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Why has India’s power demand surged?

Surging power demand in India poses a challenge for a country where solar power is growing rapidly but generation capacity is stretched when the sun goes down.

In 2022, India’s power demand grew about 8%to more than 149.7 terawatt-hours (TWh) from the previous year.

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And in the first two months of 2023, demand jumped 10% from a year ago.

Following are the factors behind the rapid growth in demand.

Where is demand growth coming from?

In absolute terms, the States with the strongest growth in demand in 2022 were Rajasthan, Gujarat, and Maharashtra, where many of the country’s industries are concentrated, a Reuters analysis of government data showed.

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Chhattisgarh, known for extensive mining activity, had a 16.6% growth in the five months since the monsoon ended in 2022, while Rajasthan’s power demand grew 15.1% in the same period.

Growth rates were also high in Punjab, where agricultural demand makes up the lion’s share of total power use, and Madhya Pradesh, Telangana and Bihar – where residential demand has historically accounted for most of the load.

Why is demand growing?

India’s Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman have previously linked increased power demand to higher economic activity.

Industrial and commercial activities account for more than half of India’s annual power use. Homes account for a fourth, while agriculture has accounted for over a sixth in the recent years.

Consumption patterns vary wildly by States and seasons.

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A heatwave and easing of Covid-19 curbs drove power demand higher in the first half of 2022. Erratic weather and a jump in agricultural activity were among the most prominent reasons behind the high growth in the second half of last year, according to a federal Power Ministry presentation reviewed by Reuters.

In northern Haryana and Telangana in the south, unexpected dry spells contributed to higher demand from agricultural consumers for electricity during November and December, according to the presentation, which was based on assessments by grid operators in different states.

Higher demand from industry in Andhra Pradesh and tech employees returning to office in Bengaluru also drove power use up.

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In the football-crazy, southern state of Kerala, the live streaming of World Cup matches potentially contributed to a 4.1% hike in peak demand, a Power Ministry official said.

In Punjab, a policy to provide free power to some consumers boosted demand, while a decision to increase hours of power supply to agricultural consumers in Rajasthan resulted in a 22% rise in November and a 15% rise in power demand in December, according to the presentation.

What’s next?

Officials are scrambling to ensure India does not face power outages this summer, when demand typically peaks.

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India faces high risks of nighttime blackouts this summer, following years of neglect in adding new coal and hydropower capacity, needed particularly at night when solar capacity is unavailable.