HT G20 Agenda: How India can plan for fluctuations in demand for power

The arrival of the monsoon holds much significance – cultural, economic and even political. While cooling rain brings relief to many, the prospect of hotter conditions and uncertain rainfall is very real in many parts and has implications for electricity demand, especially in a fast-growing economy such as India. Alongside constant and rising economic activity, the cyclical trends of weather, elections, and festivals are key drivers of electricity demand – the supply of which has political and livelihood salience, and must not be interrupted at any cost.

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The growth of electricity demand remained muted from the last quarter of 2019, even before the pandemic set in, until mid-2021 on account of the persistent Covid waves and subdued economic activity. Concomitantly, our ability to rely on past trends to gauge demand in the coming months became limited and posed significant challenges in lining up supply – both capacity and fuel. The unexpected growth in energy demand in the monsoon and post-monsoon period of 2021, and even in the summer of 2022, left system operators and utilities scrambling for sources of supply. The summer of 2023 is nearly past us without much ado – no wide-ranging supply shortages – but the distribution system did show vulnerability in pockets. The electricity supply growth needed to cater to our demand was at 6%, the same growth expected in the medium term (2030). Not every year may see an even growth rate, so how do we plan for the vagaries of power demand growth and stay one step ahead?

First, the ability to predict India’s power demand in the short run is extremely important to have a cost-effective and reliable supply. A significantly hotter February this year prompted the Ministry of Power (MoP) to issue a series of measures that put all hands on deck – maintaining supply at all costs in the summer, mandating minimum coal blending thresholds through imports, having all maintenance events deferred, gas plants on standby, and pre-empting a peak demand of 229 GW in April. However, an extended-range weather forecast issued in March indicated that heat waves would be absent until the first half of April. Between March and May, the country was on average cooler by 0.5°C to 1.5°C compared to 2022. The preparation in advance certainly held the system in good stead – coal stocks at power plants ballooned to 37 million tonnes, nearly 30% higher than the same time last year. Immediately after the MoP decree in March, statutory shutdowns (for maintenance) were taken out and coal plant availability increased. However, on account of the subsequent muted demand, many continued to be on standby (instead of maintenance), which would have been beneficial for the post-monsoon spurt in demand. Thus, integrating weather events and short-term economic forecasts into power demand estimation forecasts is crucial to improving the reliability of power and keeping costs in check.

Second, the pace of renewable energy (RE) capacity installation, especially solar, needs to increase significantly. The energy it generates offsets the need for conventional sources (coal) during the day – renewables already cater up to 28% of the day or afternoon energy demand peak. Even in the night peak, wind can contribute up to 10% of peak demand. RE capacity addition, in the period after the Delta wave, stands at a rate of ~1.1 GW per month. As a result, more than 50% of the growth in energy demand between 2022 and 2023 was provided by thermal generation. In order to reach the capacity targets, set for 2030, India will have to add ~3.5 GW (of solar and wind energy capacity) per month over the rest of this decade. Among non-fossil sources, hydropower saw decreased generation in 2023 (vs 2022), while biomass-based power generation did not materially alter supply position.

Third, the power system will have to show increasing flexibility as variable RE share grows. Thermal power plants (TPPs) will have to provide this flexibility in two ways – by ramping down/up their generation when RE generation increases/decreases, and by catering to the peak load in non-RE hours. Thermal power plants can be likened to marathon runners – set for the steady, long-duration operation. Asking them to do frequent bursts of walking and sprinting on demand (determined by the RE contribution), can wear them down in the long journey they are intended to undertake. Being engineered systems, they can certainly handle this intermittent operation but it needs monitoring and care. Today, inter-state generation stations (such as NTPC) provide a bulk of this flexibility and help cater to peak loads. They ramp down to 55% capacity or lower, for about a tenth of the operating days in a year. In the non-RE evening/night peak, TPP’s contribution rose to an all-time high of 180 GW (generation) in May 2023, and accounted for 82% of the peak supply.

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However, State-owned assets are not geared to do this cycling operation (they cycle down to between 65% and 70%) or shore up peak supply. If a large portion of our thermal fleet can lend flexibility (cycling down to 40-55%), then we can prepare better – financially and technically, for onboarding energy storage systems and more complex power plant operations to integrate even more variable renewable energy in the next decade. Nevertheless, a well-planned maintenance schedule for TPPs and utilisation of the gas-based generation assets should help shore up contributions from these firm and dispatchable assets until 2030 and cater to the non-RE peak.

India’s power system needs this fine interplay between renewable energy and thermal generation to deliver cost-effective solutions to our consumers and to enable clean electricity supply to the much touted Green Hydrogen Mission. With the right investments, planning and predictive assessments, India can ensure that energy storage considerations – costs, material availability, and engineering constraints – don’t present barriers to its energy security and economic growth.

Karthik Ganesan is Fellow and Director, Research Coordination, at the Council on Energy, Environment and Water (CEEW). The views expressed are personal.