India’s electricity demand is projected to grow at an average annual rate of 6.3 percent over the next three years, surpassing the 2015-2024 average growth rate of 5 percent.
While emerging economies continue to experience robust electricity demand, Africa lags behind, with 600 million people in sub-Saharan Africa still lacking access to reliable electricity. In contrast, China, the United States, and India are all set to see solar PV’s share in their energy mix reach 10 percent over the forecast period, IEA said in its report today.
Wholesale electricity prices in 2024 saw a decline of around 20 percent on average compared to the previous year in the European Union, India, the United Kingdom, and the United States. Despite this, India is expected to maintain strong growth in electricity consumption, accounting for 10 percent of the total increase in global demand through 2027, IEA report said.
This growth is driven by a combination of robust economic activity and the rapid increase in air conditioning stock, which has contributed to rising peak electricity loads. India’s time-of-use tariffs have played a significant role in managing peak load trends, an area that continues to be a focus for national energy authorities.
While electricity demand in advanced economies remained relatively unchanged in 2024 compared to 2021, emerging and developing markets have been the primary contributors to global demand growth. By 2027, the share of advanced economies in additional electricity demand is expected to increase to 15 percent, spurred by the electrification of transport and heating sectors, as well as the rapid expansion of data centers. In the United States, the expansion of data centers is a key driver of demand, whereas in the European Union, uncertainty surrounding the recovery of energy-intensive industries remains a crucial factor in electricity consumption trends.
India witnessed an 8.3 percent increase in electricity demand in 2023, followed by a year-on-year growth of 5.8 percent in 2024, driven by strong economic performance. The first half of 2024 saw an 8.5 percent surge in electricity consumption due to prolonged heatwaves, while demand growth moderated in the latter half amid milder weather conditions. With continued economic expansion and increasing electrification, India’s electricity demand is forecasted to grow at an annual rate of 6.3 percent from 2025 to 2027. Rising air conditioner ownership will further propel this demand, adding pressure to an already strained power grid.
India’s peak electricity load has surged from 148 GW in 2014 to 250 GW in 2024, marking a 68 percent increase. This growth is fueled by industrial expansion, agricultural development, enhanced electricity access, and increased use of air conditioning and household appliances in residential and commercial sectors. Electricity demand in these sectors has risen by approximately 60-65 percent over the past decade.
Although state interconnections and thermal power plants have helped manage energy needs, the rapid rise in peak load presents a significant challenge for grid stability. Cooling alone contributed an estimated 60 GW to peak load in 2024, with AC sales reaching a record 14 million units, a 27 percent increase from 2023. By 2030, cooling equipment is expected to account for one-third of India’s peak electricity load, potentially reaching 140 GW.
The India Energy & Climate Centre (IECC) has projected evening power shortages of 20-40 GW by 2027, even if all planned dispatchable capacity is commissioned on schedule. The National Electricity Plan 2023-2032, published by the Ministry of Power, forecasts peak demand to reach 458 GW in 2032, an 83 percent increase from 2024 levels.
However, capacity shortfalls are already a pressing issue, with the Central Electricity Authority (CEA) reporting that available capacity at peak load in 2024 was 11 GW lower than required, a deficit of 4.3 percent.
The northern and eastern regions of India faced the most critical shortages, with power deficits of 7.3 percent and 7.9 percent, respectively, despite capacity expansions of 6.6 GW and 1.3 GW in the past year. Addressing these gaps will require sustained investment in generation, transmission, and storage infrastructure to ensure long-term energy security and grid reliability.
Baburajan Kizhakedath