India summer power demand seen manageable, govt measures in place: JP Morgan | Mint – Mint

New Delhi: India is likely to witness a manageable power demand this summer with the base load remaining flat due to unseasonal rains and the government focusing on expanding power capacity, according to a report by JP Morgan.
The report said the peak power demand in India witnessed a moderate increase this summer, reaching 223GW, a 4% year-on-year rise. “El Nino could result in elevated demand amidst low seasonality; government is preparing by increasing the window for imported coal plants to operate with fuel cost pass through,” the report added.
To prepare for potential spikes in demand, the government plans to extend the operating window for imported coal plants with fuel cost pass-through arrangements.
With an installed power capacity of 418GW, India relies heavily on thermal power, which constitutes 237GW of the total capacity. The thermal power plants are already operating at elevated Plant Load Factors (PLFs), with a year-to-date average of 70% and 77% for the central sector. In light of the growing power demand, planning agencies have revised their power capacity targets for fiscal year 2032.
To address the rising demand and promote renewable energy sources, the government plans to increase tendering targets for new thermal and renewable projects. Additionally, emphasis will be given to energy storage solutions to maximize the utilization of power during peak hours.
The report suggests that government-owned utilities are expected to lead the power capital expenditure upcycle. The government’s focus on regulated return business models, such as NTPC and Power Grid, offers insulation from earnings risks, it added.
In terms of capacity addition, the Central Electricity Authority (CEA) has revised the National Electricity Plan (NEP) to target a cumulative addition of 500GW between fiscal years 2023 and 2032. This includes 310GW from solar energy, 81GW from wind energy, and 50GW from thermal power, out of which 25GW will be newly commissioned.
The Ministry of New and Renewable Energy (MNRE) has set a target of awarding 50GW of renewable energy capacity annually between fiscal years 2024 and 2028, including 10GW per year from wind energy. The report highlights key enablers such as the government’s waiver of domestic procurement rules until March 2024 and the expected reduction of module and cell prices by 20-30% year-on-year. The report also highlighted the accommodative nature of the government’s approach paper for the years 2025-2029, particularly for generation companies.
The report said NTPC and Power Grid are attractive stock picks, given the expected increase in thermal, renewable, and transmission capital expenditure. 
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