Syllabus: GS3/ Energy
Context
- India’s electricity demand has risen sharply during the summer of 2026, with peak demand touching a record 256.1 GW in April.
What is Peak Demand?
- Peak demand refers to the highest level of electricity consumed on the grid during a specific period, usually measured over a 15-minute interval.
- Characteristics of Peak Demand:
- Peak demand generally occurs for 2–4 hours during a day.
- In summer, peaks usually occur from late afternoon to late evening due to heavy use of air conditioners and cooling devices.
- In winter, peaks occur during morning and evening hours because of heating and lighting needs.
How States Manage Electricity Demand?
- Contractual Supply through Long-Term PPAs: State DISCOMs sign long-term Power Purchase Agreements (PPAs) with power generators.
- These agreements ensure stable electricity supply at fixed capacity and prices.
- Around 85–90% of India’s electricity demand is met through such contracts.
- Power Exchange Purchases: During sudden demand spikes or supply failures, States purchase electricity from short-term power exchanges.
- Around 10–15% of electricity is traded through these exchanges, which help balance real-time mismatches between supply and demand.
Challenges Faced by States Due to Rising Demand
- Growth in Electricity Consumption: India’s peak electricity demand has increased by nearly 37% during the last five years.
- Peak demand increased from about 183 GW in 2020 to more than 250 GW in 2026.
- Rising household electrification, increasing air-conditioner usage, growing electric vehicle adoption, and expanding agricultural power consumption are major drivers of rising demand.
- Financial Stress on DISCOMs: DISCOMs are often locked into long-term PPAs with fixed supply capacities that may not fully meet sudden peak demand.
- Additional electricity required during peak periods must be purchased from short-term markets at significantly higher prices.
- Uttar Pradesh and Bihar continue to face challenges related to high distribution losses, ageing infrastructure, and overloaded transformers.
- Stress in Distribution Infrastructure: Overloaded transformers, ageing feeders, and poor maintenance weakens last-mile electricity delivery systems.
- In many states distribution systems are operating close to their technical limits. Several northern States continue to report transformer failure rates as high as 20%.
Demand-Side Measures Adopted by States
- Many States issue advisories requesting consumers to reduce electricity consumption during evening peak hours.
- Several States are promoting energy-efficient appliances to reduce peak electricity demand.
- Agricultural load scheduling is also being adopted in some States to reduce pressure on the grid during peak hours.
- States are increasingly adopting Time-of-Day (ToD) tariffs, under which electricity prices vary according to the time of consumption.
- Smart metering systems are being introduced to encourage efficient electricity usage and improve demand forecasting.
- Examples: Delhi has increasingly relied on smart metering and ToD tariffs to reduce evening electricity demand caused by cooling loads.
Role of Renewable Energy in Managing Peak Demand
- Solar and wind power plants have low operating costs and help reduce the overall power procurement cost for DISCOMs.
- Gujarat and Karnataka effectively meet daytime electricity demand because solar power generation aligns with commercial and agricultural consumption patterns.
- However, these States continue to face steep evening demand after sunset when solar generation declines sharply.
- Tamil Nadu benefits significantly from wind power generation during the monsoon season.
- The State depends more heavily on market purchases during periods of low wind generation and high urban evening demand.
Need for Energy Storage Technologies
- Renewable energy alone cannot ensure reliable round-the-clock electricity supply because solar and wind generation are intermittent in nature.
- Hence, there is a need for energy storage technologies to store excess renewable energy during high generation periods and supply during peak demand hours, thereby ensuring grid stability.
- Battery Energy Storage Systems (BESS): Battery Energy Storage Systems store excess renewable electricity and supply it during periods of high demand.
- BESS improves grid flexibility, reliability, and renewable energy integration.
- Pumped Hydro Storage (PHS): Pumped Hydro Storage systems store energy by pumping water to elevated reservoirs and generating electricity during peak demand periods.
Way Ahead
- India needs substantial investment in energy storage technologies such as BESS and PHS to manage renewable energy variability and evening peak demand.
- Smart grid technologies and digital monitoring systems should be expanded to improve grid flexibility and reliability.
- States need to strengthen transmission and distribution infrastructure to improve last-mile electricity delivery.
Source: TH
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