portfolio, said recently.