Electricity prices in India’s spot market have surged by nearly 16.9% year-on-year this month, with further increases anticipated as summer approaches. Recent statistics from the Indian Energy Exchange reveal that the market clearing price in the Day Ahead Market (DAM) reached Rs 4.57 per unit in the first ten days of March, a significant rise from Rs 3.91 per unit during the same period last year.

Rising Power Demand Amidst Warmer Weather

The demand for electricity in India has been on a steady upward trajectory, growing at a compound annual growth rate (CAGR) of 6%. On March 11, peak power demand hit a remarkable 235 gigawatts (GW), surpassing the previous record of 222 GW noted in March 2024. The same day last year, peak power demand stood at 218 GW, indicating a consistent upward trend.

Rohit Bajaj, Joint Managing Director of the Indian Energy Exchange, commented on the situation, stating, "The warmer weather this year has been noticeable, leading to a 10% increase in energy consumption during the first ten days of March compared to last year." He noted that peak demand continues to rise in tandem with increased energy consumption.

Future Projections for Power Demand

As the summer season approaches, experts anticipate that power demand will exceed previous highs, potentially reaching 250 GW. With the growth in economic activities and the establishment of new industries, the CAGR for power demand is projected to rise to 7% over the next five years, according to Ghanshyam Prasad, Chairperson of the Central Electricity Authority. The government is forecasting that peak power demand could touch 270 GW this year.

The government is actively working to enhance electricity supply. Measures include allowing imported coal-based power plants to operate at full capacity until April 30 and ensuring gas-based plants are available to meet peak demand. Additionally, the revival of 10–15 GW of generation capacity from the 45 GW currently offline, along with continued investments in renewable and thermal energy, is expected to bolster supply in the coming months.

Coal Stock Management for Increased Demand

To prepare for the anticipated surge in electricity demand, coal-based power plants are ramping up coal inventories. This year has seen improvements in coal stocks at power plants, thanks to effective logistical strategies implemented by the government to ensure a steady supply amid rising electricity needs.

As of March 11, coal stocks at India’s thermal power plants reached 77% of the normative level, totaling 55.97 million tonnes, as reported by the Central Electricity Authority. The power ministry has indicated a need for 906 million tonnes of coal for the upcoming fiscal year of 2025-26.

In conclusion, as India gears up for a warmer summer, the energy sector is poised for significant changes. With rising electricity prices and escalating demand, the government’s proactive measures and strategies will be crucial in ensuring a stable supply to meet the nation’s energy needs.