India’s power demand is expected to grow annually at 6.3 per cent till 2027, higher than the 5 per cent per annum during 2015 to 2024, aided by rising affluence in the world’s fastest growing emerging economy.
“Supported by rapid economic expansion and increasing electrification, India’s electricity demand is forecast to grow at a high rate of 6.3 per cent annually from 2025 to 2027 on average. Rising air conditioner ownership will continue to bolster electricity demand growth,” the International Energy Agency (IEA) said.
Following a strong 8.3 per cent Y-o-Y increase in 2023, electricity demand in India grew at 5.8 per cent Y-o-Y in 2024 amidst strong economic growth, it added.
Power Demand
Over the forecast period, IEA said that India is also expected to continue recording strong growth in electricity consumption, and will account for 10 per cent of the total increase in global demand to 2027 amid robust economic activity and rapidly rising air conditioning (AC) stock.
Peak electricity load in India has shown strong growth in recent years, rising from 148 gigawatts (GW) in 2014 to 250 GW in 2024, led higher 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 per cent between 2014 and 2024, it explained.
From 2025 and 2027, coal-fired generation in India is forecast to grow more slowly, rising by 2 per cent annually, despite an expected average growth rate of 6.3 per cent in electricity demand.
This is because renewable energy sources (RES) are also forecast to grow significantly, increasing their share from 21 per cent in 2024 to 27 per cent in 2027.
Solar PV generation is expected to expand at an average annual rate of over 28 per cent from 2025 to 2027, roughly doubling its output. Wind generation is projected to grow by an average 11 per cent annually, the IEA projected.
Rising affluence
Even though less than 20 per cent of households in India are equipped with an AC, 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 sold in 2024, the IEA said.
This is 27 per cent more than in 2023, when 11 million units were sold. By 2030, cooling equipment is expected to contribute one-third to the peak electricity load in India, potentially reaching 140 GW, it added.
“This would be more in line with trends in advanced economies such as the United States, where cooling demand currently takes 50 per cent of total peak load on the warmest days in Texas,” it said.
Data shows that for 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.