Abstract

The case is about the shift in India’s electricity demand and supply due to changes in the macro environment. In 2019, India’s annual electricity demand increased by 1.1%, the smallest rise since 2013. For the month of December 2019, power demand dropped to 100.81 billion units from 101.28 billion units a year earlier, representing the fifth straight month of decline in the year. Electric supply in the country also fell for the fifth consecutive month in December 2019. Power supply fell to 101.92 billion units in December 2019, down 1.1% from 103.04 billion units the previous year. The economic slowdown, lower demand from the industrial sector, losses made by the power distribution companies, and energy efficiency measures were some of the factors responsible for the fall in power demand and supply. Following several months of decline in 2019, power demand grew 3.5% year-on-year and energy supply increased 3.6% year-on-year in January 2020. The higher power demand was expected to lead to a rise in power supply in the country. But the country’s power demand further fell over 25% year-on-year to 125.81 Gigawatts in April 2020 compared to the same period the previous year, amid the nation-wide lockdown to contain the Covid-19 outbreak. It remained to be seen how India would manage the power sector and whether it would be able to strike the right balance between electricity demand and supply to stimulate economic growth.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Identify the factors responsible for the demand shift in the Indian power sector
• Understand how electricity demand reflects a country’s economic growth
• Discuss the shift in electricity demand and supply and its influence on the power sector
• Suggest measures to maintain the right balance between power demand and supply

Keywords

Power sector; Power demand; Power supply; Power generation; Energy efficiency measures; Economic growth; Shift in demand; Demand curve; Shift in supply; Supply curve; Fall in power demand and supply; Economic slowdown