India’s electricity demand is expected to grow at an average 6.3% annually over the next three years, stronger than the 2015-2024 average growth rate of 5%, as per the forecast by the International Energy Agency. The strong demand for electricity is supported by economic expansion and rising air conditioner ownership, as per the agency.
Over the forecast period, the country is also expected to continue recording strong growth in electricity consumption, and will account for 10% of the total increase in global demand by 2027.
The forecast makes it incumbent on the government to take steps to ensure that supplies keep pace with the rising demand and no shortages are felt. The government is pushing coal-based power generation beyond the levels envisaged under National Electricity Plan to ensure that no outages are caused during summer seasons over the next few years.
The country’s electricity demand in 2024 grew by 5.8% on-year after a strong 8.3% increase in 2023 amid robust economic growth. While electricity consumption rose by a robust 8.5% during the first half of the year due to intense and long heatwaves, the second half saw a more subdued growth in demand amid milder weather last year.
“Supported by rapid economic expansion and increasing electrification, India’s electricity demand is forecast to grow at a high rate of 6.3% annually from 2025 to 2027 on average,” said the agency.
IEA highlighted that rising air conditioner ownership will continue to bolster electricity demand growth.
Peak electricity load in India has shown strong growth in recent years, rising from 148 GW in 2014 to 250 GW in 2024, led by the rapid expansion of its industry, development of agriculture, enhanced electricity access and increased use of air conditioning and appliances in the residential and commercial sectors.
“As a result, electricity demand in these sectors rose by around 60-65% between 2014 and 2024. While good interconnections among states and the operation of thermal power plants allow Indian utilities to cover demand in energy terms throughout the year, the rapid increase in yearly peak load poses a major challenge for the electricity grid and national authorities,” said the IEA.
It noted that even though less than 20% of households in the country are equipped with an air conditioner, the contribution of cooling to total peak load is estimated at 60 GW in 2024, as sales reached a new record of 14 million AC units in 2024, up 27% than in 2023.
By 2030, the agency expects cooling equipment to contribute one-third to the peak electricity load in India, potentially reaching 140 GW. “This would be more in line with trends in advanced economies such as the United States, where cooling demand currently takes 50% of total peak load on the warmest days in Texas,” as per IEA.
As per the official data by the agency, each incremental degree in daily average temperature, daily peak demand in India increased by more than 7 GW in 2024, twice the increase observed in 2019. “By 2027, this value could surpass 11 GW per degree,” IEA noted.
According to the National Electricity Plan 2023-2032, the government has forecasted the peak demand to reach 458 GW in 2032, 83% higher than in 2024. However, a shortfall in available capacity remains a key issue. As per the data from the load generation balance report of the Central Electricity Authority (CEA), the available capacity at the time of yearly peak load was forecasted to be 11 GW lower than peak load levels in 2024, after several years of decline of the forecast margin.
The agency noted that electricity adequacy was the most critical in the northern and eastern regions of India, where the deficit in power requirements reached -7.3% and -7.9%, respectively, despite available capacity growing by 6.6 GW and 1.3 GW, respectively, in one year.
While coal-based power generation accounted for 74% of the total generation share last year, its share is projected to decline to 67% by 2027. Amid this, power generation through gas-based power plants is also rising with an estimated growth of 6% y-o-y in 2024, and further increases are forecast for the next three years at an average 9% annually, as per the agency.
IEA projects coal-based power generation to grow at 2% between 2025-2027 compared to 4% from 2018-2024.