Power generation in the country grew by 10% in the first nine months of 2022-23, with the thermal power generation up 10% and renewables growing at 19%. Demand will surge over the next 6-7 months, with the onset of summer and good prospects for the Indian Manufacturing Index (PMI), say experts.

According to the Central Electricity Authority’s (CEA) provisional data up to November 2022, the total energy requirement was 1017 BU and the availability was 1012 BU, a fall of just 5,691 million units or -0.6%. India generated 1,491.9 billion units (BU), with a growth of 7.9% in 2021-22 after two successive years of less than 1% growth due to Covid-19 issues.

S&P Global's India’s purchasing managers index (PMI) for manufacturing, released a few days ago, rose to a 26-month high of 57.8 in December. It was aided by the highest increase in new orders and production in the last two years.

The power generation growth in India rebounded to double-digits in Nov-Dec 2022, leading to 8% YoY generation growth during Q3 FY23. Generation was flattish on October 22 due to heavy rains. The last two months of the previous year saw double digit generation growth.

Generation from thermal units for the quarter was up 7.3% year-on-year (YoY), while renewable energy generation was up 25% YoY. On a 3-year CAGR basis, generation is up 5.5%, with thermal/RE growth at 5.3%/16%, respectively. No major growth is seen in the nuclear/hydro verticals during the 3-year period, observes an Emkay research report.

"We expect demand to see continued surge over the next 6-7 months, with the onset of summer. Indian manufacturing PMI remains strong and, hence, demand growth is expected to stay buoyant," says the report.

Data for several years suggest the second half of the year is usually favourable for thermal units due to summer, even growing by 106% when compared to the first half of the year. "We believe that as demand sees traction, companies with large under-utilized capacity such as NTPC would benefit," say researchers at Emkay.

NTPC's generation grew only 2% in the third quarter largely due to low utilisation during October 2022. NTPC plans to add 18 gigawatt (GW) of projects (thermal, hydro and RE) over the next 3 years.

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