New Delhi: Rating agency ICRA Ltd expects electricity demand growth in India to rebound to 5–5.5 percent in FY2027, following a muted growth of 1.5–2 percent anticipated in FY2026, as recent data points to a recovery in consumption. According to a statement issued on Monday, all-India electricity demand improved by 5.1 percent year-on-year during December 1–25, 2025, averaging 4.4 billion units a day, aided by seasonal factors. This marked a recovery from a contraction of 0.8 percent in November and a sharper 6.0 percent decline in October 2025.
Follow Energy Watch on X
Commenting on the outlook, Ankit Jain, Vice President and Co-Group Head, Corporate Ratings at ICRA Ltd, said, “ICRA expects electricity demand growth at 5–5.5 percent in FY2027. India added 31.2 GW of renewable capacity in 8M FY2026, up 109 percent year-on-year, supported by a strong project pipeline and favourable solar module prices.”
Jain noted that bidding activity moderated during the period. “While bidding slowed with only 8.6 GW auctioned in 8M FY2026 amid delays in signing of PPAs/PSAs, transmission infrastructure remains a critical focus to sustain capacity expansion. Grid curtailments during peak renewable generation hours highlight the urgency for storage and grid strengthening. These measures are essential to ensure grid stability and enable the sector's continued growth momentum and will remain the key monitorable in FY2027,” he said.
On the supply side, net power generation capacity additions stood at 29.8 GW between April and October 2025, more than double the 12.5 GW added in the corresponding period a year ago. The increase was largely driven by renewable energy projects being commissioned ahead of the expiry of the complete waiver on interstate transmission system charges on June 30, 2025.
For the full FY2026, overall net capacity addition is projected at around 46 GW, significantly higher than the roughly 33 GW added in FY2025, supported by a strong renewable project pipeline.
Demand growth during the current fiscal has shown sharp regional variation. In the first eight months of FY2026, Gujarat recorded the highest growth at 8.5 percent, followed by Karnataka and Bihar at 6.5 percent each. Growth remained subdued in Maharashtra at 1.2 percent, Andhra Pradesh at 1.3 percent, Tamil Nadu at 0.6 percent and West Bengal at 1.2 percent.
Follow Energy Watch on LinkedIN
Several large states also saw a contraction in demand, including Haryana at minus 4.0 percent, Punjab at minus 6.2 percent, Rajasthan at minus 2.1 percent, Uttar Pradesh at minus 3.4 percent, Madhya Pradesh at minus 2.0 percent and Telangana at minus 2.5 percent. ICRA attributed this trend to a high base effect from the previous year and adverse weather conditions, including heavy rainfall.