Artificial intelligence data centres will add an extra 26.3 gigawatts (GW) to India’s power demand by 2031-32, the government told the Rajya Sabha on Monday. The number is a useful marker of how much the country’s power needs are changing, and why the grid connecting power plants to homes and factories will need to expand alongside generation capacity.
As per the written reply, peak demand is set to rise by roughly a third over the next five years, over Rs 9 lakh crore has already been earmarked for transmission under the National Electricity Plan, and renewable capacity is being added far faster than coal or gas.
The government said the additional AI-linked load is expected to be integrated into the grid and will primarily be served by renewable energy capacity, rather than dedicated captive coal or gas plants. This matters because it adds a new, fast-growing source of demand onto a grid that is already having to work harder to absorb solar and wind power, which, unlike coal or gas, cannot simply be ramped up on command.
Peak demand set to cross 388 GW by 2031-32
According to the mid-term review of the Central Electricity Authority’s (CEA) 20th Electric Power Survey, India’s peak power demand is projected to rise from 289 GW in 2026-27 to 388 GW by 2031-32. The sharpest single-year jump comes this year itself, with demand expected to grow 17.96% in 2026-27, before settling into a steadier annual growth rate of 5.5 to 6.6% through the rest of the decade.
Rs 9.16 lakh crore transmission plan already underway
On whether grid investment is keeping pace with generation, the ministry pointed to the National Electricity Plan, which envisages spending of about Rs 9,16,142 crore on transmission infrastructure over the 2022-32 period. The reply added that transmission development is being carried out in a phased manner, matched to the pace of new generation capacity, including renewable energy.
The scale of construction already in progress gives a sense of how much work is underway. The projects together involve 39,792 circuit kilometres of transmission lines and 4,01,510 MVA of transformation capacity.
Separately, Intra-State Transmission System (InSTS) projects of 220 kV and above account for another 30,387 circuit kilometres of lines and 1,18,194 MVA of transformation capacity.
The government also flagged plans to deploy newer grid technologies, like Static Synchronous Compensators (STATCOMs), Battery Energy Storage Systems (BESS) and synchronous condensers, to improve grid reliability and make it easier to absorb renewable power, which can swing sharply depending on weather conditions.
Renewables are outpacing coal and gas additions
On the question of whether fossil-fuel capacity is growing faster than renewables, the ministry’s answer was clear: it isn’t. Between FY 2023-24 and June 2026, thermal coal-based capacity additions totalled about 21,080 MW, while renewable energy capacity, including large hydro, grew by 1,16,487 MW over the same period. Of this, solar accounted for 95,372 MW, wind for 14,810 MW, large hydro for 5,130 MW, and small hydro and biomass making up the rest.
As a result, the share of non-fossil fuel sources in India’s installed power capacity rose from 43% to 54.2% in this period. The government noted that India crossed the 50% non-fossil fuel capacity mark five years ahead of its 2030 target.
Why the grid, not just power plants, is the bigger challenge
Building new power plants is only part of the story. Industry analysts have long pointed out that transmission and distribution infrastructure, the network of lines, substations and transformers that carries electricity from generating stations to homes and factories, needs to expand at least as fast as generation capacity, or risk congestion on the grid.
A recent report by brokerage firm Macquarie Research estimated the investment opportunity in India’s transmission and distribution sector at Rs 7.9 lakh crore (about $85 billion) between FY27 and FY36, citing updated CEA estimates. Separately, the National Electricity Plan-Transmission projections cited in the report put total planned transmission spending at roughly Rs 9 lakh crore between FY22 and FY32, with about 45% of that spending front-loaded into the first five years.
The Macquarie report noted that substations and transformation capacity, essentially transformers, switchgear and related equipment, are expected to account for 50 to 55% of total transmission spending, making this segment the largest single opportunity within the sector.
Renewable energy integration adds to grid complexity
Unlike coal or gas plants, which are typically large and centrally located, solar and wind projects are spread across many, often remote, sites and produce power intermittently depending on sunlight and wind conditions. As of March 2026, nearly 125 GW of solar and wind projects were under construction in India, according to the Macquarie report, each of which will eventually need to be connected to the grid without destabilising it.
Government data cited in the report shows renewable energy‘s share of India’s installed capacity is projected to rise from about 39% in 2022 to 55% by 2027 and 66% by 2032, with the CEA projecting an even higher 70% share by FY36. To meet this pace, renewable capacity additions are expected to grow at a 14% compound annual rate through 2032, roughly double the 8% growth expected for overall capacity.
Programmes such as the government’s Green Energy Corridors initiative, which is designed to transmit renewable power from resource-rich regions to demand centres, are central to this effort.
A global opportunity for Indian equipment makers
The push to expand grids is not unique to India. The Macquarie report pointed to a global shortage of high-voltage transmission equipment, driven by supply chain constraints and rising energy-transition investment in developed economies, particularly the United States, where data centres accounted for roughly half of all electricity demand growth in 2025.
This shortage has opened export opportunities for Indian transmission equipment manufacturers. The report cited one Indian company that secured a Rs 900-crore export order from a US data centre customer in 2026, and another whose exports grew at a 22% compound annual rate over five years, well ahead of its 9% domestic revenue growth over the same period, with exports now making up 8% of its FY26 order inflow.
The bigger picture
India’s power demand is entering a steeper growth phase, driven as much by data centres and industrial activity as by ordinary household consumption, and the transmission network connecting power plants to consumers will need sustained, large-scale investment to keep up.