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Peak demand ascends to record highs
Peak demand hits record 250GW
Soaring temperatures led to India's peak power demand reaching an all-time high of 250GW in May 2024, marking a 13% increase versus peak demand of 221GW in May 2023. This peak demand exceeded FY24 peak of 243GW observed in September 2023. Additionally, pan-India non-solar demand also hit a record high of 234GW. The Central Electricity Authority (CEA) has projected peak demand to touch 260GW in FY25.
Power generation increased in tandem with rising power demand
Amidst rising temperatures, power generation saw a 15.35% YoY increase to 169BU. This growth was based on a lower base of May 2023, when power generation rose by 5% YoY to 146BU. Coal plant output increased by 13% YoY to 122BU. Hydro plant generation, after a period of stagnation, grew by 9% YoY to 13BU. Gas-based generation surged by 117% YoY to 5.2BU, driven by the Government's directive to operationalize all gas-based plants under Section 11. Renewable energy (RE) generation also climbed by 16% YoY to 21BU. The plant load factor for coal-based plants rose to 76% in May 2024 from 69% in May 2023.
Gas-based generation soared to multi-year highs in May 2024
Soaring temperatures and government mandate under Section 11 (to operate all gas-based plants) led to a significant increase in gas-based power generation (up 117% to 5.1BU). In April and May, gas-fired power generation doubled to 8.9BU versus April-May 2023 level. The share of gas in power generation almost doubled to 3.1% from 1.6% the previous year. Section 11 required all gas-based power plants to operate to prevent power cuts during the peak summer season, boosting gas-based generation. So, plant load factor (PLF) for gas-based stations improved to 27% in May 2024 from 15% in May 2023.
Our view: Continued policy support to bode well for power sector
We anticipate policy reforms and new initiatives in the power sector to continue under Modi 3.0. With power demand growing at a 7% CAGR and peak deficit increasing accordingly, the government is likely to prioritize incentivizing private sector investments in large-scale battery energy storage systems. Transmission, generation and distribution segments may also see renewed emphasis.
We maintain positive outlook on NTPC due to its role in both energy security and energy transition. The increasing share of short-term power volumes will boost IEX. PGCIL's growth will be driven by an upward revision in capex. CESC's earnings may benefit from its 3GW renewable project pipeline, while SJVN's strong project pipeline may ensure earnings visibility. |
