Power demand hits record 171 BU in July as deficient rains spur cooling demand: Crisil

India’s power demand surged 10.9% year-on-year (YoY) to a record 171 billion units (BU) in July, driven by increased use of cooling equipment amid deficient rainfall, according to a report by Crisil. 

Power demand had grown just 2.6% in July last year. The northwest, central, and southern regions received below-normal monsoon rainfall between June 1 and July 29, with deficits of 10%, 1% and 26%, respectively. Overall, the country recorded a 15% rainfall deficit during the period. 

Among states, Karnataka reported a 27-29% rainfall deficit, leading to a 21% YoY increase in power demand. Rajasthan, which recorded a 10-20% rainfall deficit, saw power demand rise 23%.  

For the April-July period, power demand increased around 9.1% YoY in the current fiscal, compared with a 0.5% decline in the corresponding period last year. Peak power demand also touched 270 gigawatts (GW) in July, the second-highest level on record and around 22% higher than the 221 GW peak recorded in July last year. 

Short-term power market prices rise 

The surge in electricity demand was reflected in activity in the short-term power market. Volumes in the Real-Time Market (RTM) rose 10.2% YoY to 5,631 million units (MU) in July from 5,109 MU a year earlier. The average market clearing price (MCP) in the RTM increased 15.1% YoY to ₹4.41 per unit, indicating strong demand. 

During solar hours between 11 am and 4 pm, the average MCP stood at ₹1.60 per unit in July, down from ₹2.10 a year earlier. However, prices during non-solar hours rose sharply to ₹5.30 per unit from ₹4.40. The average MCP in the Day Ahead Market (DAM) increased 19.3% YoY to ₹4.99 per unit. 

Power generation rises 10% 

Power generation increased around 10% YoY to 182 BU in July, tracking the rise in demand. Except gas and hydropower, all major fuel sources recorded higher generation. 

Renewable energy generation rose around 10% YoY, supported largely by capacity additions. India added 13.2 GW of renewable energy capacity, including small hydro, during the first quarter of the current fiscal. 

Coal-based generation increased 15% YoY, with its share in total power generation rising to 64% in July from 62% in the same month last year. 

Hydropower generation, however, declined around 14% YoY in July amid weak rainfall. The energy content of 31 reservoir-based hydropower projects stood at around 14 BU as of July 31, significantly below their full-reservoir potential of around 34 BU. The corresponding level a year earlier was about 22 BU. 

Lower reservoir storage may have contributed to the decline in hydropower generation, Crisil said. 

Coal inventories fall as thermal generation rises 

Coal inventories at thermal power plants fell to 38 million tonnes (MT) as of July 31, down from 54 MT a year earlier, even as coal remained the primary fuel for electricity generation. 

Coal dispatches to power plants increased 0.52% YoY to around 213 MT during the first quarter of the fiscal. However, daily coal requirements rose to 3.12 MT in July from 3 MT a year earlier, the highest level recorded since July last year. As a result, coal inventories at power plants fell to around 12 days of requirements in July from 18 days in July 2025. 

Weather remains key driver of power demand 

Crisil expects India’s power demand to increase 6.5-7.5% YoY to 1,825-1,835 BU in the current fiscal, driven by higher cooling demand amid rising temperatures and lower rainfall associated with El Niño conditions. 

Going forward, the trajectory of peak power demand and the sensitivity of short-term power market prices to temperature variations will remain key factors to watch, the report said.