The peak power demand in India touched a lifetime high of 223 GW in June 2023 when peak deficit touched 0.17 percent. This implies a thin margin of safety of 3 percent during the month.

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The power deficit in June 2023 was 0.1 percent compared with 0.4 percent last year, improving by 10,589 MU year on year and reflecting in Indian Energy Exchange (IEX) spot prices - falling 21 percent year on year to Rs 5.37/kWh.

In the first quarter of FY24, IEX volumes grew by 6 percent year on year, despite spot prices falling 34 percent year on year to Rs 5.1. Typically, spot power demand weakens as prices move above Rs 4.5/kWh.

Power demand in June 2023 grew 4.3 percent year on year to 139bn units, while for the first quarter of FY24, demand grew 0.4 percent year on year. In the first quarter, southern region grew by 11 percent mainly led by a low base and demand in the north fell by 9 percent. Thermal continues to form 74 percent of generation mix and 15 percent is from renewables.

International coal prices cool off

International coal prices (Indonesia HBA index of 6,322GCV) have fallen 7 percent month on month and 41 percent year on year in June 2023. Coal India Ltd's coal inventory in the first quarter improved by 29 percent, while coal stocks at power plant improved to 13 days versus 8 days year on year.

According to a report by Nuvama, 26GW of new thermal orders is planned over 3–5 years, which may rise further to 32GW, if renewable energy capex does not pick up. Hence, with 5–6 percent demand growth and slow pick up in new renewable energy and thermal capacities, the peak deficit may rise in FY25–26, implying rising thermal plant load factors and spikes in merchant rates.

(Edited by : C H Unnikrishnan)