India’s first electricity demand factor is closely connected with economic activity. Given the rapid expansion of industrial sectors, fast urbanisation, and higher residential energy usage, the forecast predicts a substantial surge in this figure.
Based on the government forecast, India’s electricity needs may increase by an average of 7 per cent per year in the next decade. The second factor, economic activity, is expected to increase at 6 per cent per year; one can predict that electricity consumption will also experience such a surge. Therefore, the forecast estimates that as early as 2030, consumption could reach 2.5 trillion units per year.
This article will give you insights into the projection for power consumption demand in India.
Overview of India’s Power Sector
Power is a critical sector in infrastructure and is essential for the growth and development of a country. The existence and growth of an excellent power infrastructure are vital for the development of the Indian economy. The guiding policy behind India’s power industry is the provision of high-quality power in a sustainable manner.
India has one of the most diversified power generation infrastructures; it generates power from conventional sources such as coal, lignite, natural gas, oil, hydroelectric, and nuclear power to viable non-conventional sources such as wind, solar, agricultural, and domestic waste.
Market Size of Power Sector in India
According to the Ministry of Power, as of November 30, 2023, the country had the third-largest installed power capacity in the world at 426.13 GW. India had an installed renewable energy capacity of internal hydro of 179.57 GW, accounting for 42.1 of the overall installed power capacity.
Growth in Power Generation
Power generation has seen the highest growth in 30 years. As of FY23, power generation in India has had the highest growth in the past 30 years. In FY23, the year-on-year power generation grew by 8.87 per cent to 1,624.15 billion kilowatt-hours. In April 2023 alone, consumption stood at 130.57 BU.
Peak Power Demand and Coal Plants
The peak power demand would increase by 7% year-on-year to 260 GW in the upcoming summer. The peak power demand in summer 2023 stood at 243 GW, which is against the projection of 229 GW. Essentially, the first nine months of FY23 experienced a plant load factor of 73.7% compared to the 68.5% in FY22.
On the other hand, there had been some other significant activities, including the FY24 power generation in India as of November 2023. This was at 1,176.13 BU. In addition to other activities, as of August 2023, India‘s plans indicate that it will raise its installed nuclear power capacity to 22,480 MW. In other words, NTPC inaugurated a hydrogen refuelling station and solar power plant with the aim of making Ladakh carbon neutral.
Source: IBEF Power Report*
Government Policies and Initiatives in the Power Sector
Some of the initiatives that will fasten the Indian power sector include:
- Solar Power Allocation: The solar grid, off-grid, and PM-KUSUM projects were allocated solar power $885 million by the Government of India in the Union Budget 2022-23.
- Green Bonds and Infrastructure Status: The Indian Government also announced Sovereign green bonds for energy storage systems and infrastructure status for energy storage systems, which include grid-scale battery systems.
- Green Energy Corridor: The Indian Government has developed projects that operate in such a way that it would be easier to transport renewable energy and design a grid that can meet future demands.
- Rooftop Solar Encouragement: To simplify the application process, the MNRE established the National Portal for rooftop solar.
- Production Linked Incentive Scheme: About $2.35 billion was rewarded for high-efficiency solar PV modules.
- LED Distribution: 36.86 crore LED bulbs, 72.18 lakh LED tube lights, and a 23.59 lakh energy-efficient fan have been distributed in the country, leading to substantial cost and energy savings.
- Smart Meter Deployment: Over 51.62 lakh smart meters have been deployed under the National Smart Grid Mission, and many more are expected.
- Electrification Schemes: Several electrification schemes, such as DDUGJY, UDAY, IPDS, and others, are supporting the drive.
- Transition to Renewable Energy: By 2026, 81 thermal units shall have substituted the share of coal in their generation with renewable sources.
- Financial Support: The proposal recommended issuing a letter to the bank to increase their lending to the renewable energy sector.
- International Support: The UK government has invested $1.2 billion in Indian green projects and renewable energy.
- Saubhagya Scheme: To achieve the universal household electrification goal, the government of India has launched the Saubhagya Scheme, and as of 30.06.2021, 2.82 crore families have been energised.
Power Sector Evolution
Power generation cannot be stagnant, and power production should evolve throughout its lifetime cycle. The capacity addition projections factor in an expected growth in demand for electricity, technological advancements, and the need to have a diversified energy mix. India, according to the latest projections, has factored 150 GW of new capacity into its plan by 2030.
Coal is another major source of power in India, and it is used in the traditional way. Projections of electricity demand are linked to coal production, and they cannot be ignored, as coal affects the availability and per-unit cost of power. Projections of the government defined that production of coal is expected to increase by 1.5 billion metric tons by 2030.
Reliable Power Supply to Meet Demands
The ultimate success of projections is determined by how closely the power sector answers this demand. Proactivity in the development of generation capacity, implementation of optimal power supply lines, and the use of smart technology are vital for ensuring that projections come close to the demand actually met. Indeed, as per current estimates, the demand met during the last year of the fiscal calendar reached 1.2 trillion BU.
Future Challenges and Innovations
While the future is promising, the power sector will have to deal with a multitude of challenges towards electricity demand growth and ecological sustenance objectives. Achievements in energy storage, the utilisation of renewable sources, and continuing progress in implementing energy-efficient technologies will define the trends in change in electricity use and availability. According to the forecast, renewables will be able to deliver 40% of overall power generation prospects by 2035.
Power Demand in India – Way Forward
This decade, i.e., 2020-29, the Indian electricity sector will be transformed in terms of demand growth, energy mix and market operations. India wants reliable and adequate electricity to be available to everyone, everywhere, all the time. It also finds that in view of reducing the dependence on fossil fuels and moving toward less environmentally friendly renewables,
CFA estimates a power requirement of 817 GW in 2030. The CEA forecast up to 2028-29: renewable share up to 44% from the present 18% and from 78% to 52% in thermal. The government of India has set a target of 500 GW of renewable energy capacity by 2030.
The projections of the 11th plan demand for electricity in India are not the numbers which have to be drawn with a pencil on a graph table in CAGR; they paint the narratives of the future for the living of the nation. As wealth, industrial efficiency, and standard of living improve in India, the power industry’s capacity to predict and fulfil power demand plays a pivotal role in the country’s energy landscape.
India can light a route that feeds its power need in the following decade via a blend of collaboration, industrial inventiveness, and responsible power management that is both cost-effective and sustainable.
