Rising temperatures and successive years of low rainfall have led to an increase in electricity demand. Electricity generation jumped 16% in the first 20 days of April. In the three months to March, electricity production increased 9%, the fastest growth in at least 10 years, data from Central Electricity Authority shows.
Generation grew at an almost similar pace thrice during the last decade. Production in the first three months of 2014 was up 7.6%. That growth, however, was driven by general election—states try to win votes by curtailing power cuts. Generation in 2010 and 2011 increased in the range of 7-8% on strong economic activity.
Several states are going for elections this year also. But the generation growth this time is largely attributed to rising demand from agriculture and households. Deficient rains and low moisture content in soil are increasing agricultural dependence on groundwater, which requires pumping.
According to JM Financial Institutional Securities Ltd, Madhya Pradesh, Rajasthan, Bihar and Maharashtra saw the highest growth in power demand. "The largest chunk of the 50% year-on-year spike in Madhya Pradesh's power demand (in February and March) was led by agri-irrigation demand for the rabi sowing season," JM Financial said in a note. "Rising heat and deficit rainfall has led to high demand for pumping of groundwater for irrigation purposes, leading to this electricity demand surge."
Incidentally, the states mentioned are also seeing a sharp rise in temperatures, which in turn is driving non-industrial demand for electricity. According to JM Financial, all these states have a high share of agriculture and domestic sectors in overall electricity consumption.
"Correlating these climatic changes with rising demand on a state-wise basis, we believe most of the demand spike is due to changing weather conditions and lack of adequate rainfall in the past 12 months," it added.
The rising demand has helped improve thermal power plant utilization levels, which expanded 3.5 percentage points last month. But the recovery can turn out to be seasonal if demand from industry and commercial consumers does not improve.