India's March Power Demand Hits Decade High but Growth Rate Slows
In March, India's electricity demand increased to approximately 149 billion units (BUs), surpassing the 147 BUs recorded in the same month last year. This figure represents the highest power consumption for March in at least a decade. However, the year-on-year growth rate moderated to a modest 1.7%, primarily influenced by weather-related factors and a high base effect from the previous year.
Weather Conditions Dampen Cooling Demand
The subdued growth in power demand is largely attributed to about 10% above-normal rainfall between March 1 and 25. Typically, rising temperatures during this period drive higher electricity usage due to increased air-conditioning and refrigeration loads, especially in urban centers like Mumbai. This year, unseasonal showers significantly reduced the expected surge in cooling demand across various regions.
Industrial Activity Moderates, Impacting Consumption
Industrial and commercial sectors, which account for nearly half of India's total electricity demand, also showed signs of moderation. The Manufacturing Purchasing Managers' Index (PMI) declined to 53.9 in March from 56.9 in February, indicating a slowdown in industrial activity. This contributed to the overall deceleration in power consumption growth during the month.
Peak Demand and Market Dynamics
Peak power demand in March stood at 238 gigawatts (GW), about 3% lower than the 245 GW recorded in January, which was the highest for the fiscal year. March experienced the lowest peak demand in the fourth quarter of FY26, reflecting the impact of milder weather conditions. Despite softer demand growth, supply remained ample, leading to a decline in power prices in the spot market.
The real-time market (RTM) witnessed a sharp 41.7% increase in traded volumes to 5,283 million units (MUs), indicating active participation by distribution companies and large consumers seeking cost efficiencies. Concurrently, the average market clearing price (MCP) in the RTM fell 10% year-on-year to Rs 3.71 per unit.
Price Declines Across Market Segments
Prices during solar hours dropped significantly to Rs 1.7 per unit compared to Rs 2.5 last year, while non-solar hours saw a decline to Rs 4.2 per unit from Rs 4.6. The day-ahead market (DAM) also recorded a nearly 6% fall in prices to Rs 4.1 per unit. These lower prices provided an opportunity for distribution companies and commercial and industrial users to replace costlier power with cheaper exchange-based procurement, improving overall efficiency in power sourcing.
Power Generation and Supply Trends
On the supply side, power generation rose by about 1.8% year-on-year to 163 BUs in March. Renewable energy (RE) generation continued its upward trajectory, supported by significant capacity additions. India added 50.9 GW of renewable capacity in FY26, including small hydro, reinforcing the structural shift towards cleaner energy sources.
Coal-based generation remained dominant, accounting for around 73% of total generation in March, higher than the fiscal average of 68%. Its flexibility in ramping output up or down continues to make it the backbone of India's power system. Hydro and nuclear generation also posted healthy growth of 13.8% and 8.3%, respectively. Coal inventory levels remained stable, with thermal power plants holding 59 million tonnes of stock at the end of March — sufficient for about 19 days of consumption, similar to February levels.
Future Outlook and Projections
Looking ahead, power demand growth is expected to pick up in FY27, driven by weather patterns and economic activity. Demand is projected to grow 5.5-6.5% to around 1,815-1,825 BUs. The anticipated emergence of El Niño conditions from July could lead to higher temperatures and lower rainfall, boosting cooling demand significantly.
For cities like Mumbai, where electricity demand is closely tied to climate and commercial activity, the interplay between weather patterns and consumption trends is likely to remain a key factor influencing both demand and pricing in the coming months.
