Avg Wholesale Electricity Prices in India in H1 2023 80% Higher than 2019 Levels: IEA
IEA’s latest report entitled, ‘Electricity Market Report Update; Outlook for 2023 and 2024’ has shed light on the following findings-
India has installed significant solar generation capacities in recent years, which helps meet daytime peak demand for cooling. However, evening peaks when the sun does not shine but temperatures remain very high pose a significant challenge to the system. In such evening hours, the sufficient availability of dispatchable capacities of hydro, coal- and gas-fired power plants becomes crucial. New generation capacity additions in recent years have lagged behind the increase in peak power demand.
The substantial demand declines in advanced economies contrast sharply with the growth observed in emerging economies such as China and India. Japan is similarly expected to record a significant 3% fall in electricity demand in 2023, while the United States is set to see a decrease of almost 2%. In contrast, China’s electricity demand is expected to increase by 5.3% in 2023 and 5.1% in 2024, slightly below its 2015-2019 average of 5.4%. India is set to have an average annual growth rate of 6.5% over the outlook period, surpassing its 2015-2019 average of 5.2%.
Increases in emissions from power generation in China and India are expected to be more than offset by declines in other regions. The European Union alone accounts for 40% of the total decline in emissions from power generation expected to occur in 2023 and 2024, excluding China and India. The EU is followed by the United States, where renewables deployment is growing strongly, and gas is increasingly replacing coal-fired supply. Extreme weather, unexpected economic shocks and changes to government policies can cause an uptick in emissions in specific years. However, the overall trend of global power sector emissions plateauing is expected to persist, with years in which emissions decline, not rise, becoming more frequent.
Wholesale electricity prices remain elevated in many countries despite substantial declines, although there are regional differences. European wholesale prices halved from their record highs in 2022, falling closer to their 2021 average. Despite this, average prices in Europe are still more than double 2019 levels. Similarly, average wholesale electricity prices in India in the first half of 2023 were still 80% higher than 2019 levels, and in Japan they were 30% higher compared to 2019. In contrast, wholesale electricity prices in the United States have almost fallen back to 2019 levels.
Findings on Growth of Renewables-
The accelerated pace of new renewable capacity additions shows that renewable generation could surpass coal as early as 2024. Renewables are set to meet all additional demand in 2023 and 2024. With global demand growth easing in 2023, incremental increases in renewables alone are expected to cover all additional demand not only this year, but
also in 2024, when demand growth is expected to accelerate again. By 2024, the share of renewable generation in global electricity supply will exceed one-third for the first time. By 2024, electricity generation from fossil fuels is expected to have fallen four times in six years.