Rising power demand in India exposes supply fault lines in states

Coal, Hydro units fire up to meet new record high of 240 Gw

Even as national power demand continues to reach new milestones with each passing day, supply deficits in several states have widened, despite coal and hydropower units operating at record levels, and coal production witnessing double-digit growth.

Key industrial states such as Maharashtra, Karnataka, and Gujarat are grappling with energy supply shortages due to the increased demand brought on by extended hot summers.

In states like Rajasthan, Haryana, and Bihar, where supply deficits are typically high, the energy shortage has expanded compared to last year.

On a national scale, the peak power supply deficit reached 10 gigawatt (Gw) on September 1, when the country’s peak demand came close to the historic high of 240 Gw.

This is happening even as coal-powered stations are running at full capacity, and hydropower units are operating at their peak capacity.

State-owned hydropower operator SJVN, for instance, recently reported its highest-ever power generation.

August 2023 saw an all-time high monthly energy generation of 1,590 million units, representing a 9 per cent increase compared to last year, it stated in a recent statement.

At the national level, hydropower currently contributes nearly 13 per cent to the overall energy supply, making it the second-largest supplier after coal. Coal leads the way with a 70 per cent supply share, while renewable energy sources (solar, wind, and biomass) account for 11 per cent of the total energy supply. National miner Coal India (CIL) reported double-digit growth in both production and offtake during August. Thanks to dry weather, coal supply remained uninterrupted in August, which is typically a month that sees a slump. A substantial surge in overall coal production was witnessed during August 2023, reaching 67.65 million tonnes (mt), representing a year-on-year (Y-o-Y) increase of 12.85 per cent, said a recent Ministry of Coal announcement.

It further noted that CIL’s production had risen to 52.27 mt in August 2023, showing an annual growth of 13.21 per cent.

Grid-level challenges

Experts point out that while at the national level the grid efficiently manages the load, states pose a challenge due to their weak transmission networks and limited capacity for purchasing surplus electricity.

Rajiv Goyal, former vice-president at Noida Power Company, stated that India’s grid is capable of handling more than 255 Gw. “India’s power demand of 240 Gw reflects the growth of the gross domestic product and the demand pressure from emerging sectors such as electric mobility, cooling, data centres, as well as increased industrial activities and tourism, driven by rising urban incomes and infrastructure development,” said Goyal, who currently serves as the president of Vivani Consulting.

ICICI Securities, in a recent note, mentioned that base electricity demand grew by 16 per cent, and peak demand increased by 22 per cent Y-o-Y. It also observed that daily demand reached a high of 5.2 billion units, equivalent to a round-the-clock demand of 216 Gw.

“Strong demand bodes well for the plant load factor of existing thermal plants. It also highlights the challenges of meeting peak demand as we enter a phase where firm capacity addition is going to be low,” stated ICICI Securities in its recent note. Goyal emphasises that power sector planners need to prepare for 8–10 per cent growth in power demand and plan ahead for a surge in demand. He mentioned that the available total transfer capability (TTC) of the Power Grid Corporation of India currently stands at 112 Gw and is expected to grow to 150 Gw by 2030.

TTC refers to the maximum power that can be transferred on an interconnected transmission network. “TTC would improve only when states construct more 220-kilovolt (kV)/130-kV substations to serve the high-load areas of their power distribution companies. Supply gaps can be plugged through better demand-side management and the utilisation of energy storage technologies such as batteries and pump storage,” added Goyal.