Think of how electricity use is changing in India. Offices have rooftop solar. Factories run captive plants. Farmers are adding solar pumps. EVs are charging overnight. Data centres operate around the clock.
Much of this power never fully shows up in official grid demand numbers. That gap, according to JM Financial Institutional Securities, is shaping energy policy in important ways. Even as renewables surge, India is planning to stabilise thermal capacity at 350–400GW. This is because until storage and transmission catch up, coal remains the system’s backbone.
Thermal is not going away
Despite rapid renewable additions, policymakers remain clear that coal-based power remains essential for reliability. Between 92GW and 97GW of new thermal capacity is planned up to 2032, with a significant number of orders already placed. Over the longer term, thermal capacity is expected to stabilise at 350–400GW, even as renewable capacity expands toward 1,800–2,000GW.
The report also noted that nuclear expansion is being discussed, but is widely seen as a distant prospect in the medium term. It further adds that until the storage scales meaningfully, thermal remains the backbone of reliability.
Storage and transmission: the next bottlenecks
India may require 20GW (around 80GWh) of combined battery and pumped storage by FY27 to absorb solar without curtailment. Lithium carbonate prices have increased by about 35% in the past three months after China removed subsidies, pushing up battery costs. A weaker rupee has added to the pressure. At the same time, how batteries will perform over the long term in very hot regions such as Rajasthan is still not proven at a large scale, as per the report.
Transmission expansion is equally critical. Around 170GW of transmission capacity is reportedly under construction. Curtailment, earlier estimated at 5–7GW, has declined after new lines were commissioned, but remains a risk. According to the report, there are also concerns about rising overall system costs due to large transmission build-outs and possible under-utilisation.
The invisible layer of demand
According to the report, India’s actual power demand is being “systematically undercounted” because grid-captured data misses captive, rooftop solar and off-grid consumption.
Captive generation is formally recorded only for capacities of 0.5 MW and above. Smaller systems, which are increasingly common across factories, commercial buildings and farms, are either partially captured or absent from formal reporting, the report added.
Rooftop solar and agricultural solarisation under schemes such as PM-KUSUM have expanded rapidly. The report further explains that much of this distributed generation reduces visible grid offtake, especially during daytime hours.
As a result, actual electricity demand growth may be closer to 7–8% annually, even if conventional statistics suggest otherwise, according to one view among policymakers cited in the report. In other words, the grid may be seeing less than the economy is actually using.
Why the data gap matters
Electricity data is mainly based on how much power flows in and out of the main grid. That system worked well when most electricity came from large, central power plants. But now, with more rooftop solar and captive plants generating power locally, this method no longer captures the full picture of how much electricity is actually being produced and used, the report said.
Renewable energy reaching the grid at peak is around 78GW. Rooftop solar and net metering also lower the amount of power people draw from the grid. In cities such as Delhi, extra solar power generated during the day reduces how much electricity needed from the grid later on.
The report added that to fix this gap, authorities are working with state load dispatch centres and electrical inspectorates to build online systems that can better track captive power use. The aim is to get more accurate data without increasing paperwork or compliance costs for small consumers.
Summer could test assumptions
Peak demand for the coming summer is projected at 260–270GW, with potential short-term supply stress during extreme weather conditions.
Uncertain weather conditions, including El Niño and lower hydro reserves, make the outlook harder to predict. If electricity demand rises sharply, coal-based plants may have to operate at higher levels than the current 65% utilisation. In case of shortages, gas-fired plants and even imported coal could be used as emergency measures, the report stated. If real demand is stronger than what grid numbers indicate, planning margins could be tighter than assumed.
A structural shift
The report concluded that the long-term story for India’s power sector remains strong. Electricity demand is expected to rise alongside economic growth, wider electrification, data centres, electric vehicles and industrial expansion. Green hydrogen alone is projected to create a domestic requirement of 35 million metric tonnes, which could trigger another round of renewable capacity addition. But the nature of demand is shifting. It is becoming more distributed, less visible in official data and harder to track in real time.
If electricity underpins a modern economy, then measuring how much is truly being consumed, including power that never flows through the central grid, may be just as important as building the next power plant.