India's power demand surges in March amid hot weather, high industrial growth

The mean monthly temperature was 25.5 degrees Celsius, above the 30-year (1991-2020) normal of 24.71 degrees Celsius.

Western and eastern central India witnessed 1-5 heatwave days during the month. As a result, power demand rose 6.9 per cent, around 50 per cent higher than the full-year average of 4.3 per cent. In the western region, power demand grew 10 per cent over last year as several regions in Gujarat witnessed six days of heatwaves.

The report highlights that seasonally adjusted India PMI, a proxy to estimate the country’s industrial activity, grew from 56.3 in February to 58.1 in March, the highest in eight months. The latest reading showed a substantial improvement in the health of the manufacturing sector that was above its long-run average.

With nearly half of India’s power demand emanating from industrial and commercial consumers, expansion of relevant activities is crucial for power demand to continue growing, the report points out.

Higher cooling requirements pushed peak power demand to 235 GW, an addition of 14 GW from the previous fiscal. The effects of this surge percolated to the short-term power market as well.

The real-time market (RTM) volume surged 34 per cent year on year to 3,727 million units (MU). The share of RTM in total electricity volume traded on the IEX rose to a high of 33 per cent, compared with the average of 24 per cent recorded since its inception in June 2020 to March 2025. Despite the surge in volume, the average market-clearing price for March 2025 remained stable at Rs 3.93/unit vis-a-vis Rs 3.91/unit due to an increase in power supply.

Power generation jumped 8 per cent year-on-year to 161 billion units (BU) in March, in line with the power demand. However, compared to the previous month of February, the growth was higher at 13 per cent.

Fuels across the board grew more than 5 per cent in March. Coal-based power generation rose 6.7 per cent in March this year on a high base of 9.4 per cent in March 2024, reaching 120 BU. The fuel accounted for 75 per cent of the total power output, highlighting India’s continued reliance on coal during times of upswing in power demand.

This was followed by renewable energy (RE), which increased 15.4 per cent on-year on a high base of 11.4 per cent in the previous fiscal. RE’s share in the fuel mix for the month also increased to 14 per cent from 12.7 per cent in March 2024, underscoring the country’s efforts to reach its COP26 targets.

Generation of hydro and nuclear energy rose 33 per cent and 17 per cent on-year, with the fuels contributing 6 per cent and 3 per cent, respectively.

Dispatches of coal – the primary feedstock used to generate electricity in India – to power plants surged 6.25 per cent in March and 6 per cent on-year in fiscal 2025, improving inventories.

As on March 31, thermal power plants had 58 million tonnes (MT) of coal stock, compared with 51 MT a year ago. Coal inventory improved to 20 days as on March 31, compared with 18 days in March 2024 and 19 days in February 2025.

Overall, power demand grew 4.3 per cent on-year in fiscal 2025 to 1,695, following three consecutive high-growth years with a CAGR of 7.1 per cent between fiscals 2022 and 2024.

For Q1 (April-June) of fiscal 2026, Crisil Intelligence estimates power demand to rise 6.5-7.5 per cent over the same period of the previous year, vis-a-vis 11 per cent in the previous fiscal. With the India Meteorological Department forecasting a more than 50 per cent probability of above-normal temperatures during the summer months of April, May and June, cooling demand is expected to increase.