Stories
India Invokes Electricity Act: 5 Stocks Poised to Benefit from Power Demand Surge
- •India's government invoked Section 11 of the Electricity Act, mandating captive thermal power plants over 50 MW to operate at full capacity from October 1 to December 31.
- •This move is expected to add 5-6 GW of incremental power to exchanges, benefiting power exchanges like IEX and coal producers such as Coal India.
- •IEX could see higher trading volumes as increased peak demand, potentially reaching 290-300 GW, drives more power transactions.
- •Tata Power's Mundra plant stands to benefit directly, as Section 11 allows fuel cost pass-through, improving its economics and preventing significant fixed-cost under-recovery.
- •Renewable energy companies with battery storage, including Adani Green and Acme Solar Holdings, are also poised to gain from the rising demand for power during evening peak hours.
Key Questions Answered
Under the Section 11 order, captive thermal power plants with capacities over 50 MW must operate at full capacity from October 1 to December 31. This is expected to add around 5-6 GW of incremental power to exchanges, benefiting power exchanges like IEX and increasing demand for coal producers like Coal India.
Companies like IEX, Coal India, and Tata Power are expected to benefit directly from higher trading volumes, increased coal e-auctions, and improved economics for the Mundra plant. Additionally, renewable energy companies with battery storage capacity such as Adani Green and Acme Solar Holdings could benefit from rising evening peak power demand.
Peak power demand is projected to rise to 290-300 GW, though no immediate coal shortage risk is foreseen despite roughly 70 plants running at critical stock levels. Supplies from Coal India are expected to improve so plants can rebuild inventories, unless peak demand surges significantly past 300 GW.
