Power demand rises 11% in May amid heatwave, higher output: Crisil

Prolonged heatwave conditions and higher manufacturing activity pushed India's power demand up 11.2 per cent year-on-year to 165 billion units in May

Prolonged heatwave conditions led to a rise in cooling demand, pushing up power demand by 11.2 per cent in May to 165 billion units (BUs), according to analytics company Crisil. During the month, regions in North, Northwest, West, and Central India faced above-normal temperatures, with Banda in Uttar Pradesh recording 48.3 degrees Celsius on May 12.

 

India saw its highest-ever peak power demand of 271 gigawatt (Gw) in May, about 10 per cent higher than the 245 Gw peak recorded in 2025-26 (FY26).

 

The rise in power demand during the month was also driven by higher manufacturing activity. The Purchasing Managers’ Index for manufacturing stood at 55, up from 54.7 in April. Industrial and commercial consumers accounted for nearly 50 per cent of the country’s power demand, Crisil said.

   

In the first two months of the current financial year (2026-27/FY27), demand was up 7.6 per cent year-on-year (Y-o-Y), owing to the low base of -1.2 per cent in the corresponding period of FY26. In FY27, it is expected to increase 6-7 per cent Y-o-Y to 1,810-1,830 BU, “driven by higher temperatures and lower rainfall due to the expected El Niño effect from July 2026”.

 

Spot electricity market activity reflected the broader power demand trend during the month. The real-time electricity market (RTM) volume increased to 5,529 million units (MUs) in May, up 15.9 per cent from 4,770 MUs a year ago.

 

The average market clearing price (MCP) during solar hours was ₹2.1 per unit this May, compared with ₹2.2 per unit in May 2025. Meanwhile, the average MCP during non-solar hours was ₹4.8 per unit, compared with ₹3.8 per unit in May 2025. The MCP for the day-ahead market (DAM) also rose 18.3 per cent to ₹4.8 per unit.

 

RTM allows electricity to be bought and sold close to the time of delivery, while DAM involves transactions for electricity scheduled for the following day.

 

These prices allowed distribution companies and commercial and industrial consumers to meet their demand at competitive rates and replace costlier power by procuring through the exchange, Crisil said. All major sources, except gas, saw a Y-o-Y rise in power generation, with renewable energy generation rising about 20 per cent in May. Power generation rose about 12 per cent to 178 BUs during the month.

 

Meanwhile, coal-based generation increased 12 per cent Y-o-Y, accounting for 68.25 per cent of total generation in May 2026, compared with the FY26 average of 68.36 per cent. This highlighted coal’s ability to be ramped up or down depending on power demand and the availability of other sources.

 

Hydro and nuclear power generation also increased by about 11 per cent and 4 per cent, respectively, during the month. Thermal power plants’ coal stock declined to 49 million tonnes (mt) from 60 mt in May 2025. The ratings agency said coal dispatches to power plants rose 1.22 per cent to about 74 mt, with daily requirements also increasing from 2.9 mt in May 2025 to 3.1 mt in May 2026. This resulted in coal inventory falling to 16 days from 21 days in May 2025. 

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Crisil said on Thursday “Domestic supply will gain share and meet around half of the 60-65 Gw demand this financial year, with imports making up for the rest,” said Manish Gupta, deputy chief ratings officer, Crisil Ratings. He added that the shift will be led by demand from newer utility-scale bids, net-metering and open-access projects and government-backed sche m­es such as Kisan Urja Suraksha Evam Utthaan Maha­bhiyan (KUSUM).   BS REPORTER