India’s power sector is set to grow by 5-6% each year in the medium term as investments in both thermal and renewable power generation are projected to surge amid growing demand from electrification, data centers, cooling demand, and manufacturing, according to Citi.
India is currently seeing its first-ever multi-vector capital expenditure upcycle with investments in solar, wind, coal, and grids all rising, according to a report by Citi Research cited by Indian media.
“India’s first-ever multi-vector capex upcycle – straddling thermal, renewables, transmission, and grid storage – continues to chug along,” the report read.
India has ambitious renewables targets, especially for solar power capacity expansion, although it continues to rely on coal as the pillar of its power generation and flexible capacity to meet peak demand.
India expects to nearly quadruple its solar power capacity and triple wind power-generating assets within ten years, according to the new Generation Adequacy Plan published by the country’s Central Electricity Authority earlier this year.
Amid the current natural gas crisis caused by the lack of Middle Eastern LNG supply, India is leaning on coal and renewables to meet demand. India’s Power Minister in March ordered coal-fired power plants to run at full capacity for three months starting April 1, to be prepared to meet peak power demand during the summer.
As expected, India’s power demand hit a new record high in late April as early summer heat waves pushed electricity consumption for cooling past previous highs.
While soaring solar power helps generate electricity during the day, India remains reliant on coal-fired electricity generation during the evenings and nights, as the fossil generation stays a pillar of flexible, reliable power supply to meet the surge in demand.
Historically, summer heat in the April to June quarter is the single biggest driver of Indian power demand growth – the more extreme the temperatures are, the more electricity is consumed during these months.
By Tsvetana Paraskova for Oilprice.com
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