Looking back at 2023, one of the key highlights of the Indian power sector was the growing power demand. Propelled by economic growth, the country’s power demand has been increasing rapidly and recorded an all-time high peak demand of 243 GW in September 2023. In the first seven months of 2023-24, power demand in the country grew by 8.6 per cent on a year-on-year basis. This trend is expected to continue into the next year, with peak power demand expected to reach 256.53 GW (in September 2024) during 2024-25. The government is pulling out all the stops to meet this surge in power demand. Advisories on mandatory blending with imported coal, and operating power plants to full capacity have been issued in recent months.
In the distribution segment, there has been improvement in AT&C losses. Early estimates suggest that losses have come down to as low as 13 per cent in 2022-23. While experts are divided on the credibility of this estimate, what is agreed upon is the fact that there have been improvements in loss levels. Apart from this, there are signs of financial discipline among discoms. On the back of the Late Payment Surcharge Rules, the outstanding dues of discoms to gencos and transmission companies have come down significantly.
However, what has been one of the misses of the sector is the slow capacity addition in the renewable energy space. In the first seven months of 2023-24, just 7 GW of renewable energy capacity was added. Adding almost 33 GW of renewable capacity (considering 40 GW of annual addition to reach 500 GW by 2031-32) in the remaining five months will be a herculean task, particularly in light of the recent trend.
Overall, there are exciting times ahead for the Indian power sector as it endeavours to meet the growing power demand while also meeting its renewable energy goals.