Electricity prices rise 16% amid summer heat
Electricity prices in the spot market have surged by nearly 16.9% this month, as the peak summer season intensifies demand. Data from the Indian Energy Exchange (IEX) reveals that the market clearing price in the Day Ahead Market (DAM) stood at Rs 4.57 per unit during the first ten days of March, up from Rs 3.91 per unit during the same period last year.
The ongoing rise in India’s peak power demand has been significant, with the country recording a Compound Annual Growth Rate (CAGR) of 6%. On March 11, the peak power demand reached 235 gigawatts (GW), surpassing the 222 GW peak registered in March 2024. This year, power demand continues to rise, driven by warmer-than-usual weather patterns, with a marked 10% increase in energy consumption from March 1-10, compared to the same period in 2024. The rise in demand is also accompanied by a corresponding increase in peak power demand.
As summer settles in, officials predict that power demand will rise even further, potentially pushing the peak demand to exceed 250 GW. India’s peak demand growth, which has consistently followed a 6% CAGR, is expected to accelerate, with a forecasted CAGR of 7% over the next five years. This surge is attributed to heightened economic activity and the establishment of new industries, resulting in an overall increase in energy requirements. The government projects that peak power demand may touch 270 GW this year.In response to the increasing demand, the government has implemented several measures to boost supply. This includes directing imported coal-based power plants to operate at full capacity until April 30 and ensuring gas-based plants remain available to meet the rising demand.
Additionally, efforts to revive approximately 10-15 GW of generation capacity from the 45 GW currently under outage, alongside ongoing renewable and thermal capacity expansions, are expected to ease supply pressures in the coming months.
To meet the surge in demand, India’s coal-fired power plants have also ramped up their coal stocks. As of March 11, coal stocks at these plants were at 77% of the normative level, totalling 55.97 million tonnes, as reported by the Central Electricity Authority.
The government’s efficient logistical arrangements have ensured the adequate availability of coal, a vital resource amid the rising demand.Looking ahead, the coal ministry has projected a need for 906 million tonnes of coal for the 2025-26 fiscal year to maintain power supply stability during peak demand periods. With a combination of improved supply management and investments in renewable energy sources, India is striving to meet its growing energy requirements as the summer season intensifies.
