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Taking into consideration robust industrial activity, strong Gross domestic product (GDP) growth and the Indian Meteorological Department's (IMD) forecast of above-normal temperatures during the summer months, Fitch Ratings is anticipating power demand in India to rise by 7-8 per cent year-on-year in second quarter (Q2) of 2024. However, it considers much of this demand will be met through larger operating capacities, adequate coal inventory, and higher utilization of gas-based plants. It said India's monthly power demand typically peaks in the pre-and post-monsoon months of May or August, as cooling demand picks up with the temperature rise. IMD has predicted higher-than-normal maximum temperatures over most parts of the country till June 2024, further increasing demand. 

At the same time, the rating agency has forecasted that distribution utilities to work towards minimizing supply disruptions due to India's general elections in April and May, given that power supply is a politically sensitive issue. On the supply side, the Indian Ministry of Power has directed both gas-based and imported-coal-based power stations to maintain availability to meet the anticipated demand. Utilisation of gas-based plants has been low in the past due to higher fuel prices or lack of availability of fuel.

Fitch stated that India has experienced strong growth in power demand, averaging 8.5 per cent a year over the last three years after the Covid-19 pandemic. It has met a large part of the increase through thermal power plants' higher plant load factors (PLFs), which have jumped by around 10 per cent to around 69.5 per cent over the last two years. Strong power demand bodes well for additions of renewable capacities and associated storage demand as India aims to meet ambitious long-term energy-transition goals.