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05
2025
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12
Policy and Market Information on Max Demand in India
Policy and Market Information on Max Demand in India
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Policy and Market Information on Max Demand in India
India's "peak shaving" policy is not a standalone measure, but a central component of the country's comprehensive electricity reform program designed to address rapidly growing and unstable power demand while optimizing grid load. The core mechanism involves using price signals and precise metering to incentivize large consumers to proactively manage their electricity usage patterns, particularly avoiding peak-hour load increases.
1. Policy framework and core mechanisms
The current policy framework comprises multiple dimensions, with the table below outlining its core mechanisms and future reform priorities:
|
Policy level |
core content |
Objectives and Impacts |
|
current basis of accounting |
For industrial and commercial users (typically demand> 10 kW), the electricity bill consists of two parts: electricity consumption (kWh) and peak demand (kW). The peak demand is usually calculated as the 15-minute average power peak during the billing cycle (e.g., one month). |
Ensure cost recovery: The grid must reserve capacity based on the maximum demand of users, with this cost recovered through the "maximum demand" tariff. |
|
penalty rate |
If a user's actual peak demand exceeds the contracted limit, the excess will incur a penalty charge (sometimes 1.5-2 times the standard rate). |
Compulsory load management: Users are incentivized to strictly control peak loads within the contracted range through technical or managerial measures. |
|
Time-of-use electricity price linkage |
Time-of-use electricity pricing is implemented, with peak hours (typically evening) having significantly higher rates than off-peak and valley periods. The measurement of peak demand is linked to peak hours. |
Peak shaving and valley filling: This strategy guides users to shift adjustable loads (e.g., production or charging) off the grid during peak hours, reducing electricity bills while easing system strain. |
|
Future directions for reform |
The Electricity (Amendment) Act 2025 aims to eliminate cross-subsidies for electricity tariffs to manufacturing, railway and other users within five years. |
Enhance industrial competitiveness: make electricity price more real reflect the cost of power supply. The maximum demand management of users will be directly linked to the market price of electricity, and the economic incentive will be stronger. |
2. Key regulatory agencies and market information
Understanding the following institutions can help you get more dynamic market information:
Central Electricity Regulatory Commission: Develop regulations for inter-state power transmission and wholesale electricity markets.
State Electricity Regulatory Commissions: Set the state's retail electricity prices (including peak demand pricing), time-of-use pricing structures, and specific implementation rules. The policy implementation details and pricing standards may vary across states.
The Power Grid Corporation of India (PGCI), responsible for managing the national power grid, will issue a nationwide short-term resource adequacy report to forecast potential power shortages.
3. Market Background and Data
To understand the urgency behind India's policy implementation, one must examine the unique features of its electricity market:
1. Rapid demand growth and seasonal peaks: India's electricity demand grows at an average annual rate of 6.3%. During summer months (April-June), extreme heat and cooling demands drive extremely high and rapidly increasing peak loads, projected to reach 273 gigawatts in 2025. Demand-side management (DSM) serves as the core solution to address these seasonal peaks.
2. Renewable Energy Integration and Storage: To address the intermittency of renewable energy, India has mandated that newly tendered photovoltaic projects must incorporate 2-hour energy storage systems equivalent to 10% of their installed capacity (10%/2h). This mechanism enables electricity release during evening peak hours when sunlight is scarce, effectively providing the grid with 'peak capacity'.
3. Ongoing power supply security challenges: Despite government measures, projections indicate the power system will still face certain shortages in the summer of 2025 under the medium scenario. This makes direct management of large user loads (maximum demand control) critical.
In summary, India's peak demand management policy serves as a dynamic economic lever that is closely aligned with the actual needs of its power grid. For large electricity consumers operating in India, this means integrating peak demand monitoring and management as a core component of their corporate energy strategies and cost control measures.
If you need to understand the electricity pricing details of a specific state or are interested in load management technologies commonly used by industrial and commercial users (such as energy management systems and energy storage), Acrel Electric can provide further information.
Acrel’s IOT platform can monitor max demand information in time:
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