New Delhi

Power demand in the country is expected to rise by around 6 per cent in the current financial year, driven by the anticipated impact of El Nino conditions, which are likely to increase temperatures and reduce rainfall, according to a report by Crisil Intelligence.

The report stated that power demand is estimated to grow 5.5-6.5 per cent year-on-year in fiscal 2027 to reach 1,815-1,825 billion units (BUs). The expected emergence of El Nino in July is likely to push up cooling demand due to higher temperatures and lower rainfall. In addition, steady economic growth and a low base are expected to support the rise in power consumption.

It stated, "Power demand is estimated to rise 5.5-6.5 per cent year-on-year in fiscal 2027 to 1,815-1,825 BUs, because of the expected emergence of El Nino in July".

The report also highlighted recent trends, noting that power demand in March rose to approximately 149 billion units, surpassing the 147 BUs recorded in the same month last year. This marks the highest March consumption since at least 2010.

Activity in the short-term power market reflected this trend. The real-time electricity market (RTM) volume in March surged 41.7 per cent year-on-year to 5,283 million units (MUs), up from 3,727 MUs a year ago.

Despite this, the average market clearing price (MCP) in the RTM declined 10 per cent year-on-year to Rs 3.71 per unit, indicating ample power availability in the system.

On the supply side, power generation is estimated to have increased by a moderate 1.8 per cent year-on-year to 163 BUs in March. Except for gas, all major fuel sources recorded an increase in generation.

Renewable energy generation continued its upward trend, supported by capacity additions. The country added 50.9 GW of renewable energy capacity, including small hydro, in fiscal 2026. Coal-based generation saw a marginal increase of around 0.4 per cent year-on-year, with its share in total generation rising to around 73 per cent in March, compared to the fiscal 2026 average of around 68 per cent.

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The report noted that coal remains the primary fuel for power generation in the country due to its flexibility in ramping output based on demand. Hydro and nuclear power generation also recorded growth of around 13.8 per cent and 8.3 per cent year-on-year, respectively, during the month.

Rising temperatures and weather-related factors, along with economic growth, are expected to drive higher electricity demand in the current financial year.