After the disruption caused by the COVID-19 pandemic, economic activities have returned strongly, causing a strong use of power. Additionally, the cold wave caused increased use of heating devices such as heaters, blowers and geysers and the low rainfall due to El Nino conditions forced increased use of pumps for irrigation, further driving the power demand.
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According to the latest government data, electricity consumption in the country rose to 1354.97 billion units (BU) during the April-January period of this fiscal year, marking a 7.5% increase from 1259.49 BU recorded during the same period in fiscal year 2022–. 23.
The significant increase in electricity demand prompted the government to revise its projections for electricity consumption.
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Last year, peak demand soared to 243 gigawatts, beating initial projections of 229 gigawatts by the power ministry. In response, India unveiled plans in December to add nearly 88 gigawatts of new thermal power capacity by early 2032, with coal plants accounting for the majority. This represents about two-thirds more capacity than previously planned.
11 stocks soar up to 110%
The strong growth in electricity consumption has driven the share prices of companies within the power sector, including power generators, distributors and financial firms, to record highs.
In addition, the expansion to renewable energy (RE) projects, the new-age business of green hydrogen, solar module production, and increased capacity utilization due to robust demand contributed to the upward momentum in stock prices.
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Against this backdrop, 11 powerhouse stocks have posted gains of 20% to 110% over the past three months. Leading the pack is Adani Green Energy, soaring 110%. Other shares of the Adani group such as Adani Energy Solutions and Adani Power rose by 54.2% and 41% respectively.
Meanwhile, PSU stocks such as NHPC, SJVN, Power Grid Corporation of India, NTPC, REC, and Bharat Heavy Electricals also witnessed notable returns of 63.7%, 48%, 38.3%, 31.9%, 30%, and 49.8%, respectively. . . Additionally, Tata Power and JSW Energy saw impressive gains of 45% and 22.5% respectively.
Renewable energy will play a key role
In recent years, India has made significant strides in transitioning from coal-based power to renewable energy sources. While coal still remains an important component of India’s energy mix, the country has been actively expanding its renewable energy capacity to reduce its dependence on fossil fuels and combat climate change.
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According to credit rating agency firm ICRA, India’s installed renewable energy (RE) capacity, excluding large hydroelectric plants, is estimated to increase to 170 GW by March 2025 from a level of 135 GW in December 2023.
Currently, the country holds the 4th position worldwide for installed renewable energy capacity, including large hydro. It is fourth in both wind power capacity and solar power capacity.
The government has also taken steps to increase nuclear power capacity to 22,480 MW by 2031–2032, a significant increase from the current capacity of 7480 MW. The government is in talks with at least five private firms, including Reliance Industries, Tata Power, Adani Power and Vedanta, to invest around. ₹44,000 crore each, Reuters news agency reported on February 20.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
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Published: 28 Feb 2024, 12:21 IST
(tagsTo Translate)Power stocks