Crisil Intelligence has estimated that India's electricity demand will rise six point five to seven point five per cent year-on-year in the current fiscal to 1,825-1,835 billion units (bn units), driven predominantly by higher cooling requirements amid forecasts of elevated temperatures and lower rainfall linked to El Nino conditions. The agency said the projected increase reflects weather-driven demand shifts.

The impact of hotter and drier weather was already visible in July when national power consumption rose 10.9 per cent year-on-year to about 171 bn units, marking the highest monthly demand on record. That growth contrasted with a two point six per cent increase in July of the prior year, underscoring the sharp swing in cooling-related load.

Higher demand was matched by increased generation, with overall output up 10 per cent to 182 bn units in July as most major sources expanded production. Renewable energy generation rose about 10 per cent year-on-year, supported by a rise in installed capacity after the addition of 13.2 gigawatt (GW) of capacity, including small hydro, in the first quarter of the fiscal year.

Conversely, hydropower output fell by around 14 per cent year-on-year in July, reflecting weaker rainfall and lower reservoir inflows. The energy content of 31 reservoir-based hydropower projects stood at about 14 bn units as of 31 July, well below their full-reservoir capacity potential of about 34 bn units and lower than the roughly 22 bn units recorded at the same point last year.

Rainfall deficits were concentrated in the northwest, central and southern regions, at 10 per cent, one per cent and 26 per cent respectively between 1 June and 29 July, leaving the country about 15 per cent below normal for the period. With electricity demand expected to remain closely linked to weather, the report highlighted peak demand patterns and temperature sensitivity of short-term market prices as key watchpoints for the power sector this fiscal.