India's power demand set to rise 6.5-7.5% in Q1 FY26 amid heatwave

With the India Meteorological Department (IMD) forecasting a more than 50% probability of "above-normal temperatures" during April, May and June, cooling demand is expected to increase and the overall power demand in Q1 of fiscal 2026 could rise 6.5-7.5% on-year vis-à-vis 11% in the previous fiscal, according to the SectorVector report by Crisil Intelligence and S&P Global. March reflected the whole year's trend, with the power demand growing 4.3% on-year in fiscal 2025 to 1,695, following three consecutive high-growth years with a CAGR of 7.1% between fiscals 2022 and 2024.

Power demand in the country surged in March as the mercury climbed and demand from industrial and commercial consumers soared, with western and eastern central India witnessing 1-5 heatwave days during the month. The data shows the mean monthly temperature was 25.5°C, above the 30-year (1991-2020) normal of 24.71°C. The average high temperature was 32.7°C and the average low temperature 18.3°C, higher than the 30-year normal of 31.70°C and 17.71°C, respectively.

Overall, the power demand rose by 6.9% on year, 50% higher than the full-year average of 4.3%. In the western region, power demand grew 10% on year as several regions in Gujarat witnessed six days of heatwave.

The 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. "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 Crisil report says.

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% on-year to 3,727 million units (MU), while the day-ahead market (DAM) improved 19% to 5,547 MU. In March, IEX achieved the highest-ever monthly electricity traded volume of 11,215 MU, up 29% year-over-year, as per the report.

Generation charges up 8% on-year

In line with demand, the power generation jumped 8% on-year to 161 billion units (BU) in March. However, the on-month performance was better at 13%. Fuels across the board grew more than 5% in March. Indeed, it was the first month in the quarter to witness positive growth in all fuels, in line with the 6.9% on-year surge in power demand.

On an annual basis, coal-based power generation rose 6.7% in March on a high base of 9.4% in March 2024, reaching 120 BU. This was followed by renewable energy (RE), which increased 15.4% on-year on a high base of 11.4% in the previous fiscal. Generation of hydro and nuclear energy rose 33% and 17% on-year, with the fuels contributing 6% and 3%, respectively.

Coal despatch to power plants up over 6%

Dispatches of coal – the primary feedstock used to generate electricity in India – to power plants surged 6.25% in March and 6% on-year in fiscal 2025, improving inventories. As of March 31, thermal power plants had 58 million tonne (MT) of coal stock, compared with 51 MT a year ago. Coal inventory improved to 20 days as of March 31, compared with 18 days in March 2024 and 19 days in February 2025.